Saturday, June 18, 2011
What does it mean by MSFT's purchase of Skype?
MSFT is going through stiff competition from GOOG and APPL. It has been barely keeping a presence in Internet search industry, even a purchase of sinking YHOO search did not put them in a better shape yet. The PC industry trend is going downward. MSFT is still stronger there but the growth of the PC market itself has already been penetrated by the "Tablets and other devices". Moreover, MSFT has almost lost its presence in the Mobile market which is one of the highest growth segment. The only good news for the software giant is perhaps its growing influence in the games market. Anyway, lets analyze what could be the reasons for MSFT paying a large sum of money for VoIP service like Skype. Skype has 663 million registered users and very significant gross profitability. Skype contributed more net new minutes of international voice than the rest of the industry put together in 2010, according to Telegeography. Skype has never struggled to achieve growth, but its profitability has often been criticized. MSFT can potentially develop a technology with Skype to disrupt the smart phone mobile industry. However, this is an absolutely daunting task to challenge APPL and GOOG in mobile market. But, only MSFT posses the strength for that. However, they need to find one or multiple people who can make that happen. They have many talented leaders. But they need someone different and it is a hard business+technology problem.
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