Microsoft Acquires Skype

Under the terms of the agreement, Skype will become a business division within Microsoft, headed by Skype CEO Tony Bates.

Microsoft CEO Steve Ballmer cited Skypes rapidly accelerating number of users as a reason behind the unsolicited offer. Skype services will be meshed with a variety of products in Microsofts portfolio.

During a May 10 press conference, Bates suggested that the Microsoft partnership could allow Skypes base to expand to literally billions of users.

Also during the press conference, Ballmer suggested that his company would continue to support Skype on non-Microsoft client platforms.

According to Microsoft, Skype assets will find themselves integrated into everything from Xbox Kinect to Windows Phone—pending regulatory approval.

For Microsoft, the Skype acquisition opens yet another competitive front with Google, which also offers VOIP services.

Apples FaceTime video-conferencing service represents yet another competitor to Skype and something Microsoft will have to take into account.

Despite acquiring Skype, Microsoft will continue to support its Lync unified communications platform.

This will be Skypes second time being bought by a major tech player. Then a two-year-old company, Skype in 2005 was bought by eBay for $2.6 billion in cash and stock.

Skype boasts an average of 170 million users a month. Although the company previously had IPO plans, it put those on hold in October 2010 after the appointment of Bates as CEO.