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Posted at 10:27 AM ET, 05/10/2011

Microsoft buys Skype for $8.5 billion

Skype is expected tosupport Microsoft devices such as the Xbox, Kinect and Windows Phone. (DENIS BALIBOUSE - REUTERS)
Microsoft and Skype made the big announcement Tuesday that the Internet telephone company will become part of the Microsoft family to the tune of $8.5 billion.

In a joint statement, the companies said that Skype will support a host of Microsoft devices such as the Xbox, Kinect and Windows Phone. The VoIP company will become a division of Microsoft. Skype’s chief executive Tony Bates will report directly to Microsoft chief executive Steve Ballmer.

In return for acquiring Skype and assuming its debt, Microsoft can compete with Google Voice and Apple’s FaceTime in the mobile market.

That’s great news for Microsoft and Nokia, which recently tied up a partnership to have the Windows Phone platform on all Nokia phones. Nokia is the world’s largest smartphone vendor, followed by Apple.

The question for consumers though, is whether Microsoft can use Skype to its full potential. Microsoft doesn’t have the greatest track record with acquisitions: products such as Hotmail have been left to languish, while a series of other promising acquisitions have been shut down. On the other hand, Business Insider has pointed out some notable exceptions: Microsoft’s 2000 acquisition of video game company Bungie yielded the mega-hit Halo and gave the Xbox a solid following.

It’s not yet clear how the acquisition will affect current Skype customers. On its company blog, Skype did not detail what will happen to existing accounts.

“The combination of Skype and Microsoft will directly benefit all of you who use Skype by ushering in a new era of generative ways for everyone to communicate,” Bates wrote in the post, before thanking Skype’s consumers for their support.

Skype users: What do you think about this deal?

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Skype hits the skids, suffers extensive outage

Skype fixes Android security problem, adds 3G calling

By  |  10:27 AM ET, 05/10/2011

Tags:  Microsoft, Skype

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