back to article Microsoft Skype: How the VCs won and Ballmer overpaid

A trio of Silicon Valley venture capitalists have made out handsomely from Microsoft's $8.5bn purchase of Web 2.0 carrier Skype. The money men have earned themselves $6.6bn in cash selling the unwanted web-telco company that they bought a $1.9bn stake in from eBay, while dodging the pain, paperwork, and inevitable disappointment …

COMMENTS

This topic is closed for new posts.

Page:

FAIL

What about Donahoe's share?

Even though eBay apparently still owns 30% of Skype, if this Skype deal does go ahead at anywhere near this price it will be interesting to see how eBay’s "Chairman Ho" will spin the matter on his CV—which he will undoubtedly have to update in the not too distant future, if his ongoing dismal performance at eBay is any guide.

My God, who would now employ this cretin? Regrettably, I think that when the time comes we will be surprised how this fool and his Bain Tool Kit will slide into another senior position somewhere. For instance, incomprehensively, Intel has this headless turkey on its Board!

Enron / eBay / PayPal / Donahoe: Dead Men Walking.

1
0
Anonymous Coward

Xbox

I just hope they release an Xbox Kinect version soon, and don't cripple it to limit you to talking to other XBoxes.

I wonder what will happen to Sony's PSP skype now?

2
0

Re

That was the first thing I thought of when I saw the article headline.

Kinect with your friends though Microsoft Skype!

We've already seen Kinect used to make a motion tracking eye of Sauron, why not use it for automatically adjusting video conferencing?

0
0

Cheap international calls

One big Skype plus for me is cheap international calls.

I have friends and family in USA and Europe, calling them by Skype is around 10% of the cost of calling them via landline or, perish the thought, mobile.

Call quality from my laptop is same or better than via a phone.

1
0
Silver badge
Happy

Could this be a delayed April Fools joke?

Business media channels report that the decision was made by the Microsoft way back in April.

Could it be the jokes on MS?

At least MS won't have my real email address, I always use a different address, each time, when signing up for things.

0
0
Thumb Down

Shouuld have paid attention in math class

"40 per cent customer growth and 20 per cent revenue growth means only half of new users are paying for Skype"

Assuming you can say anything from the figures above it would be that new customers only spend half of what the existing base of customers do. I doubt very much that half of new customers pay for Skype.

2
0

Restated in slightly different terms

Their revenue per customer this year is about 85% of what it was last year. Not a good trend, methinks...

And there are plenty of alternatives out there. We all use Skype at work but my boss is already looking at alternatives.

As to overpaying - $8.5 billion for a company that has $860 million in revenue?? All I can think of is MS must have been desperate for a tax write-off...

2
0
Black Helicopters

Missing Something

MS didn't over pay in the slightest. This whole buyout was obviously done at the behest of the department of homeland security, as they couldn't eavesdrop on terrorist calls, they got a nice frindly US company to buy out Skype so that they can listen. Now watch some nice fat juicy government contracts go to MS.

2
0
Silver badge

Dream on!

I seem to remember that Hotmail became like a Prozac induced nightmare.

Pop-ups with smiley, "have a nice day" social integration useless rubbish. Adverts for "groovy stuff" and other unwanted geographical based information like weather etc.

I also seem to remember using Windows but it might have just been a drug induced dream.

Our government is meant to protect us from drug dealers, maybe they should start doing something.

6
2
Happy

Don't worry.

Microsoft are still committed to supporting Skype on Unix platforms - based on rumours from inside the company, Skype for Xenix is just around the corner.

2
0
Gates Horns

Dear Steve

I have a handful of magic beans here. Yours for $8bn. Deal?

1
0
Coat

Not a chance.

MS knows Magic Beans come from Sun, which is now Oracle.

0
0

oh oh

I use Skype exclusivly for phone calls from home, and have done so for the past 5 or 6 years. I live in Belgium, but parents live in Ireland, with other family members all over the world. My wife the same. However, we don't use the windows or mac clients.

I have a Skype Dualphone which plugs in directly into the router. Or I use the Skype client for the iPhone or Android (my wifes and my mobile phones), so chat and video calls are irrelevant to me.

No Belgian telecoms operater can come close to matching the prices Skype offer. I pay about 6EUR for a package which consists of free landline calls to most of the EU, and a local number in Ireland. Calls to mobiles in an eastern European country are 24c/min.

I calculated that my savings are in the region of about 50EUR per month.

I really really hope that MS don't force me to change to someone else.

0
0
Flame

Everything is cloud/azure and intergration is heir new religion

As far as I can see, MS is being totally re-focused. Its entire build processes are being re-aligned and its all based around cloud/azure. The add ins that you build a cloud structure are a sum of parts.

