Microsoft at Work on Meshing Its Products With Skype
PALO ALTO, Calif. — By some measures, Tony Bates has accomplished a lot at Skype since Microsoft paid $8.5 billion for the Internet calling service. — The statistics tell the story. In seven months, the number of people using …
Context & Ripple Effects
Microsoft's $8.5 billion Skype acquisition created a separate business division in 2011, and the company formally welcomed Skype into Microsoft that October. The integration work is the test of whether that purchase becomes a product advantage rather than a standalone communications service.
Skype had already been framed as relevant to the evolving workplace communications market. Folding its calling service into Microsoft's established products gives that workplace role a larger distribution path.
First-order effects
- Microsoft's product teams can build Skype's Internet-calling capabilities into their own software, while Skype's development priorities become more closely tied to Microsoft's portfolio.
- Skype users gain a clearer connection between the calling service and the Microsoft products they use.
Second-order effects
- Microsoft's return on the Skype purchase becomes more dependent on successful product integration and adoption across its software base than on Skype operating as a separate service.
- Embedding communications in Microsoft products raises the value of Microsoft's existing distribution channels, making calling features part of the broader product choice for customers.
Third-order effects
- If Microsoft carries the integration across its portfolio, workplace communications will increasingly be competed for through bundled software ecosystems rather than through standalone calling services.
The trend: Internet calling is becoming a built-in capability of broader workplace software portfolios, with distribution across existing products determining its strategic value.