Microsoft Corp. (Nasdaq: â€œMSFTâ€) and Skype Global S.Ã r.l today announced that they have entered into a definitive agreement under which Microsoft will acquire Skype, the leading Internet communications company, for $8.5 billion in cash from the investor group led by Silver Lake. The agreement has been approved by the boards of directors of both Microsoft and Skype.Â (Microsoft)
Skype was on the verge of going public when Microsoft and Google entered a bidding war over the VoIP king.
Video Calling The Future
Although Google Voice provides superior features over Skype due to features like voice mail transcription, anti-spam protection and number porting, Google Voice currently lacks the ability to video chat with friends.
Skype’s decision to focus on video calling has paid off, resulting in hundreds of millions of users (who use the free version), with a few who are willing to pay a monthly fee in order to partake in group video chats.
Microsoft can easily take Skype to the next level by integrating Skype within Xbox 360 Kinect, as well as bring 3 way video calling to Windows Phone 7 (making the device a “must have” smartphone for corporate users).
Although Google is experimenting with video calling, it’s limited to Google Talk and is limited to only Android smartphones and computers via the browser.
Skype’s wider reach will easily help Microsoft marginalize Google Voice in the future (not to mention give the software giant a victory over Google).
Facebook Integration FTW
If Skype’s current dominance isn’t enough to scare Google, the VoIP king’s integration with Facebook should terrify the search giant.
Although Microsoft will probably integrate Skype’s video calling technology into everything (even hotmail), integrating with Facebook chat would help both companies thwart Google’s rise in the VoIP space.
With Skype and Facebook boasting over 500 million users each, Google will have a hard time convincing consumers to switch away (as leaving your circle of friends in each will be difficult).
Note: Facebook and Microsoft (via Skype) have yet to announce a joint venture for video calling via Facebook chat, although given the history between both companies it wouldn’t be surprising to see this rolled out.
Should Google Be Worried?
While Skype’s new overlords should not gloat regarding their new asset (as Microsoft could easily screw this up), Google needs to figure out a compelling way to attract the masses (and soon!).
Video calling has the potential to replace traditional email as the primary way users communicate online, and if Google does not figure out a way to thwart Microsoft’s rise, they may lose out to their old nemesis in the not so distant future.