Sunday, May 22, 2011

Microsoft and Skype = Why?

I still can not see benefit for Microsoft. At least not a 8,5 billion benefit. OK so Skype is a big brand, has some decent infrastructure & technology and 660 million users. Thats all good. But most of those users are already Microsoft Users, running Windows. So its kinda like buying customers you already have. The infrastructure is decent, but linux based, and the technology cant be worth that much money.

Microsoft has become very communications focused, it would appear as Bill Gates and Steven Ballmer view this as the way forward for Microsoft. However Microsoft's core business, operating systems and productivity software (office) is under attack and needs to advance much more quickly for Microsoft to keep that business long term. iPads, Android tablets and soon GoogleChrome books are capturing significant market share and changing the way we interact with computers. The "desktop", as we know it, is fast becoming history. Its just too static and difficult to manage. So with the desktop being Microsoft's core business, I am sure Steve Ballmer and Bill Gates have some plan for Skype to push forward their Windows and Office products - but i am not getting it. How exactly?

Until now i have not read any convincing analysis or comments by Microsoft how Skype can really help Microsoft push forward. I would think a significant buy at the operating system or enterprise level would make more sense. Maybe Vmware, Citrix, or potentially invest in hardware vendors to make notebooks that are more integrated with Windows to be able to match a MacBook air or iPad.

Skype will of course help the Microsoft Lync product. However, Microsoft Lync is hardly a significant product for Microsoft. Not now and neither in the future. At the same time Microsoft is making it self into a telecom company, and of course telecom companies are going to be wary of this development and avoid Lync. VoIP providers worldwide would be silly to push interoperability with Lync, after all its likely that Microsoft will take their business sooner or later. And telecom companies still have considerable clout.

So, I remain skeptical of this purchase by Microsoft.

13 comments:

Reizen Thailand / Bezoek Thailand said...

in my opinion its simple Nick...skype is the future of communication. its cheap, its clear, it works! Imganing skype replacing ALL phone communications. Billions of ppl will start to shift from expensive providers to skype. especially skype on smart phones that is really the future. if its cheap of course or even better for free!

Nick Galea said...

Thanks for your feedback! Yes Skype works and its good but does Microsoft have to own it? Mobile operators will block it out at some point if all their revenue goes away. And Microsoft will still have to fund all the infrastructure and networking around it so it can not remain free all the time. Yes it might get funding from advertising, but is that Microsofts' business?

Jaymes said...

I think the reason you can't see a benefit in the Microskype deal is that there simply isn't one, unless you take into account the children playing in the pen.

A great deal of conglomerates seem to be sizing up just how big their thing is, instead of concentrating on what gave them the status in the first place. It's a real shame as it's the consumer which suffers whilst these CEO's have their day in the park.

As far as I am concerned, Microsoft should be looking at ways to put Windows in the cloud, but then again, what do I know?

At least I know I would have spent $8.5 billion on something more worthwhile - like Facebook shares...

Nick Galea said...

Hi Jaymes - fully agree, i think microsoft could add significant value to windows but somehow cloud enabling it with backup, security and other features such that the average user would not have to worry about windows maintenance. Yes a significant investment in terms of technology and infrastructure but more in line with their core business model...

Rob Schaefer said...

It will be interesting to see how this plays out. I think it is huge for Microsoft. For years Microsoft has been trying to get into the voice and video business. They didn’t have much success with Response Point. It’s been discontinued. Their Live messenger is good, but it doesn't have nearly the user base Skype has. Combine the two and you have an incredibly large user base that is platform agnostic, as it runs on practically any smart device, PCs and Macs. Microsoft’s acquisition of Skype instantly leapfrogs their video chat offering past Apple’s Facetime, because of its large user base and practically unlimited availability using any device.

I don’t believe this will take over the communications world. VOIP will always be relevant. Adding Skype technology into their new Lync product may help make this newest entry into the PBX business more viable than their last offering, but I don’t see Microsoft being a major player in the PBX market. I see them touting the ability to integrate with other PBXs as their main play.

It’s just a matter of time before smart phones become purely Internet devices. You will use whatever voice application you prefer. Carriers will charge based on MB or GB, so what platform you choose for voice/video communications will be inconsequential to them. In the usage-based billing model, the carriers will not block Skype or anything else, as it will be in their interest to bill you for more data usage. US Carriers are already doing this.

