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Why Microsoft bought Skype

cringely.com

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Re: Why Microsoft bought Skype

#41

Post by contextfree »

gfodor wrote: post #20
fauigerzigerk wrote: post #14

I don't believe that at all. Google doesn't need Skype. Microsoft bought Skype because they have large amounts of cash in Europe that they cannot repatriate without taking a huge tax hit. For some strange reason, Ballmer has that obsession with hyperactively pursuing the same consumers that Google and Apple have. That's why he didn't see anything else to buy in Europe (Actually there isn't a whole lot). But there is…

I agree with this wholeheartedly -- Microsoft's fatal error was assuming they would continue to be the dominant force in both consumer and enterprise computing. They still own the enterprise. Why they aren't happy with this and focus on taking steps to ensure their dominance there for the next decade is beyond me.

They think that what's popular with consumers will eventually make its way into enterprise. Or in other words, their consumer efforts are the steps they're taking to (try to) protect enterprise dominance in the long term.

Re: Why Microsoft bought Skype

#42

Post by dotcoma »

jkaljundi wrote: post #17

Today Ballmer made a full day visit to the Skype development HQ in Tallinn, Estonia. He also met with the President of Estonia: http://www.president.ee/en/media/press-releases/6096-preside... It's interesting that while Microsoft-related Nokia in Finland is decreasing headcount, the southern neighbor Estonia's Skype is looking to potentially grow.

Skype is now worth almost 50% of Estonia's GDP.

Re: Why Microsoft bought Skype

#43

Post by ghshephard »

sek wrote: post #9
ghshephard wrote: post #7

Skype is the google of VoIP. I recently travelled to Brazil, and needed to make free calls to our US 1-800 number (vs R$18/Minute for the phone in the Blue Tree Marumbi in São Paulo). I had used google voice as a test a few months ago, and spent the better part of 5 minutes trying to figure out how to do it again - but failed - and I'm obviously highly technical. That suggests to me that 95% of your average community…

Why did you fail with Google Voice? You pay and then you call a number, what is the difference?

Have you called The US from Brazil? They had some geolocation filtering that either made it complex or impossible to make a voice call. Not at all like using it from the united states.

Re: Why Microsoft bought Skype

#45

Post by mitultiwari »

Skype+Kinect+xbox can bring video calling to living room. Also, Skype could be a great addition to Windows mobile phones. I think these two might be the main reasons for Microsoft to buy Skype.

Now depends on how well Microsoft does Skype integration with their products.

Re: Why Microsoft bought Skype

#46

Post by rprasad »

ansy wrote: post #22
fauigerzigerk wrote: post #14

I don't believe that at all. Google doesn't need Skype. Microsoft bought Skype because they have large amounts of cash in Europe that they cannot repatriate without taking a huge tax hit. For some strange reason, Ballmer has that obsession with hyperactively pursuing the same consumers that Google and Apple have. That's why he didn't see anything else to buy in Europe (Actually there isn't a whole lot). But there is…

Interesting point about taxes. Can anyone confirm if this is how it works? What prevents Microsoft Europe from buying an entity in the United States and holding the new company in Europe? It's not like other European entities need to pay tax penalties on top of the purchase price when buying assets abroad, right?

The WSJ article gives a basic, but slanted description of how it works. Briefly: income earned by overseas subsidiaries is not taxable to the American corporate parent until those overseas earnings are sent back to America via a dividend. Here, rather than pay a 35% rate on their overseas profits, Microsoft chose to use it to acquire another company, essentially delaying taxation on that income until much later into the future, if ever.

Edit: There is no advantage to the reverse (MSEuro buying a US company), since the US-earned income is taxed in the US at the US corporate rates, which are much higher than the European corporate rates. The money would be taxed at a lower rate when repatriated to the Euro owner, but you would have ended up paying the higher tax rate first.

Re: Why Microsoft bought Skype

#47

Post by erikpukinskis »

Raphael_Amiard wrote: post #36
gfodor wrote: post #20

Earlier quoted context omitted.

