The Hype behind the Skype

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Was is it that Microsoft paid 9.9 times of Skypes? 2010 revenue or the fact that Microsoft would be able to avoid huge tax liabilities by purchasing using overseas funds or even the fact that Microsoft has a Skype like service as Windows Live. These are questions probably only Microsoft knows the answers to.

It’s not what Microsoft can do for Skype but what exactly can Skype do for Microsoft. Skype is more popular compared to Windows Live and it bridges different computers and phones. With Skype application installed on an iPhone, you can talk to someone who has installed Skype on a Dell laptop, for example.

The element that connects all this is the little black box, the Xbox. Basically the combination of 145 million Skype users on average a month and 10 million (the amount sold in six months) Microsoft cameras connected to TV screens through Kinect has the power to influence numbers at Microsoft. The Xbox Kinect is a web based controller-free gaming and entertainment experience by Microsoft. Games can be played without even touching a game controller but, by using voice and hand movement gestures.

This deadly combination of Xbox and Skype open up many possibilities either in the boardroom or in the living room. It could mean that a player could use the Xbox to call anyone who has registered for a Skype account- a grandparent on their land line phone, a friend using an Android phone or even a colleague using Outlook email at work. The same Xbox positioned as a gaming tool can be used in the boardroom with ease and convenience not to mention the low costs.

It seems a very good alliance at the face of it. However the profitability shows a different picture. Windows Live has about 330 million active users each month and about 40 million users as one-time pay users. Whereas Skype has about 8 million paying users. Basically it looks like Microsoft is paying about $1000 for each Skype customer, on an average those customers are worth about a profit of about $30, assuming that a chunk of Skypes’ income comes from subscription and call charges.

Can Microsoft turn Skype into a profitable venture and at the same time keep the users happy? Will the hype really live up to its end? Let’s wait and see.

Source:,,, Google News, Yahoo News

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