Microsoft has closed its Skype acquisition, transforming the communications company into a new division.
Microsoft has formally completed its $8.5 billion Skype
acquisition, making the communications company a division within its
already-sprawling corporate structure.
"This represents a huge leap forward in Skype's mission to
be the communication choice for a billion people every day," Tony Bates,
formerly Skype's CEO and now president of Microsoft's Skype unit, wrote in an
Oct. 13 posting on The
Official Microsoft Blog. "Joining forces with Microsoft is the best way to
accelerate this mission and capitalize on our position at the intersection of
social, mobile and video communications."
Bates now reports directly to Microsoft CEO Steve Ballmer.
Skype's services will be meshed with a variety of products in Microsoft's
portfolio, including its Lync unified communications (UC) platform, Outlook and Xbox Live. Moreover,
Skype's enormous user base gives Microsoft increased influence over the
evolving voice over IP (VOIP) and video conferencing
Skype previously found itself an acquisition target in 2005,
when eBay agreed to pay $2.6 billion in cash and stock for the then
two-year-old company. Four years later, the auction Website announced it would
resell the majority of its Skype holdings to a team of private investors for
$1.9 billion in cash. By the second half of 2010, Skype boasted an average of
124 million connected users a month, and was reportedly trying to raise money
for an IPO. However, that offering was delayed after the company appointed
Bates as CEO in October of that year.
Microsoft has previously indicated that it will continue to
support Skype on non-Microsoft client platforms. The acquisition also places
Microsoft on yet another collision course with Google and its own VOIP
services. In May 2010, Google purchased Global IP Solutions, or GIPS, which
makes software for processing high-definition auto and video over the Web, for
$68.2 million. A few months later, the search-engine giant began offering its
Gmail customers the ability to make phone calls via that service. By purchasing
Skype, Microsoft also removed the company as a potential acquisition target for
Microsoft's Skype division could also challenge Apple, which
offers video conferencing through its FaceTime service for iOS.
According to a 2010 survey conducted by the Pew Research
Center's Internet & American Life Project, the combination of Skype, Google
and Apple has lifted the number of American adults participating in online
video calls to nearly 20 percent.
Nicholas Kolakowski on Twitter
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.