The latest news rocking the business and tech world is the purported matchup being hatched between Microsoft, the fallen Software giant; and Skype, the perennial spinster. The biggest part of the news is not Microsoft's interest in Skype, but how much it is willing to shell out for the favor - a whopping $8.5 billion and counting!
In 2007, the talk of the town, for a harrowingly long time, was the potential Microsoft hookup with Yahoo. While some smart-ass at Microsoft might have concluded that a $48 billion dollar takeover that was then appraised at just about $30 billion and is currently worth about $20 billion was a great idea, continues to be one of the many mysteries of Steve Balmer's stewardship of the flailing giant. In 2005, Microsoft bought another money looser aQuantive for over $6 billion in one of the many wrong headed moves aimed solely at containing Google, but all failed attempts.
The recent decision to tie-up with Skype is being touted by many as Microsoft's game plan to contain Google's internet voice aspiration. The problem is Microsoft IM superseded Skype as a VoIP platform, but it never caught up with users. Indeed, Microsoft has a history of storied purchases to acquire "customers", like the $400 million buy out of Hotmail in 1998 but the result of that purchase continues to be mixed. Hotmail users hardly translated into any viable outcome for Microsoft. Actually, most users jumped ship as soon as a reasonable alternative, Gmail, was presented a mere 5 years later. True Microsoft will tout the number of hotmail (Live) users at over 300 million, but the question is how many of these are even actively using the moribund platform?
Perhaps someone at Microsoft can explain why Skype, a company that was purchased by Ebay for $2.6 billion in 2005 and was sold at a loss of over 50%, just 4 years later and has never turned a profit is a good buy for Microsoft at over $8 billion including over a $1 billion in debt. It is true that many tech companies will acquire innovative providers to get a leg up on the competition - just like Google's purchase of Grand Central has positioned it well to become a key play in the evolution of voice communication; but Microsoft's penchant for wasting money on solutions it has not being able to leverage is a worry to any Microsoft investor. Why Skype, why not Nokia? And even if Skype, why $8.5 billion, why not $1.5 billion? Could it be that Microsoft is simply worried that a Google or Facebook buyout of Skype will leave the wandering giant in the lurch? Perhaps, but Microsoft needs to decide what it wants to be when it grows up!
Its continuing bobbing and weaving like a drunken sailor from office desktop to office 365 (in the cloud - whatever that is) is not a recipe for success. Microsoft's customers and partners need to know where the lumbering giant is headed or it might soon find out that it has become merely a niche player or a shrinking niche.
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