Will Microsoft Ruin Skype?

As before long as word spread that Microsoft is buying Skype for $8.5 billion dollars, my Twitter stream filled with tweets worrying that Microsoft would somehow ruin the service. Millions rely on the the free online voice and video calling service to stay in touch with friends, family and co-workers, during paying little or nothing. Others more astutely guessed that Microsoft was buying the VoIP (Voice over Internet Protocol) calling service to block Google from buying it. I've been using Skype for years and as a matter of fact find some comfort in the fact that Microsoft will now guide the Web's best online communication service.

Just two years ago, I worried Skype wouldn't survive at all. Not sure you noticed, nevertheless most news reports about the impending multibillion-dollar acquisition barely mention eBay, the online auction and commerce company that bought Skype in 2005 for a cool $2.6 billion. There were no obvious synergies with ebay's online auction business and within a few years, rumors that Skype's founders wanted to buy Skype back surfaced. By 2009, ebay had openly put Skype on the block, selling 65% of the business to an investment group led by Marc Andreessen.

Despite these travails, Skype has grown and flourished. According to Skype, 95 billion minutes of voice and video calls were made in early 2010. Plus, it's notable that Microsoft will pay near four times as much as eBay did in 2005.

The deal is completed

When the deal is completed, Microsoft will have some decisions to make. It does have its own voice and video service, Windows Live Messenger. Like Skype, Messenger offers desktop and mobile versions, nevertheless overall is not as rich as Skype's offerings. This is reportedly Microsoft's largest acquisition ever, which means Microsoft is not simply planning on casting aside Skype in favor of its own services.

As I tried to figure out what path for growth and technology Microsoft might carve out for Skype, I thought back to 1998, when Microsoft acquired Hotmail, at that time one of the most popular, free online mail services. Back then and there, Microsoft paid near a half billion dollars Hotmail and access to its 9 million members. I recall a similar sort of outcry, "What will Microsoft do with Hotmail?". At first, Microsoft did little; at that time, as the service grew, Microsoft added multiple features to effectively compete with AOL and Yahoo's online mail offerings. Some years ago, Microsoft did try to kill the Hotmail name. In the long run it relented and today you can nevertheless log into Hotmail which effortlessly taps into Microsoft's myriad other online services.

This short tale give me hope that Microsoft will not kill this golden goose. Consumers, especially widely dispersed families and businesses are devoted to Skype, and Microsoft will do what it can to keep them happy and slowly introduce whichever Windows Live services make sense.

I do hope Microsoft helps Skype work more effectively with Web browsers. In my experience, its plug-in has crashed nearly every browser. A seamless marriage of Internet Explorer 9 and Skype would be a big win for Microsoft and Skype users who've grown tired of browser crashes.

The best home for Skype?

Is Microsoft the best home for Skype? Then, it's better than an investment firm and a commerce company that regretted the purchase nearly as before long as it was completed. Google would've been another great partner, however the company has already made a much, much smaller $50 million bet on Grand Central, which became the increasingly popular Google Voice. It as well has Google Chat with video. Google, even though, will need to unify its communication services to better compete with the likes of Microsoft Skype. Maybe not coincidentally, Google kicks off its Google I/O developers' conference today, an event where they could launch just that kind of unity and technology—even though I'm betting they're smarting a bit over the timing and content of this acquisition news.

What will Microsoft do with Skype? It could swap out the Xbox live communication services in favor of the more extensible Skype. Like as not they'll bake it into the then and there version of Microsoft Office. Microsoft may just replace the new Lync Communication Service with Skype. With an acquisition of this size, every option is on the table.

One thing is clear, Microsoft will not shut down or seek to radically alter Skype. All things considered, Microsoft will not ruin the service and those scrambling to find alternatives should relax. Buying Skype is easily Microsoft's best and most savvy acquisition in the Internet age.