
Microsoft is buying European internet telephony company Skype for $8.5bn in an all-cash deal.
The Microsoft/Skype deal was first reported by tech news website GigaOm, and would be Microsoft’s largest to date. At first glance, Skype has clear benefits for Microsoft. It would give a boost to Microsoft’s Windows Phone 7, enabling the company to compete against Google Voice and Apple’s communication platform, Facetime. It would also strengthen links to mobile carriers, who are interested in partnering with Skype as they move to 4G and LTE (Long-Term Evolution) networks. GigaOm reports that Facebook also stands to benefit from the deal. As Microsoft is an investor in Facebook, the social network would gain access to Skype’s peer-to-peer technology, enabling it to offer video and voice functions to users of Facebook Chat.The Skype story
Microsoft: a mixed track record
Microsoft has a mixed track record for acquisitions. Despite some successes, such as British gaming company Rare – which later became the Kinetic appliance on the Xbox – it hasn’t had much luck. Microsoft bought Norwegian enterprise search company Fast for $1.2bn in early 2008 before the company was charged with accounting fraud. In the same year, the company also bought mobile software company Danger for $500m. Shortly afterwards, the Danger team collapsed amid internal in-fighting and the company was finally shut down later that year. After making only three acquisitions last year, Peter Klein, chief financial officer of Microsoft, announced at a Morgan Stanley conference in March that the company would focus on partnerships like the recent Nokia deal rather than acquisitions. Read more from Real Deals. Share this story