SAN FRANCISCO — Imagine using your Xbox and switching from a game to a video chat with a faraway friend holding an iPad. Or going into your office e-mail to invite Grandma to a virtual family reunion beamed on TV sets to relatives across the country.
Microsoft’s $8.5 billion purchase of Skype is supposed to make using the Internet for video phone calls as common as logging on to Facebook or instant messaging is today.
If it wins regulatory approval, the deal announced Tuesday provides Microsoft, the world’s largest software maker, with the means to sell more digital advertising and offer more popular conferencing tools to help businesses save money.
Skype’s services also span hot markets — online socializing, mobile phones and digital video — where Microsoft has been struggling to catch up with Facebook, Apple and Google.
Analysts and investors couldn’t seem to agree whether Microsoft is wasting its money on an unprofitable service or has pulled off a coup that will help it restore clout. Microsoft stock was virtually unchanged, falling 0.6 percent.
About 170 million people worldwide use Skype regularly for calls and chats. Microsoft believes it can attract hundreds of millions more by weaving Skype into its products. Not just Windows, which runs on eight of every 10 computers and servers on the planet, but also its Outlook e-mail program, software for phones and the Xbox video-game console.
Microsoft already has a Skype-like service called Windows Live. But the real Skype is far more popular and bridges different computers and phones. Already, someone using the Skype application on an iPhone can talk to someone who has it installed on a Dell laptop.
For businesses, Microsoft has separate communications software. Building Skype into it would make it easier for corporate users to conduct video chats with people at other companies, or from home, said Bern Elliott, an analyst at research firm Gartner Inc.
Skype allows users to make voice and video calls for free or pennies. Calls from one Skype account to another are free. Skype users made 207 billion minutes of voice and video calls last year — almost 400,000 years’ worth of minutes. Most of that was free, which has made it difficult for Skype to make money. Only about 5 percent of active Skype users pay for it.
Microsoft pledged to keep Skype in all the places it is currently available, including mobile devices that run the software of two major rivals, Apple and Google. Skype users don’t have to pay to install the software on Apple’s iPhone or iPad computer tablet or devices running on Google’s Android system.
Important dates in Skype’s history
Milestones for the Internet phone company.
2003: Skype Beta launches publicly. The company was founded by Niklas Zennstrom and Janus Friis, creators of the file-sharing service Kazaa.
Oct. 14, 2005: EBay Inc. buys Skype for $2.6 billion. Two years later, it pays an additional $530 million to some Skype shareholders because the business exceeds certain performance targets.
Oct. 1, 2007: EBay says it will take a $900 million accounting write-down on the business, acknowledging it had overvalued it.
April 14, 2009: EBay announces it will spin off Skype through an initial public offering in the first half of 2010.
Sept. 1, 2009: EBay announces it will sell a 65 percent stake in Skype for about $2 billion to a group of private investors.
Nov. 19, 2009: EBay sells a two-thirds stake in Skype to an investor group that included the founders of the Internet phone service for roughly $2 billion, saying its agreement values Skype at $2.75 billion. A week earlier, it settled a legal skirmish with the founders.
Aug. 9, 2010: Skype files for a U.S. initial public offering.
Oct. 4, 2010: Skype replaces chief executive Josh Silverman with Tony Bates, formerly a Cisco senior vice president.
March 7: Skype announces it will launch an advertising platform for the first time.
May 10: Microsoft Corp. agrees to buy Skype for $8.5 billion, its biggest-ever acquisition.
The Associated Press
Microsoft’s big-ticket purchases
Microsoft Corp. said Tuesday that it will buy Internet phone and messaging service Skype SA for $8.5 billion. It’s the software company’s largest-ever acquisition.
Here is a look at some of the biggest purchases in Microsoft’s 36-year history.
Tuesday: Microsoft announces it will buy Skype for $8.5 billion.
Aug. 10, 2007: Microsoft completes its purchase of online ad service aQuantive Inc. for $5.9 billion.
Jan. 7, 1999: Microsoft completes its purchase of business software maker Visio Corp. for $1.5 billion.
July 12, 2002: Microsoft finalizes its acquisition of business and accounting software company Navision a/s for $1.45 billion.
April 24, 2008: Microsoft completes its purchase of enterprise search company Fast Search & Transfer ASA for $1.3 billion.
April 5, 2001: Microsoft finalizes purchase of accounting and business software company Great Plains Software Inc. for $1.1 billion.
The Associated Press
