On Microsoft buying Skype: A Strategic Move

It is not Google this time that is buying a company that deals with cutting edge social media/internet phones. This is Microsoft this time that is buying Skype for US$8.56 billion! Yes, after getting its major hand in Facebook, Microsoft has now looked into this i-telephony client.

In the chat/VOIP (Voice over Internet Protocol) client market, major players are Aol, Yahoo messenger, Msn messenger, Google talk, and Skype. From corporate image perspective, Skype and Aol have been standalone chat clients that provided voice services as the main focus of business, whereas MSN, Yahoo, and Googletalk were more like an extension services of search engine providers. Out of these chat clients, Skype has some unique features for which it stands out in the crowd. Now Skype being sold out to Microsoft which has its own MSN Messenger, purportedly doing the same functions, there is a big question of which one Microsoft would now promote to which market segment in the long run, and why. We won’t be surprised if there is an addition to login procedure where you can sign in with your Msn id and password, particularly when we are progressing towards an era of “open id”. We can even expect cross functionality of Msn Messenger and Skype, each of them being capable of importing and exporting each other’s contacts. What would be suspecting to most Skype users, in my humble opinion, is the Microsoft’s ability to collect and utilize private information. Now Skype being in Microsoft’s hand, it would be probably collecting more data than it used to, and cross-match everything across multi-platforms that Microsoft has already gained access to. Privacy has been lost long before we knew it, now it would just put another nail in its coffin.

Critics argue that, even though buying Skype could be viewed as a strategic move to compete with Google Voice (an innovative service by Google, currently limited to USA only), Microsoft should have considered whether Skype should fetch as much as US$8 billion plus. There are two answers to this issue. First, if you compare the telephony infrastructure that Skype has access to, including its ability to purchase foreign numbers, this would definitely pre-empt the Google’s move with Google Voice in its later venture in a global scale. Second, even though Skype could be used for free, its internet phone calls would cost money. The good news is, Skype already has 8 million users who pay, in contrast to much more overwhelming number of MSN Messenger users who pay nothing. In addition to all these information, there was a rumor in the market that Google and Facebook were willing to pay in between US$7 – 7.5 billion to buy Skype. I think that could be one of the reasons why a higher stake has been taken by Microsoft for not letting Skype get out of its hand.

Finally, having a good product in your portfolio may not guarantee success. It takes much deeper planning and execution to stay tuned with customers’ expectations. We wish Microsoft a happy journey with Skype.

End note: Other than buying a hot product (Skype) that was developed by others, I wish Microsoft would rather invest in fixing their own ailing and ever-defeated browser called “internet explorer”. Do you agree?

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About 1mmarketing

Working as Associate Professor, School of Business, United International University, Bangladesh; a North-American graduate, with doctoral studies from UUM, Malaysia, cherishing a wide-view of the world, with multiple interests in culture, people, traveling, and specifically marketing science. I have a colorful and diversified background with a blend of corporate experience, research, consulting, training, public speaking and teaching. I love to write about marketing issues that affect our lives, and talk about its direction that would promote the greatest human welfare.
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One Response to On Microsoft buying Skype: A Strategic Move

  1. Abdullah Al Mahmud Aumi says:

    Yes, sir i agree with the investment. But buying Skype is also a great move, its like one competitor is removed & which resources are helping to compete with other.

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