Microsoft Buys Skype for $8.5 Billion - Why?

You’ve heard the rumors and now it is official, Microsoft has acquired Skype for a whopping $8.5 billion. On the face of it you may think that purchasing a company for such a vast amount given that Skype made a $7 million loss last year is somewhat bizarre, but I think there are several reasons for this purchase.

Firstly, the integration into existing products such as Xbox and Windows Phone 7, it certainly would be a contender for Apple’s Facetime if you implement in your living room, using Kinect!!

Secondly, with the up and coming cloud services Office365, Microsoft Lync will play a major part in providing business class services and the adoption of Skype will provide an inroad to a whole new client base. Making the move from a free product to a paid service in the region of $5 for a bundle of value add services seems to make sense.

Finally, competition, in my opinion if you have a lot of money in the bank then it makes sense to purchase an existing technology to enhance your portfolio or indeed if you want your technology to succeed then simply remove your competition!