In future, if/when Skype is embedded deep in most MS products, with deep intergrations, and the data, compute and managemet is in azure/local/hybrid, is cheap, and powerful, and fixes multiple areas of legacy difficulty/failing, its basically starting again with a blank page, but better.

Microsoft has for a while been looking to try and bring communication together and have it intergrated. Buying skype and its move into azure is all part of a new strategic aim at MS.

Don't under estimate this, every sinew there is being driven by this, for this, to this. There is no question on the committment or where they want to go, only if they can hang it al together.

Expect a lot of if 'Azure'.

0
0
FAIL

Problem with Skype

The problem with Skype, and even more so now Microsoft are involved, is that it is the absolute antithesis of what telecommunications needs to be about.

A subscriber with one telephone company has to be able at least to contact subscribers with any other telephone company. That much ought to be self-evident. It is also highly desirable, where multiple telephone companies are competing for business in the same physical space, to be able to use the same equipment with any of them. Such interoperability requires open standards that can be implemented by anybody, and the most preferable way to achieve this is through an Open Source reference implementation (think: OpenBSD and the Secure Shell, or Apache and HTTP servers). Which is why, among those in the know, voice-over-IP invariably means Asterisk.

Skype's proprietary nature means that only Skype "subscribers" can talk to other Skype "subscribers", and potentially runs afoul of some European countries' telecommunications deregulation and competition laws (except, as we all know, normal laws don't apply anywhere there is a computer involved).

My guess is, what Microsoft want out of this deal are (1) the measures built into Skype to frustrate reverse engineering and (2) the increased opportunities for vendor lock-in which will inevitably come from integrating Skype into Office.

3
1
Grenade

@A J Stiles

Interoperability does not in any way require open standards. Skype already have remarkable interoperability in all the places that matter. I have no problems calling numbers on landlines, mobiles or other VOIP facilities using Skype. Interoperability for telecomms means having the right interfaces at the boundary of your system. Running an efficient system means having the right technology for the platform on which you operate, regardless of whether that is an open source implementation or something else entirely. Running on the most appropriate technology is the reason in the US Verizon are on different technologies to AT&T and provide a far superior service as such.

0
2
WTF?

Epic FAIL

"Interoperability does not in any way require open standards."

Did you really just write that?

Do you not understand the meaning of interoperability, or do you not understand the meaning of open standards? Because politeness forbids me to accuse you of smoking crack.

1
0
Stop

Semi fail at worst

Your first post is flailing in the wrong direction.

Perhaps you aren't aware that

a) Skype calls are gatewayed into national phone networks worldwide, leading to local call prices for many (maybe most) skype-to-landline or skype-to-mobile calls

b) Skype will happily sell you a voice line number located in the geography of your choice, and will then route calls to that number to your Skype ID

Only one end of that gateway is using open standards, and it's not the Skype end.

1
0
Unhappy

Alternatives?

Like quite a few here, I am glancing around for an alternative service to Skype which offers everything Skype does (stick with me here). I must say, it's a tall order in my case, not least because I want to make voice (and if poss, video) calls not only between desktops/laptops (Win, Mac, Lin, etc.), but between those and Nokia (Symbian) mobiles (mine and my wife's).

Voice calls over the Net? No problem - we use a SIP provider, compatible with all the above platforms.

Video calls over the Net? A tougher call, especially when you bring the Nokias into the equation. There are plenty of other cross-platform "videophone" solutions for the desktop/laptop, but very few on Symbian (and none capable of desktop-Symbian video). We use Fring for Net-based video calls between our mobiles, but Fring has no desktop client - it can hook into Google Talk, but can't offer video-calling via the service.

I think I'll be sticking with Skype for the moment (for lack of a "drop-in" alternative, and because we call my parents with Skype when they are abroad), but speaking as a user of Skype on Linux and Symbian, that doesn't mean I'm exactly welcoming this development with open arms.

2
0

Patent portfolio

I wonder what the Skype patent portfolio looks like - maybe MS figures that they can make some money off of it.

2
0
Silver badge

Skype is great for travellers

The only time I use Skype is when I am in a hotel room in a foreign country. Nearly-free calls back to the UK via free wireless and Skype Out easily beat arm-and-leg mobile rates. It does work absolutely great for this with zero setup problems.

Yes I am a SIP user the rest of the time but while travelling I really hate being behind an unknown NAT fiddling with the stun settings in the hope of getting my call working.

0
0
Silver badge
FAIL

Office on Mac?

