Did Microsoft Overpay to Acquire Skype?

Skype is a VoIP service or free phone calls over the Internet using their computers or smartphones. Users can also make calls to both traditional land-line telephones and mobile phones which can be made for a fee using a debit-based user account system. It has 663 million registered users as of 2010.

Software giant Microsoft purchases Skype for US$ 7.8 Bilion

Microsoft today announced the successful purchase of Internet Phone Service Skype for $8.5 Billion dollars cash. Folks, now that’s a really lot of money and is the largest acquisition ever by the US Software Giant. I really feel that’s way too much overpriced. According to a Wall Street Journal Report, the deal could have totally cost Microsoft more than $7 billion. Microsoft is certainly looking to expand its Internet business.

We are no strangers to the news that Cisco, Google and Facebook were fore-runners to buy Skype, which had earlier called off its IPO this year in-order to gain negotiating time. Skype, on revenue of US$860 million in 2010 lost US$7 million.

Microsoft’s purpose to buy Skype may be unknown, but we are sure they will try and put it to good use; in what way? Only time will tell. Buying Skype could help Microsoft to throw spot light at its business software image. In an era where Internet is a requirement on the go via smartphones, it’ll surely help Microsoft gain power in the ever-expanding smartphone market. However, Facebook or Google would have surely pulled off a deal at a way lesser price.

Apple probably did the right thing with FaceTime? They promised to make it an open standard, which means Apple might well have a video calling service of its own that runs on millions of iOS devices and others via compatible software? Worth saving $8.5 billion.


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