Microsoft just snatched up Skype for $8.5
bajillion billion dollars and boy is everyone going crazy about it! Many are saying that Microsoft overpaid for this acquisition but you have to keep in mind that Skype was pretty much guaranteed to file for an IPO this year. Microsoft had to pony up the cash to not only convince Skype to join its camp, but to offset the profits cash that would be lost if Skype had gone forward with its IPO filing. Personally I’m wary of this deal because Microsoft has a terrible acquisition track record. The majority of the biggest acquisitions it has made have ended up going nowhere or ditched in favor of an internal Microsoft product (Danger, aQuantive, Great Plains, WebTV, and Hotmail easily come to mind).
However we’ve recently seen a change in direction for Microsoft. It’s coming out hard and coming out swinging by spending cash on everything it can. From search to Windows Phone and ARM optimization to the cloud. It’s finally hit home at Redmond that the post-PC world is on its way. Granted the PC won’t ever die, but Microsoft realizes that it can no longer depend solely on Windows as its primary revenue source. The Skype acquisition may be Microsoft’s shrewdest move yet, taking a page straight out of the Book of Apple.
Blasphemy you say? Not so much. When Apple released the iPod in 2001 it completely changed the portable media landscape. There’s not much to elaborate on this since it is common knowledge. However if you recall back to those dark days 10 years ago if you were a Windows user you were pretty much out of luck when it came to having an iPod. iTunes was an Apple-only product from 2001 until 2003 when iTunes 4.1 brought support for Windows 2000 and XP. Although this seems like a no-brainer move on Apple’s part, it was actually a wonderfully executed brand infiltration. Steve Jobs knew that he couldn’t get everyone to buy an Apple computer just to use an iPod. Instead of bringing people to Apple, Jobs decided to bring Apple to the people. And so Microsoft’s worst nightmare began: Apple began taking over slowly from inside Microsoft’s own operating system.
The advantages of push over pull that Apple relied on to dominate the MP3 player market still hold true today, and Microsoft is relying on that with the acquisition of Skype. Skype has already done most of the work in terms of being available on a wide variety of platforms. Boosted by the fact that it is one of the most used VoIP services in the world, Microsoft has just acquired the opportunity to become an almost guaranteed presence on everyone’s computer, just like Apple did with iTunes. This time, however, Microsoft has the advantage by not being limited to just computers since Skype is available on devices like smartphones and tablets. And since all the hardware is already in place for a VoIP possibility when it comes to the Xbox 360 and the Kinect, we will definitely be seeing a Skype experience integrated into our living rooms. Any fears that exist that Microsoft will kill off Skype on Android and iOS are purely bogus. Microsoft now controls the gateway to the VoIP world and it will do what it does best: maximize penetration. Oh and it will penetrate deep. So deep that just the news of the acquisition are making FaceTime look inadequate. Apple had a nice flirtation in the spotlight with FaceTime, and while everyone was going bananas about FaceTime and its ability to video chat with people on Apple computers as well, it is burdened by the same walled garden iTunes was burdened with back in its first couple years of existence.
With Qik out of the picture (and in Skype’s hands, and therefore in Microsoft’s) this leave Google Voice as the other main competitor that can go toe-to-toe with Skype. Microsoft has a lot of work to do. It is very easy to be handed something where most of the work is already done, and it is very easy to give it less attention because of that. Let’s hope this deal isn’t just another footnote in Microsoft’s long history of failed acquisitions.