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Why is Steve Ballmer excited about Skype?

by alec on May 10, 2011

Microsoft and Skype just wrapped up the official press conference announcing the merger.  Steve Ballmer led the discussion, followed by Tony Bates from Skype, and then Microsoft CFO Peter Klein talking about the deal.

Microsoft is understandably enthusiastic about this deal. They’re getting a great company, and a great brand with 170 million users, all of whom are potential sockets for their advertising business, as well as being buyers of Microsoft products in the future.

According to Ballmer, their “Vision is that products and services that Skype users know and love today will continue to grow and advance.”  They’re committed to grow Skype on non-microsoft platforms, as well as optimizing Skype for the TV with XBox and Kinect, for Windows Phone, and the PC.  At the same time, Microsoft wants to extend the reach of Skype by integrating with Lync, MSN Messenger, Hotmail, Outlook, and XBox Live.

Ballmer also underscored Microsoft’s commitment to business use of Skype.  He cited the “incredible uptake” of the Lync Unified Communications Client, and talked about plans to enhance the client, plus connect to the Skype customer base.

One ongoing theme to Ballmer’s remarks is that we have many “personas” in our daily lives, and communications vehicles that bridge those personas. He used this slide to illustrate his point.


Next up, Tony Bates.  In a nice nod to Microsoft, he noted that Skype was founded as a disruptive platform company in 2003, just as Microsoft had done with MS-DOS in the early 1980’s.  Bates talked about the engagement of the user base. He said that Skype users average 100 minutes of user per month, which explains the interest in advertising as a monetization mechanism.  Moreover, Skype sits at the intersection of three major internet trends, and is well positioned to exploit that advantage.  He highlighted video, in particular.


Bates sees three key opportunities for what he described as “A platform and a set of services that can reach everyone on the planet.”

  • Core communications service – voice, plus video
  • New premium subscription services that layer on top of the base service
  • Advertising that monetizes the large audience.

Peter Klein’s remarks on the financials highlighted Skype’s strong performance, the all cash nature of the deal, the synergies between the companies, and their desire to finish the regulatory process by end of this calendar year.


From where I sit, this has all the makings of a great deal for everyone involved.

  • Microsoft and Skype customers win through a better customer experience as Skype becomes a ubiquitous connectivity option throughout the Microsoft product platform.
  • Skype gets access to the dominant financial resources, markets and channels that Microsoft has built for over 30 years.
  • Microsoft taps into a market of 170 million new customers that can be monetized across multiple product lines and businesses.
  • Microsoft takes a dramatic step toward a more compelling mobile story in the face of fierce competition from Apple and Google.

And Microsoft shareholders?  Well, perhaps after 10 years of stagnation, the company’s stock price might finally move again.

And wouldn’t that be cause for excitement?


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