Skype Can Position Microsoft For Future Prosperity

In May of this year, Microsoft agreed to acquire Skype Global for $8.5 billion in cash. This acquisition happens to be the largest MSFT has ever made. Why Skype? Really Skype is an internet phone company. It enables the end users to make phone calls through internet for free or for a nominal charge. Of more importance to MSFT may be the 663 million registered users. Can MSFT use Skype to strengthen its enterprise, search and mobile businesses?

Skype has been bought out twice. In 2003 it was formed and by 2005 it was purchased by eBay for $3.1 billion. EBay at that time sold the majority of its holdings in 2009 to a private investment group for $1.2 billion less than it paid. If eBay dumped it as a non-profit making venture, what did MSFT see in it? Just in 2010 with revenue of $860 million, it had an overall loss of $7 million and after all carried $686 million in debt.

There has to be other reasons MSFT would buy Skype and it cannot be for short term gain. There are two emerging communication platforms developing out of its competitors. Google has Google Voice and Apple has Facetime. MSFT needs a platform for its Windows Phone 7 and Nokia venture.

A future income maker that could make moreover sense it a marriage with Facebook of which MSFT has a $240 million investment. Could the Skype peer to peer network be integrated into Facebook chat? Building its own from scratch may be cost prohibitive however using one in place may make more sense. Skype's active customer base may grow raising the income levels for its SkypeOut Service. Facebook credits may be used to pay for the phone calls as one idea or cross-integration. And there has to be the ability to license technological usage in other apps and services as the user base increases.

Xbox and other game integration could be a key element. We know Skype is appearing more and more on connected TV sets with cameras and apps. An Xbox connection seems to be a natural evolution. Kinect already uses camera innovation. Kids growing up using a form of Xbox gaming would intrinsically make face to face calls to peers and family. This would take place all in accordance with the MSFT platform bringing up a generation of clients from cradle to grave. With the future of face to face communication getting closer every day, Skype may bring an advantage to MSFT.

The Big future money may be in multi-billion dollar revenue opportunities internet telephony could bring. Juniper Innovation predicted that the total number of mobile VoIP (Voice over Internet Protocol) minutes would jump from 15 billion in 2010 to 470.6 billion by 2015.