I agree with this wholeheartedly -- Microsoft's fatal error was assuming they would continue to be the dominant force in both consumer and enterprise computing. They still own the enterprise. Why they aren't happy with this and focus on taking steps to ensure their dominance there for the next decade is beyond me.

They're still the ones who make the most used OS in the world. They're not the ones innovating and creating new markets and paradigms. But were they, ever ?

I've waved the "What did Microsoft ever invent?" flag plenty in my life, so let me try and advocate for the devil:

Microsoft basically invented the hardware-agnostic software platform. Before Microsoft, there were a variety of hardware platforms, each with their own libraries and languages... not unlike the situation today with phones. Developers had to choose what to target... not only Mac vs PC, but different video cards, different sound cards, different network stacks, etc.

Microsoft took that fragmented market and unified it under a set of standard APIs for both hardware makers and software developers to target. I would consider that an innovation: the loose coupling that they enabled allowed much faster innovation in both hardware and third-party software.

Interestingly, Netscape tried to play the same game on top of them (unifying Windows, Mac, and UNIX under one standardized API), and though Microsoft was able to destroying them, Webkit has succeeded where Netscape failed, and it is slowly making Microsoft irrelevant, just as Gates feared.

Other than that, I don't think Microsoft invented much. But they did a good job copying, were ruthless with business executation, and so their one innovation ended up being a multi-trillion dollar innovation.

Re: Why Microsoft bought Skype

#48

Post by shareme »

mcantelon wrote: post #34

Tldr: Cringely believes Google is the next Microsoft. Microsoft is worried about its future and bought Skype so Google wouldn't buy Skype. Cringely believes Apple, however, is a magical unicorn that Ballmer cannot even comprehend.

Cringely is wrong again.. read Steve Levy's GooglePlex take on it..Google Passed on buying Skype not once but twice..

Re: Why Microsoft bought Skype

#49

Post by itgoon »

MS v. Google? v. Apple? After reading this, and the comments, and a little thinking about it, the more this makes sense.

MS has a clear weakness in its lineup. Skype brings a bunch of existing technology and know-how, not to mention all those sweet, sweet users.

Multiply by some factor of Ballmer being an idiot, and 8.5 is almost reasonable.

Part of what convinced me - and I realize HN comments are anectdotal - was people's impressions of Skype and Google Voice (I've done no more than played with each).

From the sounds of it, Skype's biggest issue is its UI. MS has plenty of experience (and some success ;) with good UIs and backend work.

Other than that, it satisfies its basic function well: it makes the calls. It sounds like Google Voice, at least internationally, isn't as straightforward.

So, they get the users, and a jump on the tech. Okay, decent, but not great, business decision.

Will they turn it into something successful? Ehhhh, I have my doubts. Who knows? Ballmer isn't actually an idiot; maybe he's learned something by now.

*Edit - spelling

Re: Why Microsoft bought Skype

#50

Post by raganwald »

contextfree wrote: post #41
gfodor wrote: post #20

Earlier quoted context omitted.

I agree with this wholeheartedly -- Microsoft's fatal error was assuming they would continue to be the dominant force in both consumer and enterprise computing. They still own the enterprise. Why they aren't happy with this and focus on taking steps to ensure their dominance there for the next decade is beyond me.

They think that what's popular with consumers will eventually make its way into enterprise. Or in other words, their consumer efforts are the steps they're taking to (try to) protect enterprise dominance in the long term.

You might have something there! A few years back I wondered if enterprise software was experiencing a disruption because of the way user expectations were being set outside of the company:

http://weblog.raganwald.com/2007/09/we-have-lost-control-of-...

Maybe Microsoft sees this they way you suggest and believes that by controlling the consumer experience, they will also control the enterprise experience. For example, if they control the dominant VOIP consumer application, their tools can dominate enterprise-VOIP integration.

I don't know if they have the management moxie to pull it off, but I think you may be right about what they're trying to do.

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