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Summary:

People familiar with Skype indicate that some kind of news is forthcoming later this week, perhaps as soon as Monday. It is also rumored that Microsoft is a late entrant and is said to be in talks with Skype, the Internet telephony company.

Photo of Microsoft Campus courtesy of Flickr User, Wonderlane under Creative Commons license.

For the past week or so, rumors have been swirling around Skype, the Internet telephony company. Reuters has reported that the company has been in talks with both Facebook and Google, either for a partnership or for an outright acquisition. And if my sources are right, we will find out more details very soon.

How soon? People familiar with Skype indicate that some kind of news is forthcoming later this week, perhaps as soon as Monday. At present, corporate attorneys and other senior managers are burning the midnight oil this weekend, ahead of some kind of announcement. A Skype person replied to my email query by saying, “Thanks for reaching out – as a matter of practice  - Skype does not comment on rumor or speculation.”

Sources also say that Microsoft has entered the mix and is interested in either partnering with, acquiring or investing in Skype. While they are late entrants to this game, Microsoft’s interest makes sense for several reasons:

  • Skype would givemMicrosoft a big boost in the hotly contested enterprise collaboration market places, thanks to Skype’s voice, video and sharing capabilities. It would be particularly useful for competing against Cisco and Google, two of its main rivals in the collaboration business.
  • It would give them a must-have application/service that can help with the adoption of the future versions of Windows Mobile operating system.
  • it would give Microsoft an outside chance of working with carriers, many of them looking to partner with Skype as they start to transition to LTE-based networks.

What is my take on all the rumors? First of all, this is not the first time we have heard them. While I clearly see value in these companies partnering with Skype, an acquisition doesn’t make much sense. But an investment from one of the three could give Skype the cash cushion as it waits out for its initial public offering, and could also be a way to buy out an antsy investor. And while a partnership would make sense for Facebook, it doesn’t need to acquire Skype — I’ve heard the two companies are about to make some kind of joint product announcement soon.

Photo of Microsoft Campus courtesy of Flickr User, Wonderlane under Creative Commons license

  1. Google buys Skype and we get an instant VoIP solution, then hopefully they’ll pour a bit of money into it to make it more reliable.

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    1. TWiT Commander Monday, May 9, 2011

      Nope. Google buys Skype and it disappears like Gizmo did. v_v

      I hope I am wrong.

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  2. There is every chance that any of these three suitors could potentially bury and the brand equity and culture of the one and only great telco alternative. Skype is the “other” beef, the counterbalance to the telco hegemony. If Skype is swallowed to be mismanaged by a Microsoft, falls into the bottom pit of the Googleplex never to emerge, or to be dismembered and dissected by the maverick facebook (the privacy nightmare has only just begun), we shall all be the poorer.

    Hey, I am sympathetic to the notion of ‘harvesting of investment value’, but the principals of Skype are already fabulously wealthy – at some point, the notion of industry and sector stewardship must be considered, and how, pray tell, is operating a multibillion dollar VOIP and collaboration venture that throws off hundreds of millions in profits a bad thing. To simple throw the business to well known “brain and innovation black-holes”, is borderline irresponsible.

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    1. Well said.

      Of the three, I’d root for Google, but then Google did just kill Gizmo…

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      1. They probably should not have bought Gizmo in the first place. It was well intentioned to build a standards based VoIP client, but nobody used it, and the call quality was generally not very good.

        If Google bought Skype and made it more standards compliant, and integrated it with Google Voice, that could be pretty interesting. Google has been pushing development tools (App Engine, etc), and has a great platform.

        On the other hand, mergers between big companies rarely work out very well, so I’d rather see Skype remain independent.

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  3. Hmm:
    Exchange, integrate it as personal conferencing: Task oriented messaging, today’s unified messaging seems more like a relic of the 90′s, it’s like programing with global variables. To get the data flow under control we need to go down to task level.

    Mobile OS: Tiles show already that MS is thinking about task orientation. Allow developers to take advantage of it as differentiator to the rest.

    FB: Deepen partnership, allow different task on FB to integrate with it, don’t take FB mail as the enemy to exchange. Take it as a personal task, extend it with professional tasks ….

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  4. Dilip Andrade Sunday, May 8, 2011

    Taking a look at the people who bought into Skype, a quick sale doesn’t seem in character. If I recall correctly, the Canada Pension Plan Investment Board was one of the bigger buyers through the fund run by SilverLake. CPPIB isn’t typically a buy and quick sale profile. It appeared at the time of the purchase that this was an investment that viewed Skype as a form of utility that generally blended with other parts of the investment portfolio.

    I’m not saying that a quick buck isn’t what a government pension plan is looking for (especially when there’s pressure to show good returns in a weak market), but the pressure for a quick return doesn’t seem to be apparent right now.

    I’d put my money on some partnerships that would bulk up the reserves and allow progress towards and IPO.

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  5. I don’t want Facebook raping Skype on the privacy side, handing your Skype credentials over to scabby app developers as they are so desperate to do with real phone numbers, etc.

    Google buying it seems like a mistake too … they don’t support anything, where are millions of Skype users going to go to when they have a problem or feedback?

    MS also seems like a bad idea .. some of their non-Windows software is pretty meh, what would they do with all the non-Windows versions of Skype?

    Having to choose between no privacy, no support, or single-platform is a tough decision cause they’re all such great options.

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  6. “Skype would givemMicrosoft a big boost in the hotly contested enterprise collaboration market places…”
    Microsoft has enough and even better products in this area with exchange, lync etc. It would be more about the brand and user base as it would be about the technology. Skype is a consumer brand and their features focus on that, nevertheless it wouldn’t hurt to own it.

    “It would give them a must-have application/service that can help with the adoption of the future versions of Windows Mobile operating system.”
    Skype for WP7 is coming this fall with the Mango Update. Pre-Release versions have been already shown publicly, you don’t have to own Skype to pull that one either …

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    1. Dan Becker Sunday, May 8, 2011

      Maybe a Lync-to-Skype gateway so Lync and Skype users can call each other without going through PSTN. (PIC has long allowed Lync users to IM with AIM, Yahoo and Messenger users.)

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  7. Eventhough I know they will totally mismanage it as a product, only Microsoft has the pull with the carriers to get Skype on mobile handsets.

    Carriers hate all VoIP more than anything, the very idea of their cash cow ( call minutes and SMS ) being usurped by efficient data based voice communication fills them them rage.

    …but if Ballmer promises the carriers he will intentionally make Skype *less* efficient, cripple it for any other mobile OS besides Windows 7, quadrupedal how much data it chews up, they be more open to it being on mobile phones.

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  8. Small typo: “givemMicrosoft” – extra

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  9. It’s called Windows Phone. Not Windows Mobile. #really?

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    1. #McPointless

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  10. If Microsoft partners with or buys Skype, it should be for the pro-sumer side, not enterprise UC. Skype’s protocol is never going to pass any of the big-corp compliance requirements and besides Microsoft has Lync for that market.

    Embedding Skype as standard in IE9 – and supporting it in hotmail – that makes more sense. Or possibly some Azure cloud angle….

    But given the lack of uptake from Facetime (and Apples reneging on releasing the protocol) I’d say they should be interested.

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