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Can Skype Help Microsoft Beat Google?

Major Implications Come with Microsoft's Biggest Acquisition to Date

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Can Skype Help Microsoft Beat Google?
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You’ve probably heard by now that Microsoft is buying Skype (pending regulatory approval). This is Microsoft’s biggest acquisition to date at $8.5 billion, and Skype’s second acquisition (it’s already been bought and sold by eBay). Since Skype’s release from eBay, it has been quite busy adding features and functionalities, and even making some acquisitions of its own, such as that of live streaming video service Qik.

Was this acquisition a good idea? Comment here.

Skype has a reported 663 million registered users and 145 million average connected users. The company recently announced a record of 30 million users online at the same time.

The deal has enormous implications, not only for Microsoft’s own offerings, but for the industry at large. There are also plenty of concerns. Let’s get to those first.

Concerns

Clearly, Skype has a big user base, and users have the right to be worried about what is going to become of their beloved service in the hands of a giant like Microsoft. Especially considering Microsoft’s track record of acquisitions (laid out its graphic nature here).

Marshall Kirkpatrick at ReadWriteWeb brings up some reasonable fears, such as product neglect and malware issues. “Will Skype in 14 years look like Hotmail does today?” he asks. “Malware is already an issue for Skype and of course it’s a well known part of the Microsoft landscape,” he also notes.

How will it affect use across various platforms? Microsoft says it will continue to invest in and support Skype clients on non-Microsoft platforms. Still, this is a little vague, and considering how much head butting goes on between Microsoft and Google, it wouldn’t be an enormous shock to see some issues raised in this area in the future.

On reassuring the continued support of other platforms, Steve Ballmer said at the press conference, “I said it and I mean it. We will continue to support non-Microsoft platforms.”

Steve Ballmer Talks Skype

“We’re one of the companies that has a track record of doing this,” he added. Still, does that mean all platforms?

The fact that this is such a huge acquisition for Microsoft, however, should be an indication that the company will take it very seriously, as it has so much invested in Skype’s future success.

Mobile

Skype, which has more users than Twitter, should help Microsoft on numerous strategic levels. Mobile would be a major one. Skype will support Windows Phone, of course, and while it remains to be seen what kinds of integrations we can expect, there’s little doubt that it will be an integral part of the Microsoft mobile strategy as it tries to gain ground against Google’s Android and Apple’s iOS.

Also consider that Microsoft has recently made deals with Nokia and RIM that will see Microsoft services heavily integrated on these companies’ mobile devices. It stands to reason that Skype will play a major role here as well.

It doesn’t seem out of the realm of possibility that Microsoft would at some point create a Skype-branded phone.

The Living Room

The living room is one area where Microsoft already has a tremendous edge over competitors like Google and Apple. While the jury’s still out on the future success of Google TV and Apple TV, it’s been pretty well established that Microsoft’s Xbox line is a smashing success. Kinect is doing pretty well too. Guess what will be integrated with both of these.

In its announcement, Microsoft points out its “long-standing focus and investment in real-time communications across its various platforms” including Xbox Live. It also says Skype will support Xbox and Kinect, and will connect Skype users with Xbox Live (in addition to Lync, Outlook and other communities).

PayPal is also coming to Xbox Live. That can’t hurt either.

The Enterprise

Let’s not forget about the implications for businesses. Microsoft says the acquisition will increase accessibility of real-time video and voice communications for enterprise users and generate “new business and revenue opportunities”.

Plenty of businesses are already using Skype. How many are using Microsoft products? This could be a huge blow to Google, who is aggressively going after the enterprise market with Google Apps, and soon with Chrome OS. Skype may give businesses another reason to stick with MS. Of course it remains to be seen what kinds of integrations we’ll see.

Competition and Google

There are plenty of areas where Microsoft and Google compete with one another, and Skype could go a long way in helping Microsoft with maybe all of them. That includes the areas we’ve already discussed – mobile, the living room, and the enterprise. It also includes the communication services Skype provides on its own.

Google has been doing more and more in this area, whether it be in the form of Google Voice or video chat via Google Talk and Gmail (email being another prime example of where Google and Microsoft already compete). How about live streaming video? Skype recently bought Qik for this, and YouTube recently announced its own YouTube Live (both a viewing destination and a platform for streaming live video).

