Microsoft Buys Skype in $8.5 Billion Deal

Microsoft Acquire Skype for $8.5 Billion:

Microsoft has bought Skype for $8.5 billion, in an all-cash deal. The deal is Microsoft's largest cash purchase in its 36-year long history. Steve Ballmer, CEO of Microsoft, is said to be a big champion of the deal, the largest in the history of the company. Microsoft Corporation agreed to acquire Skype Communications, US $8.5 billion. The company is to be incorporated as a division of Microsoft, and Microsoft will acquire all of the company’s technologies, including Skype, with the purchase.

It won’t surprise if Microsoft comes in for major heat on this decision to buy Skype  and the software company could always botch this purchase, as it often does when it buys a company. The Skype team is also full of hired guns who are likely to move on to the next opportunity rather than dealing with the famed Microsoft bureaucracy.

Skype is a phenomenal product and brand that is loved by hundreds of millions of people around the world,” said Microsoft CEO Steve Ballmer. “We look forward to working with the Skype team to create new ways for people to stay connected to family, friends, clients and colleagues... anytime, anywhere.

What is Skype?

Skype is a software application that allows users to make voice and video calls and chats over the Internet. Calls to other users within the Skype service are free, while calls to both traditional landline telephones and mobile phones can be made for a fee using a debit-based user account system. Skype was founded by Niklas Zennstrom and Janus Friis who were also the founders of the file sharing application Kazaa.

The combination will extend Skype's world-class brand and the reach of its networked platform, while enhancing Microsoft's existing portfolio of real-time communications products and services," according to Microsoft's press release on the deal. "With 170 million connected users and over 207 billion minutes of voice and video conversations in 2010, Skype has been a pioneer in creating rich, meaningful connections among friends, families and business colleagues globally.

Microsoft may also hope the deal will increase its competitiveness against both Apple and Google in the mobile platform arena by allowing it to upgrade its suite of products.

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