A second Microsoft source confirms that the company bought Skype to “accelerate” its position in the communication market, and emphasised that it’s mainly a business play.
This person, who has close insight into Microsoft’s investment strategy but who declined to be named, explains that the Skype deal is a lot like Microsoft’s purchase of enterprise search provider FAST back in 2008.
Microsoft integrated FAST into the SharePoint business collaboration product line. SharePoint already had basic enterprise search, but nothing as sophisticated as what FAST offered. SharePoint is one of the unheralded products in Microsoft’s business software line-up, contributing well over $1 billion in revenue per year (although some of this comes from bundled licenses that aren’t actually used).
Expect Microsoft to use Skype in a similar way to boost Lync.
In particular, Skype’s ability to connect calls to traditional phone systems is a big asset.
The brand was also important: when Microsoft talks to IT managers about Lync, they often hear back “that’s a lot like Skype.”
Microsoft believes that selling IP-based communication systems to replace outmoded PBX phone systems will eventually be a $5 to $12 billion annual market.
If Skype helps Microsoft capture even a relatively small part of this market — say $2 billion a year — then the $8.5 billion purchase price looks pretty cheap.
Lync rolls up into the Microsoft Business Division that also includes Office and Exchange Server (email). That division has been responsible for most of Microsoft’s growth for the last year, but will face difficult comparables starting next quarter, as the anniversary of the Office 2010 release is passed.
Skype is obviously strong consumer product as well, and Microsoft will continue to offer it to consumers. But analysts who think Microsoft is hoping to earn its money back by selling ads against it are missing the point, says this person.