YouTube is also doing plenty of other things to cement its position of being THE online video destination. This week, the company announced new partnerships with movie studios, the doubling of its catalog of movie offerings (including new releases), and increased investments in original content from partners. This comes back to the living room discussion, but I’m guessing we will continue to see overlap in the offerings from these two companies here.

Bing

And then there’s Bing. What in the world could Skype possibly have to do with search? Well, everything we’ve talked about up until now is all about Microsoft expanding its presence and user base. The more people using Microsoft products (now including Skype), the more opportunities Microsoft has to push Bing on people. The more businesses using Microsoft products, the more opportunities for Bing integration. The more consumers using Microsoft in the living room (where Microsoft is already heavily pushing Bing via television commercials), the more opportunities for Microsoft to push Bing on users through products.

We’ve had the mobile conversation more than once – both when Microsoft announced its partnership with Nokia, and its partnership with RIM. They both equate to Bing search being the default search on more mobile devices, and getting Bing into more consumers’ hands (literally). These things can only help Bing’s continued growth.

Last week, we asked, “Will Bing catch Google?“. The Skype acquisition can’t hurt. Much of this is simply about opportunity. We don’t know all of the details about Microsoft’s plans for Skype, but there’s no question that there is an incredible amount of possibilities that can help give the company some much-needed boosts.

Kirkpatrick brings up another good point about developer opportunities, making the case that “social graph and address books, presence, file sharing, Instant Messaging, [and] mobile” elements of Skype are all things developers salivate over, and that with Microsoft behind it, developers could get a great deal more access to build more useful applications and integrations on top of Skype.

The social element was played up in the press conference about the acquisition.

The Facebook Factor

As long as we’re talking about how much of a strategic buy this could turn out to be for Microsoft, in its ongoing competition with Google, let’s not leave out the implications for Facebook – another company that not only has a partnership with Microsoft, but increasingly competes with Google in numerous areas.

Om Malik brings up some good points about how the acquisition relates to Google’s competition with Facebook, which he says could be the biggest winner of the deal.

“The Palo Alto-based social networking giant had little or no chance of buying Skype. Had it been public, it would have been a different story. With Microsoft, it gets the best of both worlds — it gets access to Skype assets (Microsoft is an investor in Facebook) and it gets to keep Skype away from Google,” he says. “Facebook needs Skype badly. Among other things, it needs to use Skype’s peer-to-peer network to offer video and voice services to the users of Facebook Chat. If the company had to use conventional methods and offer voice and video service to its 600 million plus customers, the cost and overhead of operating the infrastructure would be prohibitive.”

“Facebook can also help Skype get more customers for its SkypeOut service, and it can have folks use Facebook Credits to pay for Skype minutes,” he adds. “Skype and Facebook are working on a joint announcement and you can expect it shortly.”

Also, while Google continues to struggle in social, Skype makes Microsoft more social by default, with or without Facebook (MUCH more so with any Facebook integration).

The New York Times says Microsoft analysts see the acquisition as a move to block Google from “gaining greater ground in Internet communications”. Google was said to have been in talks with Skype about a potential partnership. It may or may not be the entire basis for the acquisition, but it’s not hard to see this logic.

To put it simply, it’s all about products that people use, and Microsoft just added another major one to its list.

Google is just kicking off its Google I/O developer event. It will be interesting to see what all news comes out of this, and how it might pertain to this discussion. Also keep in mind the ongling regulatory scrutiny over competition that Google continues to attract.

Do you think the acquisition will be good for Microsoft? Good for Skype? Tell us what you think.

Can Skype Help Microsoft Beat Google?
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  • http://asedrfdsa.com Dan

    Microsoft WILL screw up Skype for the majority of users!

  • Henry P.

    Great story and summation. This is a fantastic acquisition for Microsoft. Ballmer finally did something right!!!

    • http://www.webpronews.com/ Chris Crum

      I guess we’ll see.

  • http://www.philatron.com/NewCatalog/TAB7/Coiled_Cable_and_Coil_Cord-index.html jessica

    8.5 billion…not a bad sum for the creators of skype, wow. I like that it will soon be integrated with xbox live and kinect, that’d be nice. I wonder though, any indication that the monthly price of skype may go up at all?

