Microsoft to buy Skype for $7 billion • Hacker News Board

Re: Microsoft to buy Skype for $7 billion

#221

Post by nikcub » Tue, May 10, 2011, 12:50 PM UTC

brudgers wrote: post #204

nikcub wrote: post #183

As many users as Facebook, many of those users have entered their payment details, a great brand that is just as big as Facebook, and synonymous around the world with communication. I just happen to be talking to a non-tech computer user on the weekend who told me that he and his entire family and friends overseas do not use Facebook because Skype does everything they need in terms of staying in touch and it has work…

> "As many users as Facebook" I suspect that there is a closer correlation to one account = one person with Skype than Facebook since there is little social incentive to create multiple Skype accounts. In addition, the strength of relationships between Skype customers is more easily determined. Finally, Skype has the potential to scale well into MicroSoft's core B2B business model.

I should have asterixed that with 'registered'. Updated numbers are out now as part of the msft press release:

http://news.ycombinator.com/item?id=2532230

Facebook has 3x active over Skype - but as you mention, while Facebook are straight-up about their numbers, it is still hard to compare because of differing methodologies and different app types

Re: Microsoft to buy Skype for $7 billion

#222

Post by bergie » Tue, May 10, 2011, 12:51 PM UTC

justincormack wrote: post #182

Skype's (technical) HQ is in Talinn just across the water from Nokia, Microsoft's other new "acquisition"... useful for their mobile strategy perhaps? But Skype's infrastructure is all Linux + Postgres (they are a huge Postgres user), so maybe they will be forced to rewrite it all on SQL server for the next few years.

If I remember correctly, Hotmail for still running on BSD many years after the MS acquisition

Re: Microsoft to buy Skype for $7 billion

#223

Post by dspillett » Tue, May 10, 2011, 12:53 PM UTC

cfinke wrote: post #5

Maybe I've missed something, but what has changed in the two years since eBay spun off Skype at a valuation of < $3B to make it worth more than $7 billion today?

1. Since eBay sold its controlling stake (they still own an amount of equity in the business) the investors now in control have got the rights to the whole thing where eBay didn't actually buy the rights to some of the code off the founders - this makes quite a difference.

2. The western world is slowly pulling itself out of a recession right now, rather than two years ago when we were on the other side and already sliding down. This will help any good plan to monetise the service further if that is MS's goal (it is probably their secondary goal).

3. Social networking, while already the "big thing" two years ago has grown considerably and is a fertile battleground for the big names. Competing in this market is presumably MS's primary driver for the purchase.

4. Facebook were strongly rumoured to want Skype or something similar to integrate with its current offerings and Google already has Google Talk (though it only has a fraction of the market awareness of Skype). So for MS to compete in that area they would have two choices: put up a big enough offer for Skype to scupper anyone else (particularly facebook, because if they got it MS would be competing against two entrenched brands in the same beast) buying it, or make their own (or buy something else) and have to compete against the entrenched ubiquitous brand in the area (some people talk of making an Internet call as "skyping" someone).

The valuation seems quite a bit high to my untrained eye, but MS buying Skype makes sense and perhaps that is simply the price they had to pay to get it. It isn't like MS is short of a bob or two.

Re: Microsoft to buy Skype for $7 billion

#224

Post by blub » Tue, May 10, 2011, 12:57 PM UTC

VMG wrote: post #198

blub wrote: post #186

Earlier quoted context omitted.

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/

There are companies that say "we don't track or store your information" and then there are companies that write five page long privacy policies that link to other privacy policies and so on.

Re: Microsoft to buy Skype for $7 billion

#225

Post by hessenwolf » Tue, May 10, 2011, 1:06 PM UTC

smackfu wrote: post #217

hessenwolf wrote: post #172

"Goldman Sachs Group Inc. and J.P.Morgan Chase & Co. advised Skype on the deal, according to people familiar with the matter. Microsoft is not using any financial advisers for the deal, the people added." I see. That makes the 8.5 billion (price + debt) make more sense.

Funny, but financial advisors on acquisitions are just people who want a few percent for doing nothing.

Hmmm... I would definitely be happy to pay somebody a few bucks to perform a reasonable independent valuation. I mean, seriously, whats 500K compared to 8.5 billion?

Re: Microsoft to buy Skype for $7 billion

#226

Post by aneth » Tue, May 10, 2011, 1:08 PM UTC

guywithabike wrote: post #117

aneth wrote: post #76

Earlier quoted context omitted.

If Microsoft somehow owned both of those services, would it affect Microsoft's prospects? Certainly not. FaceTime is a gimmick that few people actually use use. Google Voice is bridge between soon-to-be legacy voicemail and cellphones and the future, which is unlikely to be owned by either Google or Microsoft. Neither business would help Microsoft grow again, and neither will Skype.

FaceTime is a gimmick that few people actually use use. Do you have any data to support this assertion?

I haven't met in the flesh anyone who uses it regularly, and I know a lot of iPhone 4 owners. I'm sure there are people who do. It would be interesting to get some real data. My impression is, as with every video chat service for 30 years, it has very limited use because people just don't want to video chat most of the time.

Re: Microsoft to buy Skype for $7 billion

#227

Post by hessenwolf » Tue, May 10, 2011, 1:10 PM UTC

dspillett wrote: post #223

cfinke wrote: post #5

Maybe I've missed something, but what has changed in the two years since eBay spun off Skype at a valuation of < $3B to make it worth more than $7 billion today?

1. Since eBay sold its controlling stake (they still own an amount of equity in the business) the investors now in control have got the rights to the whole thing where eBay didn't actually buy the rights to some of the code off the founders - this makes quite a difference. 2. The western world is slowly pulling itself out of a recession right now, rather than two years ago when we were on the other side and already s…

Hold on - did Ebay just score a win with this?

Re: Microsoft to buy Skype for $7 billion

#228

Post by bvi » Tue, May 10, 2011, 1:10 PM UTC

moeffju wrote: post #151

bvi wrote: post #144

Earlier quoted context omitted.

While you're right about loyalty, quality matters too. Skype is infinitely better than Google Voice when it comes to video calls (very little lag, if at all!) - plus, users can video conference for free, which is not an option with Google Voice (as of now). My point is, Skype is the best product in the market in its domain, no question. I do agree than Microsoft is massively overpaying for Skype, however.

Skype stopped free video conferences after the end of the beta phase. You now need a subscription to have video calls with multiple people.

Good point, thanks. But one of the biggest factors in favor of Skype is still its free audio conferencing capability. Google Voice does not have this, unfortunately, and I wonder why.

Re: Microsoft to buy Skype for $7 billion

#229

Post by aneth » Tue, May 10, 2011, 1:14 PM UTC

The most valuable asset of Skype is not the technology, but the social network and user base. That however is not all that valuable since, unlike Facebook, Skype is mostly a 1:1 communications model easily moved to another network. When people want to communicate, they will use whatever is easiest. Skype has minimal and diminishing revenue potential, adds nothing to MS core products, and the social network is not all that sticky. It's a dumb buy by a dumb company. I haven't heard a positive word said about Microsoft product management by an employee in 3 years of time spent in Seattle.

Re: Microsoft to buy Skype for $7 billion

#230

Post by aneth » Tue, May 10, 2011, 1:16 PM UTC

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…

> it could help strengthen the corporate MS position

People are going to continue to buy Word, Windows, and Exchange because they have a commodity video product "integrated"? I don't think so.