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Microsoft to buy Skype for $7 billion

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Re: Microsoft to buy Skype for $7 billion

#101

Post by firebones »

johns wrote: post #78
firebones wrote: post #68

Earlier quoted context omitted.

I get the sentiment, but do you really think a) that there are 200 worthwhile startups in the mobile space, or b) that there are 200 promising startups that you could acquire for an average of $350 million each that would have anywhere near the chance of establishing a network effect as big as Skype's in any kind of reasonable internet timeframe (say, in the next 5 years)?

35 million each, not 350

Ackppttthtt, my fail. Still not a lot of $35 million exits, but significantly more of those than $350 million. The point still holds though--not sure there are 200 of those $35 million exits either. (Isn't that still almost twice the size of a CDBaby exit?)

Re: Microsoft to buy Skype for $7 billion

#103

Post by alanh »

jsz0 wrote: post #87

This is Microsoft's ICQ moment. Overpaying for a company at the moment when its core competency is becoming a commodity. Does anyone have the slightest bit of loyalty to Skype? Of course not. They're going to use whichever video chat comes built into their SmartPhone, tablet, computer, etc. They're going to use FaceBook's eventual video chat service or something Google offers. No one is going to actively seek out Sky…

Agreed completely. Skype certainly has brand recognition and people know it’s “the” way to keep in touch across the ocean, but — and I don’t have studies to back this up — I bet it’s one of those brands people know but don’t feel very fond of. Skype is kind of annoying, for one, and is less reliable and more complicated than traditional telephone solutions (by virtual necessity, but that doesn’t matter). This should theoretically make consumers prone to try alternatives, as parent suggests.

Re: Microsoft to buy Skype for $7 billion

#104

Post by drallison »

As I commented in one of the other postings for this event: "There goes the neighborhood....".

Skype is/was one of the most significant products of the last decade or two. one I use and depend upon every day. I doubt that Microsoft will be able to avoid killing the goose that laid the golden egg.

Re: Microsoft to buy Skype for $7 billion

#105

Post by niels_olson »

mgkimsal wrote: post #13

A few thoughts: When we see the mac version stagnate, we won't be able to say MS has sabotaged it - skype did that before on their own. The linux version has never been on parity with the others - will it be officially killed? Might MS actually put resources in to it to make it work as well as the others? Overall, good on MS for doing this. I'm assuming this may bring on some more interesting dynamics to the google v…

> The linux version has never been on parity with the others

That may be true, but in my experience, I could barely get skype running on an old windows box: it would routinely grind the system to a halt. In 2010 I switched to that box to SuSE 11, where Skype, though a bear to set up, ran smoothly, with a non-noticable frame rate and better-than-TV graphics on old hardware (circa 2003 2GHz Dell with 1 GB RAM. It did that while providing NFS filesharing to another computer playing movies and a laptop playing audio.

The audio setup hassle had all the features of any other sound setup headache in Linux. I lay that problem squarely in the lap of the Linux sound community.

Re: Microsoft to buy Skype for $7 billion

#106

Post by firebones »

neworbit wrote: post #93
firebones wrote: post #68

Earlier quoted context omitted.

I get the sentiment, but do you really think a) that there are 200 worthwhile startups in the mobile space, or b) that there are 200 promising startups that you could acquire for an average of $350 million each that would have anywhere near the chance of establishing a network effect as big as Skype's in any kind of reasonable internet timeframe (say, in the next 5 years)?

a) Probably, though I bet I don't know most of them. If I were MS M&A I would bet disproportionately on mobile, though, because that's an area they need to nail if they want to stay relevant. If they could get 70 out of 200, that'd be a darn good start. b) Individually, not terribly likely. Collectively? Sure. (And it's $35M each, but the exact number isn't the point - let's say you could offer every ycombinator and…

To the extent that my math was way wrong, I think your point carries more weight (meaning: you're an order of magnitude better than I thought). I'd say if they bought the top 10 mobile plays for $70 million each they'd have a much better expectation (assuming that the acquisitions could be digested--risk which itself carries a significant reduction in expected value).

Re: Microsoft to buy Skype for $7 billion

#107

Post by richardw »

jsz0 wrote: post #87

This is Microsoft's ICQ moment. Overpaying for a company at the moment when its core competency is becoming a commodity. Does anyone have the slightest bit of loyalty to Skype? Of course not. They're going to use whichever video chat comes built into their SmartPhone, tablet, computer, etc. They're going to use FaceBook's eventual video chat service or something Google offers. No one is going to actively seek out Sky…

One reason is likely their experience with IE. They took so much flak destroying Netscape that it's just cheaper and less stress to buy the market leader and get on with it.

In terms of 'why', this is just the easiest way to integrate telephony with their own operating system in a way that leverages the network effect. Soon, any app which runs on Windows could just use the Skype Service. Mac/iPhone/Linux will only have bolt-on app integration with the market leader, or have to develop their own from scratch. And Microsoft will slap some very serious marketing behind this. Maybe Windows phones automatically use Skype when you call other Skype users and they're online, saving costs. Or MS could integrate it into business services, taking over internal phone networks. Maybe they have thought of a use I haven't in my 5 minutes of thinking :)

Re: Microsoft to buy Skype for $7 billion

#108

Post by alanh »

Sidnicious wrote: post #100
mikecarlucci wrote: post #39

Earlier quoted context omitted.

Interestingly, if Microsoft does buy Skype and make it Windows only, they would be opening a huge door for GChat as [EDIT: the obvious] cross-platform client. FaceTime too, I guess, if Apple decides to move in that direction. If Skype isn't the default, verbed, system, doesn't it lose some value?

On that node, didn’t Apple say, via Steve Jobs at the presentation where it was announced, that FaceTime was to become an open standard? What ever happened to that?

He did, but that’s the last we’ve heard of it as of yet [last I heard it discussed]. I doubt they killed it forever though, it’s not like Apple to make a false announcement (vaporware); it is like Apple to de-prioritize the speed of open sourcing that stack over developing/improving/iterating their own implementation and/or iOS ecosystem as a whole.

Re: Microsoft to buy Skype for $7 billion

#109

Post by dstein »

Duff wrote: post #74
dstein wrote: post #66

Earlier quoted context omitted.

Dividends reward short term shareholders. Capital reinvestment rewards long term shareholders (if it's successful).

10 years ago, Microsoft was $35. Today it is $25 and change. Not very rewarding. Microsoft is like the electric utility of the technology business -- they should embrace that or wake up and break up the company into manageable parts. Buying Skype? That's not creating shareholder value.

When you look at Microsoft's acquisition history http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...

There aren't many very large brand name "statement" acquisitions there. Most are small companies you've probably never heard of. I think this Skype acquisition is a clear message that Microsoft is playing hardball now.

Re: Microsoft to buy Skype for $7 billion

#110

Post by lookingchris »

sukuriant wrote: post #98
jsz0 wrote: post #87

This is Microsoft's ICQ moment. Overpaying for a company at the moment when its core competency is becoming a commodity. Does anyone have the slightest bit of loyalty to Skype? Of course not. They're going to use whichever video chat comes built into their SmartPhone, tablet, computer, etc. They're going to use FaceBook's eventual video chat service or something Google offers. No one is going to actively seek out Sky…

I have loyalty to Skype. And this is infinitely better than Facebook owning Skype, imo

MS and FB are practically the same ethics-wise to me. I'd be interested to hear more of your thoughts on this.
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