    • http://www.webpronews.com/ Chris Crum

      Not as far as I know. I’m sure they don’t want to drive users away.

  • http://www.killerwebs.info/ Bradford Web Design

    I really hope so, the giant nedds bringing down a peg or two!!

    So between Microsoft, Skype and Facebook this might be the winning combination to do so!!

    Lets wait and see, good post guys !!!

  • http://www.cornerstone-exteriors.com Roofer

    Skype is great. Great buy for MS

    • http://www.limohiredirectory.co.uk/ limos

      I think not great because skype will be become so costly.

  • http://www.neo-symmetry.com Neo Symmetry

    I think this was a great buy for Microsoft, but I also like Skype being a separate entity on its’ own. As long as the software giant improves its services for Skype usage and continues to make Skype a better product it should remain as a huge contender. I have been a Skype user for about 5 years and remember when they were the new kind on the block.

    This company has changed immensely through the years and have supported them from the start, even when people did not know who Skype was or even what services the offered. There are a few browser quirks that should be debugged, but overall, I give them a good rating, 9 out of 10.

    I am curious to whether or not the fee’s will changed for better or for worse. They have been competitive for years and that is one of the reasons they have become a successful company. It should be interesting to find out how Microsoft navigates this one.

    Best regards,

    Ty Whalin

  • http://www.mandloys.com Mark Gavalda – MandLoys Online Marketing

    I just hope that Skype will remain ‘independent’ because I changed from Live Messenger to Skype for a reason… ;-) Let’s hope they’ll only improve the brand and the product!

    • http://www.webpronews.com/ Chris Crum

      It’s going to be its own business unit of Microsoft, at least for the time being. Bates is still running it, and will report directly to Steve Ballmer.

  • Bahooka

    The next version of Skype will only work on Windows7…. adios mi Skype!!! (from an XP dedicated user)

    • http://www.webpronews.com/ Chris Crum

      Doesn’t sound like that will be the case.

  • http://www.zadees.com Justin

    Great…now I have to find another chat application to use because Microsoft is going to screw this one up too….

    Dear Microsoft,

    You make an amazing operating system and word processing software. However, when it comes to internet related things you are horrible. Your browser is sub-par and your search engine is terrible. You don’t know when to quit, and I guess you just don’t get it. You spent $8.5 Billion dollars buying skype, and Google is going to laugh, spend $10 million in research, and come out with a newer and better product that will eventually take over after you are done screwing up skype.

    Goodbye Skype, I loved you and used you for several years now, but it is time to depart.

    • Roy

      Really? Google couldn’t find its way out of a wet paper sack. They just don’t have it in them to take over anything. They have to buy it.

    • VG

      IE9 is just a notch below Chrome. And Bing – try it. You will be surprised. It is less than a notch below Google. Just try it. Not only is the search remarkably improved, you will like the side bars that show the live twitter feeds on the search item, etc. That is how I ran into this cut-above-average article.

  • http://michaelhaltman.com Michael Haltman

    I think that the merger is going to better for Skype than it will be for Microsoft. The ten best ways to use Skype for business are at The Economic Peephole here:

    http://michaelhaltman.com/2011/05/10/microsoft-buying-skype-ten-ways-to-use-skype-in-your-business-and-personal-life/

  • http://www.diversityjobs.webs.com Danny I.

    It is absolutely a great idea. Hopefully, the merging of technoligies will help Skype expand its service base. I am a paid subscriber of Skyp and cannot utilize it on my smartphone. I look foward to that changing soon.

    • http://www.webpronews.com/ Chris Crum

      I’m very interested to see what they do in terms of social – an angle they played up in the press conference.

  • http://www.wensil.com Rishabh Khurana

    Skype acquisition would allow Microsoft to gain a foot hold in the internet market, where Microsoft barely has any presence compared to it’s size. Microsoft can integerate Skype into different software applications and specially in it’s cloud platform. It’s a win win for Microsoft.

  • michael

    an absolute game changing acquisition for microsoft. skype is a must have on mobile and it is a funcion my new samsung galaxy doesn;t have. if microsoft can stall android and iphone (which is skype compatible) it will be a serious contender in mobile – which it isn’t now. i am surprised that as well as google and apple, facebook didn’t make a tilt for skype.

