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Microsoft to buy Skype for US$8.5 bln
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Microsoft Corporation announced on Tuesday that it has agreed to buy the popular Internet telephone service Skype SA for 8.5 billion US dollars. This is the biggest deal of the software maker's 36-year history.
Buying Skype gives Microsoft access to a user base of about 170 million people who log in to Skype every month. They use the Skype accounts as a complement to the traditional phone network.
Microsoft CEO Steve Ballmer said the decision to buy Skype is part of the company's overall plan to empower "consumers and businesses to do more with technology."
He said, "Based on Skype's great market position and innovative technology though, it became clear to us that we had the opportunity to do even more together as a single company in a way that would be innovative and beneficial to customers as well as both companies."
Microsoft said it will marry Skype's functions to its Xbox game console, Outlook email program and Windows smartphones. All of these platforms already have other options for Internet calling, but the addition of Skype users expands their reach, making them more useful.
Microsoft said it will continue to support Skype on other software platforms.
Skype users made 207 billion minutes of voice and video calls last year. Most of that usage is free calling from computer to computer, which has made it difficult for the service to make money.
Dan Costa, Exec. Editor of PC Magazine, said, "I think Skype actually has a lot to offer Microsoft. First of all, it's the most popular voice over IP service in the world. They've got 135 million customers, both those things are great assets for Microsoft in, really, places where it doesn't have a strong presence right now."
According to research firm TeleGeography, Skype is the largest provider of international calling services in the world, surpassing any single phone company.
Microsoft said Skype will become a new business division headed by, who will report directly to Microsoft CEO Steve Ballmer.
