Microsoft, Skype Deal Creates UC Juggernaut

Microsoft’s $8.5 billion acquisition of VOIP and video conferencing company Skype may just be the first move to creating the unified communications juggernaut that has been the Holy Grail for so many technology vendors.

And the move may also redeem Microsoft (NASDAQ:MSFT) which has fallen prey to competitive moves by other technology giants Google and Apple, that have chipped away at Microsoft’s once unshakable dominance of the ownership of the user interface. Microsoft’s Skype buy may just give Microsoft a shot of winning some of that back.

Microsoft said the acquisition would bring unified communications benefits to both consumers and enterprise users as well as generate "significant new business and revenue opportunities."

Look for Microsoft to integrate Skype into technologies including Microsoft’s email client Outlook, instant messaging client Messenger, Xbox, Kinect, and Windows Phone 7, covering the bases of users from business to mobile to home, all while creating more value for its own user interface.

But don’t expect to see Microsoft’s line get much bigger in the short term because of this deal. Skype started out and has been widely adopted because it is a service offered free-of-charge.

Still, that widespread adoption is worth quite a bit and could be leveraged by Microsoft into new opportunities.  A survey last year showed that business users were more likely to use Skype or another consumer video conferencing service rather than high-end telepresence video conferencing systems from companies like Cisco, Polycom, Lifesize and HP. /news-and-trends/skype-yahoo-and-gmail-beat-out-cisco-and-polycom-among-business-users//

“Skype is a phenomenal service that is loved by millions of people around the world,” said Microsoft CEO Steve Ballmer, in a prepared statement. “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

Skype will become a new business division within Microsoft, and Skype CEO Tony Bates, who joined Skype from Cisco just seven months ago, will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.

“Microsoft and Skype share the vision of bringing software innovation and products to our customers,” said Bates, in a statement. “Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate,” Bates said.

Microsoft acquired Skype from a private equity group, Silver Lake. Skype, founded in 2003, was acquired by unlikely suitor eBay in September 2005. Silver Lake purchased the company in 2009.