Oh yes, good example. Does Ballmer know that Excel for Mac does not support VB scripts anymore? Does he know the pain that resulted for the users when that support was dropped?

2
0

No Skype on WM7 was a dealbreaker for me

At present there is no version of Skype for WM7.

There is no flash support on the iPhone.

That's why I bought an Android phone.

If there was no Skype or Flash on an iPhone then you'd have to be out of your mind to buy one.

Did they overpay? probably, but it gives them a lot of power.

0
0
Gold badge
Stop

Just when I thought the Skype UI couldn't get worse..

.. there comes Microsoft, which means it'll get the dreaded, productivity removing "ribbon" interface. The Skype UI on OSX is rubbish, but I think it will look like genius compared to what will happen when MS gets its hands on it :-(

2
0
Grenade

Well thats gonna kill Skype... Time to find another service!

So MicroShite bought skype!! and as steve Davies says a rather large userbase will become a rather shrinking database...

It won't be long before people move from Skype to seomthing like Qnext or something less microshitty.

All that microsoft manages to do is to kill everything it buys, bloat it and add that useless service called bing. they refuse to conform to standards with IE so why should they make skype a good service.

Its no wonder that Microsoft is failing rapidly.

Sorry to be negative, oh well.

3
0
Silver badge
Unhappy

Azure-isation of Skype infrastructure

... that will do for the reliability.

0
0

3-way videochats

Today, Skype charges $8.50 a month for the privilege of starting a group video chat. If Microsoft offers it for free--on any Skype platform--I'm all for it.

0
0
WTF?

Ewwwwwwwww!

'Microsoft's biggest excuse for not putting apps such as Silverlight on other platforms has been its constrained resources....'

Pass the keyboard cleaner someone, there's a load of cheese and onion sandwich in mine now!

2
0
Stop

Y buy skype

Doesnt MSN Messenger have all these features..........?

0
0

Video - why does everyone miss the point?

2 Reasons why video calling sucks:

1. You are trapped in front of your computer. With a voice call you can use a headset (as we frequently do) and wander round the house/office, make a cup of tea, pick your nose etc.

2. Strangely enough video doesn't actually add anything to the experience of communicating. I don't actually need to see the person I'm talking to. Maybe it's because we're experienced at having no video, but the video really is a distraction that ties you to one task - the video call.

1
0

Video doesn't add anything?

"Strangely enough video doesn't actually add anything to the experience of communicating."

Ok now turn the camera to point at the back of the computer. Oh, I see. That black cable has come undone. Plug it back into the wall.

0
0
FAIL

The licensing plans will be cool !

So Skype will be free provided you have it pre-installed on a new PC. You'll be entitled to a certain amount of words per hour on the 'Home' version over which you will have to subscribe to the 'Sentence Subscription Assurance' plan which will allow you talk a little longer but without intrusive voice ads from Go Compare.

Business users of course will have per user licencing, policed by voice recognition technology and tied to being able to talk only in the area you were when you purchased your subscription. Outside of that area another licence will have to be purchased for each square foot you enter plus a Client Calling Licence for each new caller you contact using the service.

I believe Skype, in time, will be renamed Wank.

4
0

Extend? Embrace? Extinguish?

I would think twice before laying bets on this one, given the way M$ managed to screw over the DoJ, but the XMX strategy is time-dependent and needs the moves to be made at the critical juncture. I suspect Ballmer is rehearsing his past successes with this one, and given the latest financials vis-a-vis Apple, it smacks of desperation. In the past M$ has relied more on bludgeon than finesse to crowbar its successes, so it will be entertaining to watch the SS M$ gradually sink below the waves (unless Windoze for Warships fails in action first, and we all disappear in puff of plasma).

2
0
Silver badge

Non-microsoft software

Balmer wanted people to be able to make Skype calls on winmobile7.

Nobody has been brave enough to explain to him that you can run non-MS software on Windows, so he assumed they had to buy the company

0
0
J 3
Joke

"today and into the future"

Well, next week qualifies as "into the future", doesn't it?

0
0
FAIL

Captain Business 101 Here

Save $7 Billion and do it yourselves, but better. Peer to peer is inefficient as it sits. $1 Billion would get you a hell of a lot of tech and R&D. If I were a shareholder (I'm smarter than that) I would be pissed off right about now.

0
0
FAIL

Xbox Live Gold Feature

soon then....

Remove PSP support, can the PS3 Skye launch.,,.,,

0
0
Badgers

I have it on good authority...

