Confirming rumors that started hitting the Internet last Sunday, Microsoft has now officially announced its plans to acquire Skype, the Internet phone software company. This morning's press release announced that the price that Microsoft is paying for Skype will indeed be $8.5 billion in cash, as previously revealed on Monday night by the AllThingsDigital web site.
According to the press release, this major move by Microsoft "will increase the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise users and generating significant new business and revenue opportunities." The deal will also "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." The deal is still subject to government regulatory approvals but Microsoft hopes to close the deal sometime in 2011.
Microsoft plans to use Skype, which has 170 million registered users, for many of its products, saying in its press release, "Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities." Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms." The deal will turn Skype into its own division inside of Microsoft. Skype's current CEO Skype Tony Bates will be the president of the new Microsoft Skype Division and will report directly to Microsoft CEO Steve Ballmer. Ballmer is quoted in the press release as saying, "“Tony Bates has a great track record as a leader and will strengthen the Microsoft management team. I’m looking forward to Skype’s talented global workforce bringing its insights, ideas and experience to Microsoft."
Rumors of a Skype acquisition started on Thursday when it was reported that the company was in talks with both Facebook and Google. However, Microsoft's name entered the fray on Sunday as a possible partner for Skype. This is one of the biggest acquisitions ever conducted by Microsoft.