Microsoft gets voice, video – and Skype fans worry

May 12, 2011|By Jeff Gelles, Inquirer Columnist
  • Microsoft CEO Steve Ballmer foresees the time when talking to people around the world is as easy as talking to those in the same room.

Microsoft's $8.5 billion deal to buy Skype is the latest reminder of a simple dictum: As rapidly as technology is changing our world, nothing changes as quickly as technology itself.

A decade ago, nobody had heard of the Luxembourg company - it was launched in 2003. Today, Skype boasts 170 million regular users, nearly $1 billion in annual revenue, and annual growth rates of 20 percent to 40 percent.

Skype is profitable, if just barely. What it offers to Microsoft is access to a technology that has captivated a generation of users by offering exceptional services - worldwide computer-to-computer phone calls and video calls - at a price that literally can't be beat: free.

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Success is often elusive in any merger or acquisition, especially when entrenched corporate cultures collide. That was a common theme this week as word of the deal leaked and once it was formally unveiled Tuesday.

Among many Skype fans, the instant reaction was that the Evil Empire was buying and threatening to enslave R2-D2 - a cool and innocent technology that we've all come to love, if not to pay for.

It's worth noting that not too many years ago, Microsoft itself was the one helping to turn an established industry on its head: the world of mainframe computers long dominated by companies such as IBM.

Skype CEO Tony Bates generously made that comparison at his joint news conference with Microsoft's Steve Ballmer, where Bates said that Skype "was founded around very disruptive and innovative software, very similar to the founding DNA of Microsoft."

Skype's technology and business model are indeed disruptive and transformative - another of those overused descriptors that cropped up during Tuesday's news conference as Ballmer described the deal's potential and envisioned a future where "talking to friends and colleagues around the world will be as seamless as talking to them across a kitchen table or a conference room."

Maybe there's a reason Skype rhymes with hype, but who knows? There's no denying that Skype has already had an outsized impact. As just an occasional user, I've already benefited from Skype in memorable ways. I've gotten tours of my daughters' college dorm rooms, met their friends face-to-face, shared holiday and birthday festivities via video, and let them each catch glimpses of their beloved (and utterly clueless) dog.

Here are some answers to questions about what the Skype deal could mean:

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