..that Microsoft are buying Woolworths next - keep it under your hat

0
1

DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS!

http://www.youtube.com/watch?v=d_AP3SGMxxM

WHOOOOOOHOOOOO YEEEEEEE WWWWHOOOOOO

Maybe he has a hankerin' to do some more jumpin'?

0
0
Pint

Steve B.: Head-In-Sand Chief

..good luck steve! telecom companies worldwide are seeing dropping 'voice' calls and plateauing SMS revenues and while skype calls might be growing its not growing as fast as the alternatives ie email, social networks etc. I wont be surprised if in a few years we'll see companies with absolutely no phone number listed.

beer.. to toast the band of money men laughing their way to the bank with Bill and Steve's money!

0
0

It's got to be about the IP hasn't it?

See title.

0
0

About IP?

You probably are very correct. They can bludgeon ANYone whose implementations are perilously close to Skype's. Then, ms can screw those companies out of royalties, or sue/litigate them to death, or merely publicly threaten them so that investors of those targets withdraw future funding, just like ms' 1990s vaporware or delayware tactics.

0
0

Not just 1990s

Wonder how far that "settlement" of Novell's pushed them into the red?

While Matt Asay might like to troll on about Microsoft being "more open than Google", the facts speak very very differently. At least Android 3.0 WILL be opened up when it's ready to be. I don't think the EFF have infinite patience with GPL software in that regard. Can you say the same of Windows, or of anything that Microsoft do?

The only time I've seen Microsoft release genuinely free open-source software is when they were forced to by a court after being found out to be using someone else's intellectual property with cavalier disregard for the licensing terms. No, not just threatened in vague terms by someone who wouldn't even tell them where they were violating. They were caught with their hands in the till, cookie jar, with their pants down and very red faced, however you'd like to paint it. Even then they managed to paint it as a public gesture of friendship towards the "open source community", whatever that means.

Oh how ironic.

0
0
Silver badge
Gates Horns

Communicator replacement?

How about selling private skype clouds or webex-type services? Skype's reasonably reliable and has an easy client setup. See how much a video conference hardware + software system costs and then tell me there's no money it! They could do a sort of "google mail for business" thing with a private grouping hosted on an external cloud. All you need is to open a couple of firewall ports and all your internal pc's get an internal voip capability via your exchange/AD server.

Then there's the IP. Maybe they want to integrate proprietary things into WinMoPho so that when you walk into the office you pick up your AD assigned deskphone number to your mobile.

Have you ever seen the price tag on a cisco ip phone? You could get two pc's for that. They've admitted Windows on ARM, how about getting a slice of all that deskphone business by wrapping it all into AD?

How about voip based on email addresses? If Exchange does that, there are lots of companies using exchange who could turn that feature on in a later release. With a large potential user base (via exchange, not skype), it might be a reason to stick with exchange/windows rather than a unix mail system. A private skype/pstn gateway (exchange? communicator?) could try dialing free skype addresses and fall back to pstn if that fails.

If you aren't concentrating on pushing skype to price-sensitive end-users, there are possibilities out there.

But 8bn? Barking!

Cue google voice going international.... because they can and it makes life fun for their staff :)

0
0
Gates Horns

Quite worried about this TBH

I use Skype everyday to work with my Team in the states in order to run a business.

I use all of its features. Text messaging, Regular calls, Video calls, Screen sharing, Skype numbers, Calling US landlines.. everything - on a Mac, on Windows and on several Android devices. I pay, but on the whole, it's very reasonable.

While Microsoft appears to have been better behaved of late, I'm worried that they're going to pull the rug on this awesome product or change it to make it something that it's not. Or force changes in how I use it. Basically, they're gonna mess me about, reduce my options and charge me more for it.

I'm perhaps reacting in a knee-jerky kind-of way but I wonder how long the good times will last?..

0
0
Silver badge
FAIL

Microshaft buys Skype

Pressed, Ballmer responded: "I said it and I mean it."

If you go by their past well deserved reputation of "embrace, extend and extinguish"; do not believe a fscking word Ballmer says.

Give it 18 to 24 months, and only Windows will be a supported O/S. Skype users, who ran away from anything Microsoft, the time to jump ship IS NOW.

0
0
Boffin

Use Pidgin instead...

Pidgin is already ahead of skype in combining various accounts such as Gmail, Yahoo, ICQ, MS Messenger & others a well.

You can chat with these different accounts within Pidgin, something skype doesn't do. Pidgin is currently being ported to Android & runs on Linux, Windows & Apple. I guess someday iPhone may be ported too but I'd expect that to happen only after it is stable on Android...

0
0

Page:

This topic is closed for new posts.

Forums

Biting the hand that feeds IT © 1998–2018