Microsoft Snaps Up Skype

With rumours that Google and Facebook were circling around Skype like Great White sharks looking for their next meal, another big fish came in from under their noses.

Bill Gates' huge computer corporation outbid the others to take the Voice over Internet Protocol Company for a staggering $5.2 billion.

Microsoft has long been trying to get in on the voice communications business but struggled at first with the unsuccessful market impact of their Kin phone.

Microsoft then followed this up with the Windows Phone 7, but that model will have a hard time trying to compete with the wildly popular Apple iPhone and Google Android smartphones.

Yet while other companies have been feeling the global economic pinch, there are no such problems from Microsoft which this week reported revenue in excess of $16 billion.

That means that the loss of $156 million from the failed launch of the Kin Phone last year was not a terminal problem.

We wait now to see what the future holds for Microsoft and Skype. Analysts predict that one move might be to allow an in-game chat service for users of the Xbox gaming console. Surely though this would be the very least of the powerful VoIP capacity which Skype offers.

Skype was just preparing itself for an Initial Public Offering with a rapidly amassed 170 million paying subscribers and a valuation of over $1 billion.

It seems that the bidding war forced Microsoft to pay five times that much, but the company has made a strong statement to its rivals that it intends to be the dominant player for many years to come.

However some Microsoft investors remain skeptical of acquiring a service which has always struggled to monetise itself.

Forrester Research analyst Andrew Bartels said: "It doesn't make sense at all as a financial investment. There is no way Microsoft that is going to generate enough revenue and profit from Skype to compensate for this huge outlay."

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