    • http://www.webpronews.com/ Chris Crum

      I think Om Malik made some good points about that, in that it may be able to benefit simply from Microsoft’s acquisition, without having to put up all that money.

  • Joe

    I always get the idea that WPN is just a little biased against Google – is that correct? :-)

    Personally, I left Skype ages ago for a better and cheaper VOIP setup for my business, and I think a lot of businesses did the same. MS will have to work hard to get them back. A decent Skype mobile package would make me look again though.

    I’m sure Google wont be too worried. They still have many unique and great apps – and their search is still light years ahead. From a web developer point of view their service remains very very good.

    They are yet to create the killer social app – but it’s within their scope for sure. And at some point we will have to ask what is the point of x number of million users anyway.

    There are so many factors that could come into play in the future that it’s almost not worth speculating. Just imagine what would happen to the internet landscape if the ad blockers step up the pace, considering the big 2 – Google and Facebook – are built on ad revenue??

    Thanks for a good article, Joe

  • BMD

    Used Skype once, it was a resource hog at that time and never bothered to try it again and don’t see any reason to.

  • http://einternetmarketingservices.org Rick Samara

    Hey Chris,

    Can’t say I’m surprised that you were right on top of this! Great article and lots of healthy food for thought. The last I heard, Google and Facebook (could have been Yahoo)were in competition for Skype. A great service by the way. I use it all the time!

    Then, I wake up this morning and Microsoft came out the apparent winner. I don’t see how Microsoft can lose on this, if as Ballmer says, they protect and build upon the platform.

    We’ll by Skyping on our TVs in a few months! Hey, this could be great for Fantasy Football if you have an engaged league. Rather than smack on chat, we can smack in person!

    Best Regards,

    Rick

    Internet Marketing Services for Small Business

  • http://www.jacksononthemoon.com SJackson

    I have the same fears as many of the people who have commented before me, that Microsoft will only screw up what is presently a great service. I have nothing against Google, though I am a Firefox fan and have no intention of changing to Chrome. Microsoft I loathe and only use it when I must.

  • http://anthonytansley.ws Anthony Tansley

    Well the last mention i got was facebook and google were in the running and i was hoping facebook would get it and integrate but microsoft crept in at the last moment.

  • http://seo-expert-for-hire.blogspot.com R.Baylon – Google SEO Tips

    This is definitely a good buy for Microsoft but I am more worried about multi-platform support. How many months will MS support other OS especially Linux?

    Linux users better look for other alternatives…

  • http://www.dlook.com.au Corri

    Great article Chris.

    The polarization of all things Virtual between but a few players is changing the rules of everything formerly understood. Integrating Skype with Microsoft and the ramifications for Google is just the iceberg. I wonder about Vodafone, AT & T and other major carriers who soon will compete with VOIP on mobile.

    This is gladiatorial combat in a global Colosseum – enjoy the show.

  • http://www.zhongguolu.com/ China Maps

    If Microsoft can keep it a Free Service then I think MS has got w winner on their hands.

    MS should have brought Skype earlier!

  • exadelio

    i think it doesn’t matter whether Skype integrates with Microsoft.. it’s still the people who will use it wins….

    For Google… it’s time for you to have an apps better than Skype…. everybody is waiting for that.

  • http://www.loyaltics.com Dhana

    With mobile and Internet markets gaining widespread adoption and PC based software business expected to decline, and in order to compete with Google, MS need to make a huge, bold strategic purchase, which they did in the form of Skype. If they can play the cards correctly (Mobile + Internet), I think MS can edge out Google.

  • http://www.frosca.com Jacqui Cooper

    I think anythng that makes Google wary is a good thing, I remember whe Google was a little tiny search engine that you submitted to just for the fun of being told they may not look at it for months and wouldn’t necessarily get in.

    As they got bigger the arrogance got bigger, I use Skype and when that doesn’t always work use Messenger as back up so it doesn’t make much difference to me. I like Bing as a search engine and am starting to use it more because results are just as good as Google.

    As an advertiser with Google I’m completely fed up with the lack of care or customer service, arrogance has filtered down and it’s not good.

    So yes, on balance I think this is good for the web, good for Skype? Only time will tell.