Live Messenger is free. Microsoft is already funding the Live messenger infrastructure albeit probably a fraction of the size of Skype’s . They are already advertising in the Live Messenger app. Skype is generally free. When it is merged with Live messenger, it will really be more of the same. The only thing different for Microsoft is that they will now be in the telecom business, offering PSTN termination. Will they run this new Live-Skype product on Linux servers? I doubt it. This is Microsoft. I’m sure they’re capable of reengineering the Skype code to run on a Windows infrastructure in no time.

As standards like SIP and URI dialing become more prevalent, the PSTN itself will become less and less relevant. You could say Skype and Live messenger are already doing a form of URI dialing.

Fortunately, PBX products like 3CX already integrate with Skype and Exchange. 3CX already has full video support. Hopefully Microsoft will provide the ability for Live-Skype users to seamlessly communicate with non-Live-Skype users over standard protocols and codecs, using true URI dialing. If so, products like the 3CX Phone softphone for Windows and future video-enabled versions of the 3CX Phone softphone for smart devices will become an even more powerful and engaging experience for business users.

Wise said...

Skype service will be the powerful addendum to the infrastructure of "Azure clouds"
Note: "Azure clouds" as infrastructure (service) and "Azure technologies" (API) are completely different things

Wise said...

Skype service will be the powerful addendum to the infrastructure of "Azure clouds"
Note: "Azure clouds" as infrastructure (service) and "Azure technologies" (API) are completely different things

Nick Galea said...

@Wise = please elaborate on your comment. We are very interested in Azure. How would Skype help Azure?

Wise said...

"Azure Clouds" is the infrastructure supported and provided exclusively by Microsoft.
For example, Microsoft Office 365(which includes Microsoft Lync) is the part of these exclusive clouds.
Skype can be encapsulated by Microsoft Lync. As result - Users of Microsoft Office 365 will get access to Skype network transparently and 3CX PhoneSystem will not be able to provide any benefits even if it will be launched in the context of this cloud technologies.

Ami said...

Hi Nick, interesting thoughts and even more interesting comments. Microsoft (just like Google) has the cash but not the innovation. I see Microsoft and Google the same as IBM was in the 1980s. The PC came, they had some interest but did not capitalize in the software arena. The same with mobile and VoIP and Microsoft and Google (with Moto) - just like eBay bought Skype (again people asked why?) the market and innovation in VoIP and mobile is fascinating. But as you clearly wrote, facination is not what makes a business! Skype does not fit into anything MSFT does. Saying that it "might fit into Azur clouds" is again the voice of "this is neat, cool, fascinating..." - Let's see how long it takes for the Skype people to atrophy or for MSFT to sell it off. At least this is my US$0.02 :)

Chris said...

I think an area where Skype can play a role for Microsoft is as an element of the Xbox / Kinnect platform. I see instant large screen video conference call possibilities on that platform for a very large number of users. An Xbox in every living rool and office conference room!

Nikola Komadinic said...

Hi guys,

interesting thoughts. But, let me ask a question? Do you think Instagram is worth 1 bil? It sure isn't but lets snatch it before someone else does.

I think this was a case with Skype. Plus, my 50 cents says it will never integrate with MS software, they have the Lync for it. But it might be a nice on-the-side business. for mobile.

BR

Matt Landis said...

Nick,

I agree with you that Microsoft doesn't seem to need Skype at the moment.

But it only seems that way if we overlook one of the biggest "game changer" aspects of future ready Unified Communications: UC Federation. (1)

Microsoft UC (ocs/lync) has the biggest "cloud" of UC federation enabled enterprise organizations. By various research reports approximately 20-25%. I did my own research by pinging DNS records of a fortune 1000 list and came up with 23%, old edu and .com domains came up approx 20%.(2) Avaya executives have noted that Microsoft has a huge lead on all other vendors in this area

I frankly think that UC Federation is the transformative challenger to the current PSTN/SIP Trunk cloud. With PSTN/SIP trunks you get...audio. With UC Federation you get Presence, IM, desksharing, video, online meetings and, btw...HD voice. ;-)

Now to the above +/-20% enterprises, add Skype (Combined with Live Messenger, Yahoo and AOL which are not counted in the above 20% number and already federate to Lync/ocs) and you see that Microsoft is getting a huge headstart footprint in the future mode that most of our communications may travel. Skype starts to make a little sense.

This is one benefit in my mind.
Matt


(1) http://bit.ly/lyncfed
(2) http://windowspbx.blogspot.com/2011/11/new-informal-report-approximately-23-of.html