Wednesday, May 11, 2011

Is Skype A Win For Microsoft?

With Microsoft paying a lot of money to acquire Skype, one has to wonder if this is a good investment of capital or a bad one. With its signature Office product, Microsoft may believe that a full integration of Skype into its suite will have enormous value to the business community. "Microsoft is betting that Skype can help change its fortunes. Skype is a leader in Internet voice and video communications, with 170 million users each month connected for more than 100 minutes on average. In the last year or two, video use has surged, now accounting for 40 percent of Skype’s traffic."

Skype helps make international calls cheaper. Skype helps grandparents see their grandchildren long distance. And while video calling has been the dream for telecommunication for years, most younger generation users prefer texting to calling. In the business would, video conferencing can work when you are also presenting powerpoint and other materials. In those instances, software like WebEx works well. But in most interactions between buyer and seller, the anonymity of a voice only call over video chatting remains the preference. We multitask so much when we are on a call and we don't want the other person on the call to know that we are not giving them our full attention. Otherwise, we might be caught reading our emails, drinking our coffee, or chatting with the mute button on to someone else in the room.

Can Microsoft take this expensive investment and find additional revenue? "Google, like Skype, has a free Internet phone call and video messaging service. So Microsoft, analysts say, is taking a bold step to grab a leadership position instead of risking falling behind Google in a crucial market and then facing the difficult task of trying to catch up." Is this space the best place for Microsoft to make this investment? Will users pay more for the Office Suite with Skype? Hopefully Microsoft has already put together a strategy to quickly capitalize on the software and make it, like the Office Suite, invaluable for the user. Or it may become for Microsoft another bust investment.