    <a href="http://www.frosca.com/"Local, Social and Mobile Marketing for small businesses

  • http://sofortmassnahmen.eu Michael Holdcroft

    Obviously Microsoft will adapt Skype to favour Microsoft products and services. This may be of advantage to Microsoft, but it will be to the detriment of Skype. I personally don’t like sytems and services which force things on me, such as which OS or Software I need to use it. That’s why I don’t use any MS services, if I can avoid it.

  • http://webhostingreview.info/dedicated-hosting/ top dedicated hosting

    no way Skype will take the help of Microsoft to become stronger

  • http://www.whatshakin.com Logan Weiler III

    This is discouraging. I counted on Skype as my true alternative, embraced by all platforms that I use: Linux, Windows, and Mac. It appears there is no rock we can hide under that Microsoft won’t buy and hold over us.

  • http://www.opus-telecom.co.uk Telephone systems guy

    I think this is a good thing. Having Skype integrated with outlook will be a great boost for businesses and might just bright Skype seriously into the business domain. Also, since it’ll be integrated with outer Microsoft products too, it should make it more mainstream at the same time. I think it will work out better, though there will surely be some change.

  • Tom

    Skype is a tremendous tool for small businesses communication. We avoid using Microsoft counterparts as they are more cumbersome and feel intrusive. If Skype’s new parent company can remain transparent, it will be a win for Microsoft. If it is micromanaged by by cost accountants, we will be looking for a new entrepreneurial Skype clone to provide us service.

  • http://www.classifiedsads.co.in classifiedsads

    Def this will help microsoft to boost further. Skype is very much popular through out world.

  • http://www.brokenglass.co.in/ kannan

    But is it official? or not?

  • http://www.marketadvertisepromote.com LibertyBell

    I have only used skype a few times and found it to be very user friendly. I plan to use it more often. However from the string of negative comments about Microsoft, doesn’t look like its a good match.

  • http://www.engineerstoolkit.com artur

    for the user, probably not. microsoft is expert in making things worse, needing more computer resorces and offering only “cosmetic” improvements. see what they have done with the office pack.

    the best thing they can do is not to change anything. everything they change gets worse, takes longer to work, crashes, freezes, etc.

  • http://anumuloyo.blogspot.com alexa top rank

    I think it is good strategy to win all visitor in the world. When we want to see microsoft historical, we can find how they develope big planning. So it is very vital to give best service an inovation to every user with skype newer

  • http://www.secretstowinbackgirlfriend.com/how-to-win-your-girlfriend-back/ get my girlfriend back

    It’s definitely a good move on Microsoft. The problem is that Google will come up with a better version of Skype.

  • http://blackhair-extensions.com Genta Kusuma

    I don’t think so.. Google too strong for everyone..

  • http://www.serveronline.us/ daniel web server

    excellent purchase by micrisoft is a good company skype

  • http://www.cnpintegrations.com William Smith

    This( Microsoft deal )will be a fantastic source of data points to help companies in negotiation to raise funds.

  • http://jamesmsingleton.com/websitewidgets.html James M Singleton

    I think this is good for the Internet Community but Microsoft really needs Yahoo!
    Jim

  • http://www.webhostingscreen.com James

    I think microsoft was preempting google on this one. Skype is a fantastic addition to the microsoft stables.

    Top Web Hosting Best Web Hosting

  • http://www.seonorthamerica.com Tom Aikins

    Very interesting insights and they seem to be also very accurate. This could indeed be a major coup for Microsoft if they handle things correctly and don’t allow their corporate culture to be overbearing. The integration of Facebook, Skype, Microsoft and Bing has to be worrying to Google. Who knows what they’ll be forced to come up with now.

  • helenmicheal

    I think this was a great buy for Microsoft. Thank you for giving such wonderful version.

  • http://www.bycostello.com bycostello

    skype yet to make any money so you gotta wonder about what they are paying…

  • http://thewebtaylor.co.uk TheWebTaylor

    Another product to be ruined by Microsoft!

  • http://www.jiletlitelfiyati.com Jiletli Tel

    we can make sure that skype becomes unefficient in the hands of Microsoft !

  • KJ

    Idiots, they could have downloaded it for free…