Skype has 13% of calls. It has lots of connections to the various different telephone networks all around the world. MS bought the largest telecommunications company. MS wants into telecommunications in a big way.
Skype has a product that corporate users want - voip/conference calls/video conferencing. MS has access to that market, which Skype did not really have.
Skype has a massive user base(663 million registered users as of 2010). These users also have contact lists - business, friends, and family. Think of these social connections in a user base larger than facebook. MS wants more into social.
Skype has a massive amount of peoples credit cards on file, and agreements with those people.
Skype has a huge botnet(110 million+ active nodes). Many of the computers running Skype process data, and use their internet pipe for Skype. Remember Skype is a P2P network.
The Skype brand is quite strong, and is something people like. MS needs to buy into brands like Skype, which people love - since many people hate the MS brand.
Then there is the raw talent they are buying. These are some seriously good hackers, and business people.
Great points. What's more is that they pre-empt and sort of sidestep Google out of a big part of this too. People who criticize the high price paid for Skype should also think about their decision to invest in Facebook at a $15bn valuation early on - another bold move by Gates.
Except Skype is not a product that corporate IT wants - as you point out, it is a botnet and they do not want their bandwidth being sucked up for calls.
MS does have access to the market - but it's one increasingly dominated by Cisco and their solutions just work. I do not think Skype will succeed in the enterprise.
pedantic note: not larger than facebook, as pointed out in a dozen other comments on the skype deal, facebook's reported 600M+ users are _active_ users
Bill Gates is a savvy guy, but come on, he is the chairman of the board of directors of a Fortune 50 company. What's he going to say -- he was tepid on the deal they just spent $8.5 billion on? Boards don't operate like this (that is to say, boards don't air their internal disagreements or criticize sitting management in public).
How about nothing at all? If he truly thought the deal sucked, there are a lot of politically correct ways to feign corporate enthusiasm without saying "I was a strong proponent at the board level for the deal being done."
He's pretty much personally endorsing the deal, which is not savvy if he's tepid on it.
for the corporate world, MS can probably do some big upselling into the PBX world.
I think their could be some interesting tie-ins to getting an integrated system working between the pbx of the company you are contacting, and web-based support. Theoretically skype could provide that for their already installed base.
Microsoft already has a VoIP stack for enterprise through their "Microsoft Unified Communications", and its already integrated into many of their products, esp office (though my knowledge/understanding of this product line is limited).
I think the value behind the Skype acquisition is as a consumer-facing VoIP solution; think of integration with windows phone, windows messenger, and xbox. Its great for consumers because its a brand that grandmothers are familiar and comfortable with.
"It'll be fascinating to see how the brilliant ideas out of Microsoft research, coming together with Skype, what they can make of that."
Really, I promise.. I'm not trying to be snarky... but can someone point out to me recent examples of "brilliant ideas out of Microsoft research" making a dent in the world I live in lately? I'm struggling.
[Edit - Quora-style-summary]:
1. Kinect, mostly
[Edit - soft apology / further expression of confusion]:
So, ample down-votes so far (expected), and lots of comments.. but still very limited in terms of interesting input about projects that have come out of MSR that have (as I put it) made a dent in the world. So far lots of people pointing at Kinect (and one person pointing out it was acquired), some noise about Surface, a mention of .NET. Honestly, none of which have made my life any better. That's not a bad thing though. I guess maybe I'm in the minority, and lots of you are living in a much better world because of Surface, or something.
At any rate, sorry if I've offended. I really wasn't attempting to call bullshit on MSR at all, I was genuinely curious (and yes, a little cynically suspicious).
MS research has produced a lot of stuff that is directly used in games today. Hugh Hoppes research on vertex cache optimization and SHPRT has been a shipping part of the DirectX SDK for years for example. Recently MS Research published a paper that greatly reduced Kinect latency that is likely to make its way into games and other applications.
I'm not as aware of other research to product transitions, but I imagine a lot of MS research's work has moved to .NET (I think F# might have started as a MS Research project?) Microsoft Research is one of the strongest divisions right now, they produce a lot of cool stuff, practical or not.
The problem with Microsoft is that they aren't able to turn all that research into usable products. But that doesn't mean the research isn't valuable, some of the best ideas in the world have been happening ahead of their time you know ;)
Microsoft produces a lot of paper in a very large set of fields related to computer science. They invest a lot in research and I know it doesn't seem like it for those outside of academia. Hell I bet Bell labs didn't seem too impressive except for the transistor to the outside world.
Someone mentioned Haskell, they also do a lot in artificial intelligence, operating system research, security (yeah yeah I know), human computer interaction etc.
