Microsoft buys Skype

All Things Digital is reporting that Microsoft’s play to buy Skype for $8.5 billion has been confirmed.  The deal would likely bring interoperability between Skype and Windows Live Messenger but more importantly, give Microsoft’s Kinnect some solid communications software.  Microsoft has already sold over 10 million Kinnects since March 2011 which means a lot of Microsoft cameras (but only 640×480 standard definition resolution) attached to consumer HDTVs.  The Kinnect already has its own video communications software but the Skype deal gives it instant access to millions of Skype users around the world.  Furthermore, Skype has managed to make connectivity between endpoints seamless and problem free while Microsoft’s Live Messenger has always

Skype also had intentions of getting integrated into HDTV sets and it makes sense for all the Microsoft and Skype clients to talk to each other.  Lack of connectivity between instant messaging software and voice over IP (VoIP) software has plagued the industry and it has meant that users of one software or hardware platform haven’t been able to see or communicate with users of another platform.  Cisco video conferencing devices intended for the home won’t even communicate with Cisco video conferencing devices intended for the enterprise market.  With the acquisition of Skype, Microsoft buys itself a very large merged communications platform encompassing voice, video, and text.  Whether that justifies the steep $8.5 billion remains to be seen, though it seems unlikely that it could do worse than the $9 billion per year that Microsoft sinks into “bleeding edge” research and development with hardly anything to show for it.

This does raise some interesting policy questions as well.  Microsoft had long abandoned the “Net Neutrality” regulation proponents but Skype has been one of the most staunch advocates of regulation especially when it comes to mobile Internet services.  Does this mean that Microsoft will pull Skype into the free market camp or vice versa?