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Microsoft to Acquire Skype
May 10, 2011 | William Zimmerman
Image via Guardian News
Microsoft Corp. agreed to buy Internet phone company Skype Technologies SA for $8.5 billion in cash--the most aggressive move yet by Microsoft to play in the increasingly converged worlds of communication, information and entertainment.
WSJ's Andrew LaVallee has details behind Microsoft's $8.5 billion cash purchase of Skype. (left: Photo Illustration by Mario Tama/Getty Images. Right: Photo by Justin Sullivan/Getty Images)
Skype will become a new business division within Microsoft, and Skype Chief Executive Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Microsoft Chief Executive Steve Ballmer.
Messrs, Ballmer and Bates will hold a news conference at 11 a.m. ET to discuss the deal.
Buying Skype--a service that connects millions of users around the world via Internet-based telephony and video--gives Microsoft a recognized brand name on the Internet at a time when it is struggling to get more traction in the consumer market.
Microsoft has invested heavily in marketing and improving the technology of its Bing search engine. While it has made some market share gains over the past year, Google Inc. still dominates the search market with more than 65% of U.S. searches going through its site.
About 170 million people log in to Skype's services every month, though not all of them make calls. Skype users made 207 billion minutes of voice and video calls last year. Microsoft said it will marry Skype's functions to its Xbox and Kinect game consoles, Outlook email program and Windows smartphones. The company said it will continue to support Skype on other software platforms.
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