Skype: not the Messiah for Microsoft to beat Android and iOS

Microsoft recently confirmed that it has reached an agreement to buy Skype for $8.5 billion, which is currently the largest acquisition of the company. As a software application, Skype allows users to make voice 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 has also become popular for its additional features which include instant messaging, file transfer, and video conferencing. Skype has 663 million registered users as of 2010.

Obviously, Microsoft will try to make this acquisition worthy, because the giant of the PC era is currently suffering from very tough period. In a post PC era, Microsoft cannot dominate the market by using a single product like Windows or Office as in the old days, the company did not show a strong performance on internet business, instead, Google and Facebook took most of the marketshare, Microsoft cannot even take a breather under the huge pressure of social networking sites, Microsoft's Online Services Division has been continually loss-making since 2006 and in Q1 2011 it lost $726 million. This follows a loss of $2.5 billion for the year 2010.

Even in its comfort zone, PC, for the first time in 20 years, Apple surpassed Microsoft in Q1 2011 quarterly profits and revenues due to a slowdown in PC sales and continuing huge losses in Microsoft's Online Services Division, which contains its search engine Bing.

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This article by Derek Dickinson is brought to you in partnership with Brothersoft.

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39 Comments

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I stopped reading at "because the giant of the PC era is currently suffering from very tough period. "

What does that even mean? Where does Neowin find these writers? Absolute garbage. l2english.

***Award for the stupidest and least factual article of the day***

I wouldn't even know where to begin to fix the lack of facts or the lack of thought the author put into the article.


Skype matters, as they have some licensing deals that Microsoft was unable to obtain, due to anti-MS bigotry. This covers everything from the technologies licensed and used by Skype to their distribution and market partnerships.

Want a good example? Verizon... They have screwed around with any WP7 support, delaying the product again and again. Verizon and Skype have some rather powerful contracts, as Verizon allows and markets the ability of its users to use their 'voice' side of the system for Skype based calling.

Its funny how when Microsoft buys something, their whole point has to be domination of a market. That is nothiong more than a lie that can't even be proved beyond a reasonable doubt. Its nothing more than writers bait.

Who says MIcrosoft was trying to beat anyone buy purchasing Skype? It seems when Microsoft purchases a product, they do so to make the products they already have better or at least have a new feature.

Not long ago Microsoft purchased a company that made anti-virus. Was MS looking to dominate Norton? No. They used it to bring a new feature to Windows.

I'm not sure who the bigger Microsoft haters are, the trolls who come on here or the writers themselves.

TechieXP said,
Its funny how when Microsoft buys something, their whole point has to be domination of a market. That is nothiong more than a lie that can't even be proved beyond a reasonable doubt. Its nothing more than writers bait.

Who says MIcrosoft was trying to beat anyone buy purchasing Skype? It seems when Microsoft purchases a product, they do so to make the products they already have better or at least have a new feature.

If MS was not trying to beat anyone they would have not paid such a premium for a company.... loosing money

i wonder how many clicked "Read the rest of the article ->"

i would rather go and click in "The Microsoft suicide watch" from... what a surprite: Macdaily News.
i saw it in microsoft bing news. even i clicked read the est of article to just read the end of it.

i like how like... silly people they point out about the "Microsoft's Online Services Division" sure is lossing but didn't xbox was a loss in its beginnings? yesterday i saw how bing has 14.1% from 13.9% in US marketshare, globally i dont know. but its gaining marketshare at least in US.
and i dont know what they want, there is google, its years older than bing, so what... bing doesn't get more than losses and then microsoft will use google search for its wp7 and yahoo and rim would have to think if they do it aswell... they need the service, it isn't getting money *yet* but there is no other choice. they just need to improve it like they have over 2 years.

but anyway i dont think reading "About Derek Dickinson" and his 10 years crap i would get a good article, specially when he says about "because obiviously the company has fallen behind the other companies for too many miles" just because his point of view cant see more than numbers he doesn't even know about.
oh and "However, the system which costs the company lots of money and energy, did not play well in the market. " it has some months old and he expect people with 2 years contract can change? my sister got her wp7 becasue her winmo 6.5 broke, if it didn't break she wouldn't have gotten a new phone.
this dick-enson is just another idiot posting crap. the article was about skype but he talks alot of idiotic stuff and only mentions skype 8 times. he should have then titled it like "microsoft and my vision of their bussiness and some about their new adquisition"

but well maybe he would manage microsoft better than steve ballmer /s

Buying Skype is going to be one of the biggest mistakes Microsoft ever made. They could have just made a Skype client and added it to their software. It would have been 1000x cheaper and got the same results. Now they are lumbered with a business that is practically useless to them and will still require them to make the clients for their software that I just mentioned. Just now they paid 8.5 Billion for the privilege. Hilarious.

