Analysis: Skype turns 10: did Microsoft's bet pay off?

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Skype’s users like it a lot, and when the Microsoft deal was revealed in 2011 they’d 3 crucial issues.

One, that Microsoft would cut off support for non-Microsoft platforms, two, that Microsoft would push it into every imaginable Microsoft item whether it fit or not, and three, that Microsoft would find some method to screw it up.

They needn’t have fretted. Instead of take in Skype into its Borg-like welcome, Microsoft decided to keep Skype as a different department – and that perhaps prevented Skype from increasing down on Windows to the exclusion of all other platforms.

In addition to Windows platforms there are clients for Macs and Linux, iOS, Android and BlackBerry, compatible house entertainment devices and phones as well as the PlayStation Vita. Windows does appear to get the most attention, but other platforms are still being actively supported: the Mac customer was upgraded in March and the Linux one in November, with the iOS app getting an upgrade this month.

Skype’s individual numbers have expanded from 170 million at the time of the acquisition to 300 million earlier this year. Windows Live Messenger, which Skype was purchased to replace, had dropped from a peak of 300 million to around 100 million in 2011.

Did Microsoft pay too much?

Skype’s individuals invest 2 billion minutes each day on the service, and according to research from market experts TeleGeography, Skype use is equivalent to one-third of all the world’s telephone website traffic. That study was prior to Skype’s replacement of Windows Live Messenger previously this year, so those numbers ought to be considerably higher now.

As for shoving it into Microsoft’s own items, Skype was gotten to change the aged and troubling Windows Live Messenger, and it’s mostly gone where you’d expect: it connects with the Microsoft Lync venture messaging platform, is readily available in, is set up by default in Windows 8.1 and benefits from the Xbox One’s Kinect camera – although you won’t be able to Skype on the Xbox One unless you pay for an Xbox Live Gold account.

Skype vs Hangouts

The big question is whether Microsoft paid too much, and the answer is basic: obviously it did. $8.5 billion – 32 times Skype’s operating profit – was much, a lot more than Skype was worth, with Steve Ballmer betting that Skype’s long-lasting growth would justify paying what the majority of analysts agreed was four times Skype’s value. The numbers are improving – the Skype division’s revenues (not earnings) are up to $2 billion compared with Skype’s $800 million in 2011, although the more recent numbers likewise consist of Lync – however it will be a while before Microsoft gets its money back.

However, the acquisition hadn’t been almost monetising Skype’s individuals. Buying Skype was also a protective move, created to fend off competitors from Google and Cisco in the business markets, and to provide Microsoft a vital gamer in the mobile Voice over IP market – a market that’s still quite in its infancy, and one where Microsoft has actually been taking baby actions.

The long term vision is for Microsoft to be the hub of your voice and video communications, no issue what device you happen to be using, and Skype is a crucial part of that.

A new video messaging feature was added in June. It's like voicemail, but with video

What’s next for Skype?

There could be a cloud on the horizon, however. In July, Steve Ballmer revealed a significant reorganisation: ‘we’re rallying behind a single strategy as one business – not a collection of divisional techniques,’ he composed.

Skype will enter into a brand-new Applications Team alongside Workplace and Bing, and Skype president Tony Bates is off to take charge of developer relationships and evangelism. If Skype owes its existing success to its arms-length relationship with Microsoft, then the One Microsoft policy could show to be its undoing.