Microsoft buys Skype for $8.5 billion

Microsoft CEO Steve Ballmer (L) shakes hands with Skype CEO Tony Bates during a news conference on May 10, 2011 in San Francisco, Calif. Microsoft has agreed to buy Skype for $8.5 billion.

Kai Ryssdal: If you own a computer, and especially if you've been overseas, you're probably familiar with Skype. You can make phones calls, you can video chat online -- and you can usually do it for nothin'.

The $8.5 billion Microsoft is spending to buy it will be their biggest purchase ever. But the whole thing does leave this one nagging question: how Microsoft's going to get its money's worth? Marketplace's Steve Henn reports.


Steve Henn: Skype has 170 million loyal users, and many of them seem worried that Microsoft is about to come in and screw things up.

Peter Falvey: I think in the near term, they should do absolutely nothing.

Peter Falvey is a tech analyst at Morgan Keegan.

Falvey: They should allay some of the fears that the consumers will have that Microsoft is going to instantaneously come along and start charging for everything and change what people have loved about Skype.

Here's what they love: Skype lets you chat with your grandparents in Akron while you're trekking in from Timbuktu. It let soldiers in war zones watch their children being born. And it's all free.

Today at a press conference, Microsoft's Steve Ballmer said none of that will change.

Steve Ballmer: Fundamentally, part of the strategy here is to build and grow the Skype brand.

Ballmer wants to bake Skype into a whole range of Microsoft products: from Windows Phone to MS Office to Xbox and Kinect. Tony Bates is Skype's CEO.

Tony Bates: We believe this is a platform and a set of services that can reach everyone on the planet.

But it's also a business, and one that so far has failed to make a profit.

Microsoft is hoping to help Skype reach hundreds of millions of new customers, sell interactive ads and create new services that consumers and businesses will actually pay for. Peter Falvey is only cautiously optimistic.

Falvey: You know, not many people will say they love their Microsoft-oriented products.

But he says if buying Skype helps Microsoft building something consumers actually desire -- then this deal could be worth every penny.

In Silicon Valley, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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