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Microsoft Corp. (Nasdaq: “MSFT”) and Skype Global S.à r.l today announced that they have entered into a definitive agreement under which Microsoft will acquire Skype, the leading Internet communications company, for $8.5 billion in cash from the investor group led by Silver Lake. The agreement has been approved by the boards of directors of both Microsoft and Skype.
The acquisition will increase the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise users and generating significant new business and revenue opportunities. The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services.
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Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.
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Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.
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The acquisition is subject to regulatory approvals and other customary closing conditions. The parties hope to obtain all required regulatory clearances during the course of this calendar year.
Om Malik has some perspective on why Skype’s owners were anxious for it to be sold and suggests that if Microsoft does not botch the acquisition, the big winner could be Facebook (who already has a relationship with Microsoft) and that a joint announcement could be expected shortly. Still, the big question is how the acquisition will work out, including how much of the Skype team will stay with Microsoft and the basic economics of the Skype service which has already suffered through a failed acquisition by eBay:
Despite its popularity, the service has struggled to maintain profitability. Since most of its services are free, Skype makes much of its income from a small group of users who pay for long distance calls to telephone numbers. In 2010, Skype recorded $859.8 million in revenue but reported a net loss of $7 million, according to a filing.
Microsoft’s deal-making history is mixed. The company has often been an smart acquirer of start-ups and smaller companies, analysts say, picking off technical teams that are then folded into products likes Windows, Office and Internet Explorer. But during Mr. Ballmer’s tenure as chief executive, beginning in 2000, the company has also made far larger, riskier bids, most of which have been viewed as unsuccessful.
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In 2005, eBay bought Skype for $2.6 billion with hopes of tightly integrating the service as a sales tool. But the deal never lived up to its promise and eBay took a $1.4 billion write-down on its investment.
I’m frankly a bit dubious about the success or at least profitability of this acquisition since Skype doesn’t even seem to be a side dish, but more of a garnish on Microsoft’s plate and a very expensive garnish at that.
Today, Microsoft announced that it has sold Expression Media (a member of its Expression Studio family of Web tools) to Phase One, a Danish company that bills themselves as "the world’s leader in open-platform based medium format camera systems and solutions."
Microsoft Corp. and Phase One A/S, a leader in digital photography, are announcing that Phase One acquired the Microsoft Expression Media product. This agreement is built on an existing strategic alliance between the companies forged in 2007 to improve digital imaging solutions for professional and enthusiast photographers.
Expression Media is a leading digital asset management application used to catalog and organize photos, video and music for effortless retrieval, presentation and sharing. Expression Media will join Phase One’s product lineup, which includes open-platform-based, medium-format camera systems able to render up to 60.5 megapixel resolution, and Capture One raw-conversion and image-editing software, which supports more than 170 different file formats and provides superior image quality with excellent color and detail. Phase One products are used by some of the world’s leading photographers.
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Under the terms of the agreement, Phase One takes full ownership of the Expression Media product. To ensure a smooth transition for Expression Media customers, Microsoft will continue to provide support to retail customers for 90 days. Phase One will begin offering support for the Expression Media product after the 90-day transition period. Microsoft customers who are currently using Expression Media under an Enterprise Agreement will continue to receive support from Microsoft through the term of their agreements. Financial terms of the agreement were not disclosed.
Expression Media was formerly iViewe MediaPro which Microsoft obtained when it acquired iView Multimedia in 2006. Chalk this one up as another acquisition that did not pan out for Microsoft. I expect that multimedia asset management was rather too specialized a niche for Microsoft’s developer customers – even the "creative professionals" that the Expression Studio family targets.
Microsoft today unveiled their much buzzed entry in the mobile phone marketplace, but in keeping with their desire to still sell their phone operating system to the usual phone vendors, it has an oddly circumscribed target customer set:
Microsoft Corp. today announced KIN, a new Windows®Phone designed specifically for people who are actively navigating their social lives. Brought to life through partnerships with Verizon Wireless, Vodafone and Sharp Corporation, KIN is designed to be the ultimate social experience that blends the phone, online services and the PC with breakthrough new experiences called the Loop, Spot and Studio. KIN will be exclusively available from Verizon Wireless in the U.S. beginning in May and from Vodafone this autumn in Germany, Italy, Spain and the United Kingdom.
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The New Way to Share
The home screen of the phone is called the KIN Loop, which is always up to date and always on, showing all the things happening in someone’s social world. KIN automatically brings together feeds from leading Microsoft and third-party services such as Facebook, MySpace and Twitter all in one place, making it easier to stay connected. Customers can also select their favorite people, and KIN will automatically prioritize their status updates, messages, feeds and photos. Another unique feature, the KIN Spot is a new way for people to share what’s going on in their world. It lets them focus first on the people and stuff they want to share rather than the specific application they want to use. Videos, photos, text messages, Web pages, location and status updates are shared by simply dragging them to a single place on the phone called the Spot. Once all the people and content are in the Spot to share, the consumer can choose how to share, and start broadcasting.
Your Phone, on the Web
KIN Studio is your phone online. Almost everything created on the phone is available in the cloud from any Web browser. Photos and videos are freed from the confines of the phone and presented in an online visual timeline so they are easy to view and share. The KIN Studio automatically backs up texts, call history, photos, videos and contacts, and populates a personalized digital journal so it’s easy to go back in time to relive a crazy weekend or recent birthday. And the KIN Studio gives customers tons of storage to keep all those photos, videos, contacts and texts so they’ll never run out of space on their phone and lose a memory.
Music and More
KIN will be the first Windows Phone to feature a Zune experience — including music, video, FM radio and podcast playback. With a Zune Pass subscription, customers using Zune software on their PC can listen to millions of songs from Zune Marketplace on their KIN while on the go, or load their personal collection. KIN also has other features customers want in a phone including a rich browser with the ability to share pieces of the Web, local and Web search by Bing, and an RSS feed reader to pull down information on people and stories from the Web.
The KIN is the product previously rumored as the "Pink Phone" and is an descendant of the Sidekick product acquired with the 2008 acquisition of Danger, Inc. As for the target market, the polite way to refer to it is as a "younger crowd," but the temptation is irresistible to refer to the KIN as the Kid’s Phone. I suppose the good news is that Microsoft probably has not burned their bridges with the phone OEM’s, but the bad news is likely that the KIN sinks like a rock. My guess that trying to convince the average teenager that he/she really wants a KIN and not an iPhone or BlackBerry is going to be a tough sell.
Microsoft continued its pattern of acquisition of smaller healthcare software providers for its Amalga healthcare unit with today’s announcement of the acquisition of Sentillion:
Microsoft Corp. today announced that it intends to acquire Sentillion Inc., a privately held company specializing in software for the healthcare industry. Combining Sentillion’s products with Microsoft Amalga Unified Intelligence System (UIS) will make it easier for healthcare professionals to deliver better patient care by streamlining access to multiple IT applications and patient data.
Sentillion will continue to sell and support its products to new and existing customers while Microsoft invests in the long-term evolution of the combined portfolio of Sentillion and Microsoft health solutions. Sentillion will also continue to operate out of its corporate headquarters in Andover, Mass. The acquisition is expected to close in early calendar year 2010. Financial terms were not disclosed.
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By combining Sentillion’s context management and single sign-on technologies with Amalga UIS, a real-time data aggregation solution, Microsoft aims to give clinicians new insight about patients in real time and enable them to perform the appropriate task with unprecedented speed. At the same time, the workflow of clinicians will be simplified, allowing them to spend less time navigating different IT systems and more time with patients.
