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Microsoft to buy Skype for $7 billion

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Re: Microsoft to buy Skype for $7 billion

#191

Post by Tyrannosaurs »

timc3 wrote: post #149
mmaunder wrote: post #141

Earlier quoted context omitted.

There is a very strong network effect with Skype for PC to PC calls. But I doubt MS is going to get full value. They have had little success with freemium business models and I don't see why this would be different.

In what way do you measure success? Hotmail and Windows Live Messenger for two services have a huge amount of users.

Don't they still lose money though? Certainly as of 2008 online services (search, hotmail, messenger) was losing over $1bn a year.

I don't believe that they've ever broken that down publicly but it would seem unlikely that any one of those services is making significant money if the who division is losing cash.

10 years on (I think the Hotmail acquisition was that far back) it should be making money unless Microsoft has become a charity.

Re: Microsoft to buy Skype for $7 billion

#192

Post by geoffreyvanwyk »

Why does Microsoft feel the need to buy other companies? Why do they not just build their own Skype version if they like it so much? How many people are going to lose their jobs now? Why do they employ all the brilliant young programmers if they are just going to buy up companies and not create new products?

Re: Microsoft to buy Skype for $7 billion

#193

Post by netcan »

geoffreyvanwyk wrote: post #192

Why does Microsoft feel the need to buy other companies? Why do they not just build their own Skype version if they like it so much? How many people are going to lose their jobs now? Why do they employ all the brilliant young programmers if they are just going to buy up companies and not create new products?

First, this is something that works now.

More importantly, this is a textbook network effect market. Skype users are what makes Skype work. If MS announced they building their own, what odds would you offer me to bet I use it to talk to my Mother on it within 2 years?

Re: Microsoft to buy Skype for $7 billion

#194

Post by vl »

wladimir wrote: post #161
gabbo wrote: post #86

Earlier quoted context omitted.

Open protocols? Does Skype use any? I'm genuinely curious, I thought it was completely proprietary.

Their protocol is indeed entirely proprietary. The grandparent was talking about how Microsoft works in general. So the protocol is already OK, the client however they'll convert it to using as many Windows specific technologies as possible.

Ironically, because of the European rulings we might see protocol specification for Skype - MS had to publish bunch of it's protocols after some European anti-monopoly deal.

Re: Microsoft to buy Skype for $7 billion

#195

Post by monopede »

blub wrote: post #186
crocowhile wrote: post #163

Earlier quoted context omitted.

How can you put Google and Facebook next to each other talking about privacy? They are on different planets.

No, they are very similar. * Most of the services they provide are free (with a hidden privacy tax). * They make most of their money based on analyzing their user's data. * Both have a hostile attitude towards privacy, claiming that it's dead, trying to make it look old fashioned and irrelevant.

Both have a hostile attitude towards privacy, claiming that it's dead, trying to make it look old fashioned and irrelevant. [Citation Required]

Re: Microsoft to buy Skype for $7 billion

#196

Post by sunstone »

RuadhanMc wrote: post #147

Wasn't part of the problem for eBay that they did not actually own the core p2p technology that Skype used and instead licensed it from the former owners? Has Microsoft purchased that as well or are they just going to write their own? In which case quality will change...

Yes I'm wondering about that too. Apparently eBay didn't even know that they didn't own the underlying part until they went to sell it :P Bet somebody go their knuckles rapped for that.

Re: Microsoft to buy Skype for $7 billion

#197

Post by nextparadigms »

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 is pretty tight with Facebook, so expect deep integration of Facebook into Skype, just like they did for WP7.

Re: Microsoft to buy Skype for $7 billion

#198

Post by VMG »

blub wrote: post #186
crocowhile wrote: post #163

Earlier quoted context omitted.

How can you put Google and Facebook next to each other talking about privacy? They are on different planets.

No, they are very similar. * Most of the services they provide are free (with a hidden privacy tax). * They make most of their money based on analyzing their user's data. * Both have a hostile attitude towards privacy, claiming that it's dead, trying to make it look old fashioned and irrelevant.

this doesn't exist on facebook: http://www.google.com/privacy/ads/

Re: Microsoft to buy Skype for $7 billion

#199

Post by jakarta »

netcan wrote: post #165
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…

My mother, father, brothers and friends in 3 countries all have skype running most days. Skype have my credit card so I always have skype-to-phone available (I use it mostly to find my cell). It's been that way for me for about 7 years. That means I have skype running and I use it every day (but I only spend about $20 per year). It's not loyalty, but network effects and momentum count for something too. Not sure that…

From the estimates I have seen, Skype generates $250mm in EBIT per year.

That would mean that Microsoft is paying 28x earnings. If we want to approximate EBIT as free cash flows (not the same, but this is back of the envelope) and assume a 10% discount rate, to break even Skype would need to be growing EBIT at 6.4% annually for the next 10 years or so.

I don't know how achievable that really is, but maybe they could test raising prices to get some of that growth.

Re: Microsoft to buy Skype for $7 billion

#200

Post by bad_user »

blub wrote: post #184
brianpan wrote: post #162

Earlier quoted context omitted.

This is getting way off topic, but of course companies have ethics. Just like they have core values, goals, and ambitions... A company is made up of people and those people can choose to make ethical decisions and can have a history of acting ethically or not.

The fact that employees have ethics does have an effect on the actions that the company takes, but that doesn't mean that the company itself "has ethics". At most we can say that a company employs ethical individuals - still - that won't necessarily lead to ethical decisions. Things like peer-pressure, the board of directors, profits, strategy, market pressure and so on can make good people do bad things. Historicall…

You're arguing semantics, which is useless, and also very wrong.

People themselves have ethics because that's the only way of living in a society -- discerning between good and evil, making decisions that aren't hurtful to others -- these are standards we live by because they work best in improving our own quality of life.

Historically, we can see that people (especially leaders) are as ethical as the laws of their society force them to be, especially when it comes to decisions affecting their well-being (which quite often is their bottom line).

In society when people misbehave, they get marginalized, discriminated against, even abused. E.g. for rapists punishment doesn't stop immediately after jail-time was served, for some unlucky ones the real punishment only begins after getting out of jail.

     Things like peer-pressure, the board of directors, 
     profits, strategy, market pressure and so on can 
     make good people do bad things.
People with strong character and clear ethical guidelines have always been able to get past the herd-mentality. You really can't excuse morally-wrong behavior just because that person is part of a herd, just as you can't excuse the herd itself.
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