Weekly Update

How Microsoft Can Leverage Skype in the Living Room

This week’s news that Microsoft was acquiring Skype sent shockwaves through the tech industry, as much for the deal’s price tag as for its competitive implications across the various segments where Microsoft participates.

And there are a lot of those, including the enterprise, consumer, mobile, cloud and communications sectors. Much focus since the deal has been on the consumer space, and, in particular, on the possibilities of connecting Skype with Kinect. But there are many more ways to leverage Skype in the increasingly competitive digital living room. Microsoft’s intentions aren’t yet available, but as we wait for more news, here are a few potential ideas:

Skype as Smart-TV Platform

One of the most interesting stories to come out of CES was the fairly widespread adoption of Skype as the default video-chat platform for TV OEMs. The genesis of many of these announcements was the groundwork that Skype laid last year with Skypekit, a software software development kit (SDK) with API availability that allows TV OEMs to integrate Skype into their smart-TV platforms.

While it’s unclear how much Microsoft could leverage the existing beachhead established by Skype in the smart-TV space, that is worth trying. Right now Microsoft’s main living room play is the Xbox 360, but integrated-TV solutions are the future, and Microsoft  needs to establish itself here to counter Google and homegrown platforms like Samsung’s. Skype would be a start.

Skype as Social Glue Platform

Sure, Xbox Live is a big social network when you get down to it, but it’s largely limited to the Xbox console today (despite efforts to push it onto a mobile platform). Microsoft needs to get more social, and quick, as the social-TV space is set to explode in coming years. Here, Skype could help. It is, after all, the biggest social network outside of Facebook (a key Microsoft partner, by the way), and could be the centerpiece for Microsoft’s social-TV efforts. This would also tie together the various platforms for social: TV, mobile and web. Skype currently has strong presence on all three screens and instantly brings access to 145 million monthly users.

Skype as Mobile/TV Messaging Platform

One of the most interesting implications of the deal is what Microsoft can now do with Qik, which Skype acquired earlier this year. Qik allows for mobile video messaging; extending Skype’s real-time communication capabilities to include video messaging on the TV and on mobile devices could give Microsoft an advantage in the TV video communications space. Imagine sending video post cards to not only Xbox Live users, but also to Skype TV clients, Facebook-enabled TVs and other social-TV platforms that connect to Skype/Qik.

Ok, But Will They Screw It Up?

The question is, will Microsoft screw this up? After all, it seems many default to this opinion, mostly due to Microsoft’s track record as of late in the mobile space, and its mixed efforts at Living Room convergence (Media Center, anyone?).

There is a chance Microsoft could institute more onerous licensing restrictions around Skype, possibly requiring (or heavily suggesting) CE OEMs license a Windows OS as the underlying platform. Or the company might “bloat” the platform by integrating too much functionality into the software, as it has a tendency to do. But by keeping Skype as a separate division, Microsoft seems (at least for now) intent on not committing the sins of its past, and wants to make its $8.5 billion acquisition a cornerstone differentiator in the coming living room wars.

Question of the week

How can Microsoft leverage Skype in the battle for the digital living room?