Vice said,
Buying Skype is going to be one of the biggest mistakes Microsoft ever made. They could have just made a Skype client and added it to their software. It would have been 1000x cheaper and got the same results. Now they are lumbered with a business that is practically useless to them and will still require them to make the clients for their software that I just mentioned. Just now they paid 8.5 Billion for the privilege. Hilarious.

yeah because when they made the software... people would stop using skype and they, alot of million people, would be happy using that microsoft product.
as there are alot of mac dumbs i have read, like "i removed skype from all my computers and cancelled my 2 accounts. i will not give my money to microsoft" BUT some people in mac, windows, android, iphone, whatever... that just dont care or use what they think is what they always use, and some wont even notice its from microsoft. i wont say.. 8.5billons wasnt too much for skype.. but they have the money so as long as they release stuff i dont care, im waiting for win8 and wp7.5

Voice of Buddy Christ said,
The investors that owned Skype are laughing all the way to the bank with their hefty profit.

The investors knew why they insisted on cash only.

*facepalm*

Mobile is only a small part of the bigger picture when it comes to MS buying Skype. If so called "tech writers" can't see it then they shouldn't be writing about it. MS's mobile OS will do just fine later this year when their big mango update hits, Skype is something alltogether different in the long run.

GP007 said,
*facepalm*

Mobile is only a small part of the bigger picture when it comes to MS buying Skype. If so called "tech writers" can't see it then they shouldn't be writing about it. MS's mobile OS will do just fine later this year when their big mango update hits, Skype is something alltogether different in the long run.

+1

GP007 said,
*facepalm*

MS's mobile OS will do just fine later this year when their big mango update hits..

I am curious about this statement:

Is it an analysis or an act of faith?

I read many posts here from people stating: "In January 2011 Wp7 will have Cut/Paste" or "WP7 will reach 10% or even higher marketshare in the first quarter 2011" etc.etc.

Based on what is, so far at least, known about "Mango" it does not seem to me that the update will fix, sorry bring back, some of the many critically needed features the OS is still lacking right now.
For example:

A decent calendar app
Ability to back up SMS
Reminder snooze options - 5 minutes is just ridiculous..... and useless
Caategory support
Address book entries appearing in the dialer as you dial
Tethering support
Desktop syncing
Etc. etc.

While I bought a HTC HD7 the first day it was available and love the OS UI I have now reached the conclusion that WP7 was just a "temporary OS" used to fill the vacuum until W8 will hit the market and hopefully bring back all the features available in WM 6.5.X.

I have to wonder if Microsoft's purchase of Skype was less about the VoIP service and more about the video calling and QIK service. Lets face it, in the past, Microsoft has had a horrible track record for getting cross-platform video calling working in Messenger (it took them ages to get it working on the Mac client because the MBU couldn't keep up with the constant changes being made on the Windows side of the house). With Skype (and QIK, which Skype owns), they have a fully functional cross-platform video calling and sharing platform which sets them up to compete with Facetime and possibly even Youtube at some point.

roadwarrior said,
I have to wonder if Microsoft's purchase of Skype was less about the VoIP service and more about the video calling and QIK service. Lets face it, in the past, Microsoft has had a horrible track record for getting cross-platform video calling working in Messenger (it took them ages to get it working on the Mac client because the MBU couldn't keep up with the constant changes being made on the Windows side of the house). With Skype (and QIK, which Skype owns), they have a fully functional cross-platform video calling and sharing platform which sets them up to compete with Facetime and possibly even Youtube at some point.

Very possible, but with the VoIP, Microsoft could really compete directly with Cisco and other brands if they positioned themselves right... I think this could really be a huge thing for Microsoft if they handle this right...

Think is gonna be a fair bit of a dead weight in the company more then ATI was to AMD and look what they had to do to rebalance the entire company.

