Why did Microsoft buy Skype? Part-II

Microsoft bought Skype for $8 Billion deal. That looked like an amazing move and at a discounted price if we compare that with Facebook. Skype had over 500 million users as compared to 700 million of Facebook at the time of the deal.  Let’s compare Skype and Facebook.

• Skype’s over 500 million users as compared to over 700 million of Facebook.
• Skype’s revenue of $860 million in 2010 as compared to $1.86 Billion of Facebook.
• Facebook operates on Web, Skype is mostly Desktop based!

Here the 3rd point is distinctive. Skype is aligned with Microsoft in the Desktop Service space and hence made a perfect sense for Microsoft.

             Microsoft CEO Steve Ballmer and Skype CEO Tony Bates (right) discuss the future following Microsoft's purchase of Skype.

Photograph: KimihiroHoshino/AFP/Getty

A few possibilities for Skype:

• Desktop Software as a Service: Skype may be part of Windows distributions being a Microsoft Software. People will not be needing to install it and will ship with Windows. Will Microsoft charge for the service in the same way? May be. Microsoft will have an App store for Desktop Software – May be!
• Gaming Platform: Tencent has a key product which is called QQ Messenger. Tencent is bigger than Facebook in userbase and generated $3 Billion in revenue in 2010. Microsoft is already working in this direction.
• The worst Case: As Adobe keeps improving the Flash platform and HTML5 keeps coming – it is becoming easier to implement voice and video calling over the Web. This renders the Skype’s FREE features redundant. The future will belong to web. Skype can still live as part of Microsoft world but won’t be growing much.

It looks like Skype will need to keep pushing the envelope in QQ Messenger’s direction. After all, Kool kids of tomorrow might not really like to download something to make calls.
Also see Why did Microsoft buy Skype? Part-I