By: Aseem Gaurav, May 10, 2011
Microsoft on Tuesday agreed to buy Skype Global for $8.5 billion in all cash deal — the largest acquisition ever for the technology giant in the world of communication, information and entertainment. The agreement has been approved by the boards of directors of both Microsoft and Skype.
Microsoft will buy Luxembourg-based Skype from an investor group led by Silver Lake. The deal will give Microsoft the much needed boost in the telecommunications space as in voice services "Skype has certainly set the benchmark and gained a lot of traction." The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services.
Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.
Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.
"Skype is a phenomenal service that is loved by millions of people around the world," said Microsoft Chief Executive Steve Ballmer in a statement announcing the deal Tuesday. "Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world."
“Microsoft and Skype share the vision of bringing software innovation and products to our customers,” said Skype CEO Tony Bates. “Together, we will be able to accelerate Skype's plans to extend our global community and introduce new ways for everyone to communicate and collaborate,” Bates said.
Founded in 2003, Skype was acquired by eBay in September 2005, and then acquired by an investment group led by Silver Lake in November 2009. Skype at peak times, 23 million people are online at once. In its IPO filing last August, Skype said that it had 560m registered accounts as of last June, with 124 million active on a monthly basis.
Most people use Skype's free calling services, but the company is now planning to develop premium services such as group video calling and pursuing corporate accounts. Skype's rivals are Google Voice service and video chat client Fring.