|Skype Chief Executive Tony Bates, left, and his Microsoft counterpart....|
Microsoft is buying Internet phone company Skype Technologies for $8.5 billion.
The cash acquisition, announced 10th May, will give Microsoft a significant consumer brand online, access to 170 million people who use Skype for free or cheap calls, and Skype’s phone and video calling software, which runs on the Web and Internet-connected devices.
Microsoft said the acquisition will expand its product offerings, including unified communication software Lync, email software Outlook, instant messaging software Messenger, free Web email Hotmail and online video game network Xbox Live.
The acquisition is the largest in Microsoft’s history and signals a more aggressive business approach from Microsoft as it expands into cloud computing and tries to get some traction with mobile phones and tablets.
Microsoft said Skype will run on its fledgling mobile operating system Windows Phone, Xbox, Kinect and other Windows devices, without being more specific. Microsoft is expected to show a new version of Windows that will run on tablets this fall.
Skype, based in Luxembourg, is privately owned by an investor group led by Silver Lake. The company was started in 2003, and the service has become popular for its free or low-cost local and international voice and video calls. The service runs over the Internet instead of traditional landlines or cellular networks. It uses a technology called voice over Internet protocol, also known as VoIP.
EBay bought Skype in 2005, then sold it to the Silver Lake-led group in November 2009 for about $2 billion.
Skype will become a new division in Microsoft. Tony Bates, Skype CEO, will become a division president and report directly to Microsoft CEO Steve Ballmer.