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.
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.
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.
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.
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.
Microsoft today announced the availability of Service Pack 2 for Office 2007. What’s in it for Office 2007 users?
Users should notice the improved performance and stability of Outlook, better charting functionality in Excel, and more control over the appearance of SmartArt graphics.
On the server side, IT professionals will notice several enhancements to the security and performance of SharePoint Server 2007, including support for read-only content databases, improvements to forms-based authentication, and an STSADM command-line utility that enables administrators to scan sites that use the variations feature for errors. SharePoint Server will also feature better support for newer versions of the Firefox browser.
Also, having a wider array of file-format choices should really benefit customers. With SP2, Office 2007 now has built-in support for Open XML, ODF and PDF, along with the dozen or so other formats that were already supported in Office 2007.
Office 2007 users can download SP2 right away or wait for it via Microsoft Update where it will appear "no sooner than three months from now, and with at least 30 days notice."
Microsoft is rolling out the PR for Office 2010 (formerly Office 14) and Exchange 2010:
We’re announcing that Microsoft will begin releasing new versions of Office-related products this year. Exchange 2010 will be the first product in this lineup, entering beta for customers to download today. Exchange 2010 will become available in the second half of 2009. Office 2010 — including Office Web applications, SharePoint Server 2010, Visio 2010 and Project 2010 — will enter a technical preview in the third quarter of 2009 and will release to manufacturing in the first half of 2010.
So what goodies does Microsoft have for users of Exchange 2010 and Office 2010 (which reportedly will have both 32 and 64-bit versions)? Well, that’s a bit hard to discern amidst the flummery, but beyond the improved Outlook Web Access Webmail client, one other theme seems clear:
IT professionals will have more flexibility and choice to simplify deployment and lower management costs, while maintaining control. For example, Exchange 2010 and SharePoint Server 2010 give users the same value whether deployed on-premises, as a service from Microsoft and industry partners, or a mix of both.
As for the Exchange 2010 beta:
Exchange 2010 is part of the next wave of Microsoft Office-related products and is the first server in a new generation of Microsoft server technology built from the ground up to work on-premises and as an online service. This release of Exchange 2010 introduces a new integrated e-mail archive and features to help reduce costs and improve the user experience. A public beta of the server is available for download starting today at http://www.microsoft.com/exchange/2010.
There is a full laundry list of new Exchange 2010 features at the link, not a few of which are rather obscure.
As anticipated, Microsoft today launched Windows Live Hotmail worldwide with a spiffy new AJAX interface and the intent of retiring its venerable MSN Hotmail which has over 280 million users. Some key aspects:
There are more new features and aside from the nomenclature madness, this all seems worthwhile, but now begins the long transition of existing users which Major anticipates will be complete by November. I can’t help but observe that the transition would be faster if they had the Outlook Connector and the new Live Mail client ready now.
Update: Ina Fried has an interesting Hotmail background story that reveals that the new AJAX interface was deemed too slow, particularly on dial-up lines, and that was the reason that an updated “classic” interface was reintroduced to the final product at some delay.