$8.5 billion for Skype

Posted on May 10, 2011

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Microsoft announced today that it was going to buy Skype, the leader in Internet vid/voice communication for a whopping $8.5 billion…in cash.

This seems like a good move for Microsoft considering Skype boasts over 100 million users a month, with whom the average connection time is 100 minutes per month.

Skype has fought to make a profit, which makes sense since part of the reason the service is so popular is because it is free. Most of the money Skype makes comes from the small subset of users who pay to make long distance calls to actual telephones.

Some analysts guess that part of what made Skype so appealing to Microsoft was the chance it would bring in terms of getting ahead of it’s main rival-Google.  One analyst quoted in the Times confirmed this idea, saying that Skype’s video services were already ahead of Google’s, and now Microsoft can have those very bragging rights.

I have used both Skype and gChat video to webcam with some of my high school friends. While I do prefer gChat in terms of instant messaging, when it comes to video I only use Skype now-the picture quality is unbeatable.

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