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Clare Hudson
Clare Hudson
  • 1 Minute Read
  • 10th May 2011

Microsoft buys Skype for $8.5 billion

Microsoft recently paid $8.5 billion for Skype; the company’s largest company purchase to date. The internet telephone service was originally owned by eBay who bought Skype in 2002 for $2.6 billion, but then sold most of it off in 2009 to investors.

Over the last week, there were rumours that several other major companies including Google were also interested in buying Skype. Microsoft has often struggled to keep up with the global, online search engine giant and has subsequently made obvious attempts in the past to compete. This could well be another attempt.

In 2008, Microsoft almost bought Yahoo! for a whopping sum of $47.5 billion. However, they pulled out at the last minute- probably a good move, seeing as Yahoo is now worth half the amount that was originally offered.

Microsoft currently loses around $2 annually through online services and failed attempts at trying to compete with Google. It’s possible that Skype was bought as a way to offset the losses the company continues to make through its online services.

Both Google and Apple are in the process of developing their own VoIP technologies: Apple (FaceTime) and Google (Voice). Microsoft has a significant advantage because Skype is still globally recognised as the leading brand within VoIP technologies.

In 2010, Skype had as many as 60 million registered users and made a profit of approximately $900 million in revenue. It has also been suggested that Microsoft will integrate Skype into Xbox and Kinect, Facebook will get privileged access and there could be integrations with Bing and IE.

Microsoft CEO, Steve Ballmer says in a statement made today, “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”