Ballmer's Masterstroke In Buying Skype

Steve Ballmer Does Not Like To Lose

With Microsoft's plan to acquire Skype for $8.5 billion, Steve Ballmer is doing a Jason Voorhees in Crystal Lake. Let me explain. Microsoft failed miserably at mobile. While the boys and girls in Redmond were contemplating how to put the "Start" menu on a phone, Steve Jobs was cleaning mobile clocks with the iPhone. But, like all great competitors, Microsoft knew they lost it. So they started from scratch. The result: Windows Phone 7. In my opinion, an awesome mobile platform on a par with iPhone, albeit with a lot less cultural cachet. The problem: The momentum favors iPhone and Android. Microsoft needs an ace card. Ballmer, potentially, found an ace card in Skype.

With 633 Million Users, Skype Is A Communication Juggernaut

Skype is not a phone. It's a way to see your three-year-old granddaughter, connect with your adult children, or make sure your family is safe 4,000 miles away. And, it's mostly free. Of the 633 million users, fewer than 8 million are paying users. No matter. What is important is that many of these users would love to make free calls on a mobile phone.

Microsoft's plan to acquire Skype fits in perfectly with its recent partnership with Nokia because both offer incredible reach. Nokia has a huge number of device users even though they lost the smartphone market. There are still hundreds of millions of people to convert to smartphones and tablets. 

Ironically, Microsoft may also be able to use governments to help them provide communication services through any device. Why should people be limited to carrier plans? People should sign up for 4G access and then use the network to communicate through any channel they wish. Governments may start to crack down on wireless plans similar to what is happening on cable television versus Netflix, Hulu, etc.

It's far from certain whether or not Microsoft's strategy will work. But I continue to be impressed by the competitiveness of this great American company. Never give up. Never give in.

Microsoft Is At Its Best When It's An Underdog

There is no stopping Apple when it comes to mobile and cultural dominance. But Microsoft could displace Google as the alternative based on the great UX provided by Windows Phone 7, the Nokia partnership, and the Skype deal.

Comments

Interesting read, and while

Interesting read, and while your scenario or WinM7+Nokia+Skype could make sense and is probably the only chance MS has of gaining ANY sort of market share, I have to really disagree with your comment about MS displacing Google. MS has ZERO chance to do that - none. Android is currently outselling the iPhone, and I haven't seen the latest numbers on the installed base Android has got to be either even or past Apples base at this point - and growing much faster. Google has all sorts of free services (gmail, maps, etc) that seamlessly integrate into Android, make it a natural fit for people already using Google to move to Android. MS has one property - Hotmail. Given how late they are to the game and how woefully far behind they are, I think the *best* MS will be able to do is a distant third - possibly bypassing RMI if all the chips fall their way and RMI doesn't properly leverage their big installed base.

Longshot true, but there are still a billion+

Hi Jeff, Google Android adoption is certainly impressive. But, I think much the initial momentum was because iPhone was only available on AT&T. With iPhone now on Verizon too it will be interesting to see how it plays out. Having said that, I agree Google Android appeal is much more than just the carrier. e.g. gmail, etc....

But, the mobile industry is still chaotic. For example, Apple did not even have a device. Google did not have Android. Yet in time both of these became disruptively successful kicking RIM and Nokia in the pants.

They real opportunity is the billion+ people who do not have smartphones. Nokia certainly has the "feature phone" market. Maybe Microsoft can leverage Nokia's share and maybe they can disintermediate the mobile carriers with IP calls.

Thanks so much for your comments.

Mike

WP7 assets: Navteq+Hotmail+XBox+Office+Skype

Hi Jeff,

Windows Phone got much more assets than just hotmail:
Navteq + Hotmail + XBox + Office + Skype

And best IDE support: Visual Studio and Silverlight.

Windows Phone will also have more support from providers before they want another system can compete with iPhone and Andriod.
AT&T will start push WP7 very soon.

I giveaway licenses of Skype

I giveaway licenses of Skype Call Recorder due to thanksgiving and it is a limited time offer. Let me know if you are interested.