I think the author is missing the point. No ones trying to make Skype the messiah. From what I've seen, Microsoft is just adding yet again to the ecosystem they're building not just for mobile phones but all communications/tech related products.

blueboy75 said,
I think the author is missing the point. No ones trying to make Skype the messiah. From what I've seen, Microsoft is just adding yet again to the ecosystem they're building not just for mobile phones but all communications/tech related products.

Exactly. She's REALLY clueless. I hope she doesn't write about tech regularly, because I'm not sure how she could even be in this business... And from the article, her grasp of business in general is clearly not very tight either...

WHY THE FVCK would a call/chat program save MS in competing with other mobile OSs? and the article ends talking about MS-Nokia and throws Skype in the mix to justify the babble.
I admit, i'm probably more against the sensasionalist title than the content of the article.

To be honest, the article itself is poorly written too. The author draws some strange conclusions from hard facts and jumps randomly from one point to another. Silly grammatical mistakes as well.

Skype does help, but not strong enough to make Mircosoft be the leader again, but possibly take over the number three position of Black Berry.

Manish said,
To be honest, the article itself is poorly written too. The author draws some strange conclusions from hard facts and jumps randomly from one point to another. Silly grammatical mistakes as well.

Yeah, this has to be one of the worst articles I've read in years. Accuracy be damned!... LOL

Pointless article. Microsoft and Apple do not have products that are competing with each other head to head. If one is dominant in a market, the other one is not.

AtriusNY said,
Pointless article. Microsoft and Apple do not have products that are competing with each other head to head. If one is dominant in a market, the other one is not.

Just because one is dominant and the other is not doesn't mean they aren't competing products. What gave you that idea?

Neowin, it might help out if you put the correct authors name and post more than 'These articles are brought to you in partnership with Brothersoft.'

Maybe something about how neowin is not the people writing this article and that the author can be found at the posted link? It would give people the correct target to direct thier ire.

"Even in its comfort zone, PC, for the first time in 20 years, Apple surpassed Microsoft in Q1 2011 quarterly profits and revenues due to a slowdown in PC sales and continuing huge losses in Microsoft's Online Services Division, which contains its search engine Bing."

no they didn't MS still makes more PC profits than apple. apple makes more iOS profits than MS's mobile division. On the PC front, MS still dominates, but as a TOTAL they were less.

sweatshopking said,
no they didn't MS still makes more PC profits than apple. apple makes more iOS profits than MS's mobile division. On the PC front, MS still dominates, but as a TOTAL they were less.

Well said +1

sweatshopking said,
no they didn't MS still makes more PC profits than apple. apple makes more iOS profits than MS's mobile division. On the PC front, MS still dominates, but as a TOTAL they were less.

Yeah, I found the quote from the article to be more than a little disingenuous personally. The article as a whole though is written from a very skewed perspective. It's not even worth reading honestly it's skewed so bad. It's not even accurate...

It's an editorial/commentary piece - Ms. Wong is both pro-mobile and anti-Microsoft (and especially anti-Windows). *No* position is unassailable - just ask RIM. Skype is not even close to being all about the mobile space, and a Microsoft-acquired Skype likely has far less to do with the mobile space than with the corporate space (not just enterprise, but SMBs as well). Why is it that nobody is looking at the major headlines over the past year regarding RIM - other than product announcements, the remainder of those news articles are about governments wanting to snoop on the (currently beyond their reach) BlackBerry Network (which covers communications between various RIM devices); how much of the flight away from RIM is due to paranoia?

PGHammer said,
It's an editorial/commentary piece - Ms. Wong is both pro-mobile and anti-Microsoft (and especially anti-Windows). *No* position is unassailable - just ask RIM. Skype is not even close to being all about the mobile space, and a Microsoft-acquired Skype likely has far less to do with the mobile space than with the corporate space (not just enterprise, but SMBs as well). Why is it that nobody is looking at the major headlines over the past year regarding RIM - other than product announcements, the remainder of those news articles are about governments wanting to snoop on the (currently beyond their reach) BlackBerry Network (which covers communications between various RIM devices); how much of the flight away from RIM is due to paranoia?

Absolutely. I think that a lot of people seem to be focusing on what this means for WP7 for whatever reason, and honestly, this has the potential to impact a LOT of other things (From Windows to Office and everything in between), so I'm not sure how anyone can say that this won't be a worthwhile purchase. If Microsoft uses it right, this could be huge (Particularly for the enterprise / business)...