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So Much for Skype

May 10, 2011 7:28:09.826

If this is true, then I don't hold out a lot of hope for the future of Skype:

The Wall Street Journal reported earlier tonight that Microsoft in what would be its most aggressive acquisition in the digital space was zeroing in on buying Skype for $8.5 billion all in with an assumption of the Luxembourg-based company’s debt.

Why do I say that? Microsoft's track record with this sort of thing. First, they tend to push all staff to come to Redmond - that will cut down on the core development team right there. Second, Microsoft pushes an "eat your own dogfood" philosophy. While I think that's a great idea in general, it's not so great for mature products. If MS does that, and decides to spend an eternity rewriting the core of Skype to be a Windows specific service, then it's just death. Not because Windows is terrible, but because that's an awful lot of wasted motion for an existing application.

That's not all though - consider the revenue picture:

With Skype, which has been aggressively expanding, Microsoft will continue to lose money in its Internet efforts. Skype lost $7 million on revenue of $860 million. Operating profits, which Skype preferred to highlight, were $264 million.

The last thing that Microsoft needs is bigger losses from their online division.

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posted by James Robertson

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