Business,  Technology

Why I think Microsoft underpaid for Skype

You’ve probably already heard about the purchase of Skype by Microsoft for $8.5 Billion. Most people, or at least the vocal majority, will tell you how they overpaid, with TechCrunch readers telling you how they ‘overpaid by half’ and how they should have paid only $4 Billion. Not like they can justify that number either, just sounds nice to hear it being said.

Imho, that’s a load of bull. I think they got Skype cheap, a lot cheaper than what it would cost to acquire the specific customer base and create the technology to come upto spec with what Skype has built. And more importantly, it gets to buy a next generation communication tool for a fraction of value of the eventual target market. Not to mention the most important aspect of it all ‘time to market’, the time it would have taken them to build a matching service would have put them so far behind it would have been pretty expensive in the long run, just like it will be for their competitors now.

People will throw figures at you, how Skype isn’t worth as much, how they don’t make any profit. What they forget is that the whole internet is founded on communication. And Microsoft has been pretty sharp with the acquisition of the two companies that have created disruptive technologies in this most important of aspect of the web – Hotmail, which revolutionized communications with free email and now Skype, which has revolutionized video communication.

I think this acquisition is extremely smart and actually most of the tech gurus should have seen it coming considering the deals that went before – Microsoft & Nokia, as well as the one between Nokia & Skype.

Here’s what I see will come next – A Windows Phone, manufactured by Nokia, preloaded with Skype and supported by 3G to enable individuals to have video communications on the move. If you don’t think this will revolutionize communications, demolish the competition and bring Microsoft back into the reckoning as a tech major, think again. Add to this the fact that most other hardware manufacturers already provide Skype support and you’ll see why this buy was a no brainer and that Microsoft will come out of these way ahead than when they went in.

Samit Madan is an advertising professional with almost three decades of experience. He's known as the MediaWizard due to his expertise in advertising & marketing. He currently heads MediaWiz, a leading Media Company.