Not to long ago Apple passed Microsoft in profits, but that difference is much smaller than the difference in R&D budget. If you take that into account, Microsoft is much more profitable.
MS Research has been working on the life tracking hardware / software combo for awhile now. Which is something I've personally been interested in and I think is going to be huge going forward, especially with facebook getting people accustomed to a privacy free world. I just don't know how to turn that future technology into profits for me yet.
I expect lots of people to opt into a device the records their conversations... locations... images of the people around them... And the collates into some useable data using voice recognition + facial recognition + voice-to-text
The resultant data could be searchable by person... And bring up every picture of the person.. every conversation.. a map of locations where that person was with you (picture or voice)... etc... Anyway, MS Research has been working on similar stuff and I for one think that is going to be awesome technology someday.
MSR has the biggest R&D budget in the country after the U.S. federal government. I think they'd hit brilliance inevitably. Probability would demand it.
Although I don't use it, I think that Bing has forced google to up its game. I doubt the recent Panda update would have been as soon, as widespread (it even had a follow on update), or as publicized if not for bing.
MS has had its own video conferencing via MSN messenger for years. I don't see the value of spending 8.5 billion in order to get Skype's tech - I would think that money would be better spent on a very fat pipe on which to run the live video.
1. Skype offers the best product in its market (and is the market leader)
2. Skype has 110m+ active users, and 660m+ overall users.
$8.5b is too much, in my opinion, but Microsoft obviously believe that it's a fair price to pay for the reasons above (among others, of course). The value gained is tremendous. What Microsoft does with that value remains to be seen.
I think they spent 8.5 billion dollars for the skype brand. It also reduces competition. In the article it sounds like Microsoft Research has a good amount of tech of their own. I almost wonder if Microsoft Research has the next big thing, and they're planning on using skype to put it out there.
Hopefully it means the death of Messenger. And hopefully they don't make Skype like Messenger. They really did their best to kill Messenger over the years with all the re-writes.
If you look at the language: "I was a strong proponent at the board level for the deal being done"
What was he at other levels?
The presence of "at the board level" is distancing language. If he was personally fully behind the deal, he would be likely not to include that phrase and to add that information in a different structure.
My take is he's uncomfortable with the deal and was likely not fully behind it.
I see it not being distancing language so much as an attempt on his part to emphasize that he's a strong proponent at the highest possible level. Besides, who's a strong proponent for something at the board level but tries to fight against it at lower levels? No way Gates doesn't feel like he can say what he wants at the board level.
Bill's role is at the board level these days. He's not actively involved in the day-to-day running of the company.
But a decision of this magnitude is, without a doubt, a board-level decision. And there, at the very highest level possible, Bill was a strong proponent, he says.
And somehow you read this as him not being fully behind it?
[+] [-] illumen|15 years ago|reply
Skype has a product that corporate users want - voip/conference calls/video conferencing. MS has access to that market, which Skype did not really have.
Skype has a massive user base(663 million registered users as of 2010). These users also have contact lists - business, friends, and family. Think of these social connections in a user base larger than facebook. MS wants more into social.
Skype has a massive amount of peoples credit cards on file, and agreements with those people.
Skype has a huge botnet(110 million+ active nodes). Many of the computers running Skype process data, and use their internet pipe for Skype. Remember Skype is a P2P network.
The Skype brand is quite strong, and is something people like. MS needs to buy into brands like Skype, which people love - since many people hate the MS brand.
Then there is the raw talent they are buying. These are some seriously good hackers, and business people.
I think MS got Skype for a great price.
[+] [-] sayemm|15 years ago|reply
[+] [-] smiler|15 years ago|reply
MS does have access to the market - but it's one increasingly dominated by Cisco and their solutions just work. I do not think Skype will succeed in the enterprise.
[+] [-] riffraff|15 years ago|reply
[+] [-] keithwinstein|15 years ago|reply
[+] [-] spinchange|15 years ago|reply
He's pretty much personally endorsing the deal, which is not savvy if he's tepid on it.
[+] [-] pedalpete|15 years ago|reply
https://extras.skype.com/
for the corporate world, MS can probably do some big upselling into the PBX world.
I think their could be some interesting tie-ins to getting an integrated system working between the pbx of the company you are contacting, and web-based support. Theoretically skype could provide that for their already installed base.
[+] [-] dreamux|15 years ago|reply
I think the value behind the Skype acquisition is as a consumer-facing VoIP solution; think of integration with windows phone, windows messenger, and xbox. Its great for consumers because its a brand that grandmothers are familiar and comfortable with.
