Microsoft announced this morning that it has agreed to buy Skype for $8.5 billion. You read that right, $8.5 billion for a company that is producing $250 million in EBITDA. Microsoft’s growth hasn’t been robust, for obvious reasons. The company is huge and well past its prime. It also faces significant competition for all of its distinct products.
Steve Ballmer’s vision here is to integrate the technology provided by Skype into its existing products such as the X-Box 360, Microsoft Outlook, and the new Windows Mobile operating system the company launched last year. Although the idea is great, I am sceptical about it truly adding something spectacular to these products to make the purchase price justifiable. I think the X-Box 360 will benefit the most from the addition of Skype. The gaming system already offers users the opportunity to have voice chat in video games, but the quality of such service is generally very low. The technology added by Skype should be able to improve this and make the experience more enjoyable.
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