WSJ is reporting that Microsoft is close to buying Skype for around $8B, its biggest acquisition since it acquired online advertising company aQuantive for $6 billion.
Microsoft Corp. is close to a deal to buy Internet phone company Skype Technologies SA for between $7 billion and $8 billion—the most aggressive move yet by Microsoft to play in the increasingly-converged worlds of communication, information and entertainment.
A deal could be announced as early as Tuesday, people familiar with the matter said, though they cautioned that negotiations aren't yet final and a deal could still fall apart. Including Skype's long-term debt, the total value of the deal is about $8.5 billion.
I am sure Microsoft will get some flak for this purchase but this is huge. Microsoft gets a very strong brand and #1 collaboration service in the consumer space to complement its Enterprise communication and collaboration (Lync, or communicator as it was known some time back) offerings. Microsoft has been perceived weak on the consumer side and what better way to strengthen the same than by adding 666 Million new users who can be leveraged to position other existing and new services/products.
In my view, it will be all about extracting value from this purchase and Microsoft sensible enough will not want to repeat its past mistakes (remember Danger??). Easiest levers to aid in value extraction would be Windows Phone 7 and XBOX/Kinect. Skype integrated into these two devices alone will be a winner for Microsoft. Then there's Enterprise collaboration space where Microsoft has had a decent offering but talk of consumerization of IT and you see a lot of consumer devices & technologies come into Enterprises and that is something Microsoft will want to achieve with Skype. I am sure we will see a lot of analysis on this topic in the coming days and many more great reasons for this purchase. Stay tuned.