[+] [-] kasperset|15 years ago|reply
Great,great for Skype but just great for Microsoft.
[+] [-] famousactress|15 years ago|reply
Really, I promise.. I'm not trying to be snarky... but can someone point out to me recent examples of "brilliant ideas out of Microsoft research" making a dent in the world I live in lately? I'm struggling.
[Edit - Quora-style-summary]:
1. Kinect, mostly
[Edit - soft apology / further expression of confusion]:
So, ample down-votes so far (expected), and lots of comments.. but still very limited in terms of interesting input about projects that have come out of MSR that have (as I put it) made a dent in the world. So far lots of people pointing at Kinect (and one person pointing out it was acquired), some noise about Surface, a mention of .NET. Honestly, none of which have made my life any better. That's not a bad thing though. I guess maybe I'm in the minority, and lots of you are living in a much better world because of Surface, or something.
At any rate, sorry if I've offended. I really wasn't attempting to call bullshit on MSR at all, I was genuinely curious (and yes, a little cynically suspicious).
[+] [-] Impossible|15 years ago|reply
I'm not as aware of other research to product transitions, but I imagine a lot of MS research's work has moved to .NET (I think F# might have started as a MS Research project?) Microsoft Research is one of the strongest divisions right now, they produce a lot of cool stuff, practical or not.
[+] [-] bad_user|15 years ago|reply
You're also kind of lazy for asking, as you could simply check their website, which contains a list of projects and papers published: http://research.microsoft.com/en-us/research/default.aspx
The problem with Microsoft is that they aren't able to turn all that research into usable products. But that doesn't mean the research isn't valuable, some of the best ideas in the world have been happening ahead of their time you know ;)
[+] [-] nkassis|15 years ago|reply
Someone mentioned Haskell, they also do a lot in artificial intelligence, operating system research, security (yeah yeah I know), human computer interaction etc.
Not to long ago Apple passed Microsoft in profits, but that difference is much smaller than the difference in R&D budget. If you take that into account, Microsoft is much more profitable.
[+] [-] tseabrooks|15 years ago|reply
I expect lots of people to opt into a device the records their conversations... locations... images of the people around them... And the collates into some useable data using voice recognition + facial recognition + voice-to-text
The resultant data could be searchable by person... And bring up every picture of the person.. every conversation.. a map of locations where that person was with you (picture or voice)... etc... Anyway, MS Research has been working on similar stuff and I for one think that is going to be awesome technology someday.
http://techcrunch.com/2009/09/06/life-recorders-may-be-this-...
http://research.microsoft.com/en-us/um/cambridge/projects/se...
[+] [-] orijing|15 years ago|reply
A recent success is the Kinect, which was the fastest-selling consumer product on record.
[+] [-] pyre|15 years ago|reply
edit: From wikipedia:
[+] [-] Apocryphon|15 years ago|reply
[+] [-] Travis|15 years ago|reply
Guess that's not really research.
[+] [-] commandar|15 years ago|reply
[+] [-] davidw|15 years ago|reply
[+] [-] unknown|15 years ago|reply
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[+] [-] sad_bug_killer|15 years ago|reply
[+] [-] shareme|15 years ago|reply
[+] [-] brisance|15 years ago|reply
[+] [-] johnrob|15 years ago|reply
[+] [-] bvi|15 years ago|reply
2. Skype has 110m+ active users, and 660m+ overall users.
$8.5b is too much, in my opinion, but Microsoft obviously believe that it's a fair price to pay for the reasons above (among others, of course). The value gained is tremendous. What Microsoft does with that value remains to be seen.
[+] [-] pkamb|15 years ago|reply
[+] [-] clistctrl|15 years ago|reply
[+] [-] joshaidan|15 years ago|reply
[+] [-] RuadhanMc|15 years ago|reply
[+] [-] aneth|15 years ago|reply
What was he at other levels?
The presence of "at the board level" is distancing language. If he was personally fully behind the deal, he would be likely not to include that phrase and to add that information in a different structure.
My take is he's uncomfortable with the deal and was likely not fully behind it.
[+] [-] glhaynes|15 years ago|reply
[+] [-] michael_dorfman|15 years ago|reply
Bill's role is at the board level these days. He's not actively involved in the day-to-day running of the company.
But a decision of this magnitude is, without a doubt, a board-level decision. And there, at the very highest level possible, Bill was a strong proponent, he says.
And somehow you read this as him not being fully behind it?
[+] [-] davi|15 years ago|reply
Agreed it's distancing language but my guess is that he doesn't want to undercut Ballmer's authority.