Tuesday, 10 May 2011

Web 3.0 Lab: Microsoft near $7 billion deal for Skype

Microsoft to buy Skype, will it be a game changer?

Microsoft is putting the finishing touches on a deal to buy Internet phone company Skype for between $7 billion and $8 billion, and a deal could be announced as early as tomorrow, according to a Wall Street Journal report.

The report cited people familiar with the matter who said negotiations were ongoing and could still fall apart. Microsoft representatives did not immediately respond to a request for comment.

The Luxembourg-based company provides a software-based communications service that allows people to make free voice and video calls over the Internet to other Skype users using almost any Internet-connected device. The voice over Internet Protocol, or VoIP service also allows people to make and receive calls from regular telephone numbers using a paid service.

Interest in the Internet telephony giant has been high since online auction giant eBay, which had acquired Skype in 2006, sold off its controlling interest in Skype. Facebook and Google had previously been mentioned as possible suitors for the company, which has been around since 2003 and averages 124 million connected users per month.

The combination of the deal of Nokia and Skype could suddenly make Windows 7 mobile a game changer in the mobile industry. But the news so far has had no impact on Microsoft's stock. Looks like traders are taking a wait and see attitude about Microsoft's efforts to take over this stock. Certainly Microsoft's former domination of the PC universe has suffered under Web 2.0 failures. With Google and Facebook taking a lead people might be wise to be unsure that Microsoft will be able to take advantage of the mobile Internet or Web 3.0.

Out take is that Microsoft is very well position to make better use of Skype than eBay. Skype fits nicely in to the Office 365. And Skype will also extend the Nokia Windows 7 competitive position. We have noticed that the movement to mobile devices is speeding up the pace at which people change machines. People might use a PC for 5 to 7 years. People get new smartphones ever couple of years. So in 4 years from now people could have two upgrades of their smartphones. We have also seen people willing to change smartphones. People have moved from Palm to RIM, RIM to iPhones and iPhone to Android already. If the Windows 7 mobile phone on Nokia creates an attractive offering it might only take a few years for Microsoft to retake much of this area.

In the Pro are for Microsoft we have:

  • Microsoft strong position in PC making it still the main platform people create and use information.
  • Nokia new phones are excellent.
  • Microsoft Office 365 could become the Office productivity platform of almost all business users very soon.
  • Skype purchase.
  • The excellent reviews Windows 7 Mobile has gotten.

Against Microsoft are these problems:
  • Weak mobile reputation.
  • Strong position of Android in mobile area.
  • Web 2.0 owned by other firms like Google and Facebook.
Though it is hard to predict the future things look a lot better for Microsoft today after the Skype deal.