Microsoft Acquires Skype In an attempt to sure up its tablet and mobile defenses Microsoft has acquired Skype for an unbelievable $8.5bn. Skype is a hugely popular Luxembourg based internet phone service that has over 650 million global users. Skype has been passed around over the last few years; back in 2006 eBay bought Skype for $2.6bn then going on to sell 70% of its shares in 2009 for $2bn. The majority of this 70% was bought by private equity firms Silver Lake and Andreessen Horowit, tech firm Joltid and the Canada Pension Plan Investment Board. Now it is in the hands of Microsoft for that huge $8.5bn. Why pay so much? Only 18 months ago Skype was valued at $2.5bn, so the $8.5bn seems rather excessive. Microsoft might have some trouble explaining to the share holders how they plan to make this money back. The reasons given will be that it gives Microsoft a leg up in the tablet market. Millions of people currently use Skype on their tablets to communicate with their friends and family. The vision is according to Steve Ballmer, Microsoft chief executive, ‘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.’ The potential for Skype once it has been successfully integrated into Microsoft system is staggering. Imagine, Skype + Xbox Kinect + HD TV = a very good reason to get into the living rooms of millions of people. Skype can be so much more than just chit chat between friends; it can be face-to-face training, home schooling, patient care and customer support. Once Skype has been smartened up for the business world it may be able to challenge Cisco and Polycom in the world business tele-conferencing. ‘Mobile’ is the word, and Skype is already adapted for ‘mobile’ which gives Windows Phone 7 a boost in the stiff mobile competition. How will it affect Skype users? Skype was probably worth the money, but how is the acquisition going to affect Skype users. Skype users are very happy with the current service and normally what happens under new management is that things are streamed lined to make more money. Skype does not make huge profits because calls made to other Skype users are free. Microsoft has to justify the $8.5bn by making Skype more profitable, this may mean a hike in prices to call landlines and mobile phones. The main thing users are worried about is how Microsoft may tie it in closely with Windows Explorer, messages like ‘make Internet Explorer your default browser’ might pop up when you open links from the chat box. Skype is great as it is, let’s hope Microsoft don’t mess around with it too much. On the other hand it will be interesting to see what improvements they can make.