What Microsoft's Skype Deal Means: A Post For Content & Collaboration Professionals

I'm not going to comment on the $8.5B purchase price, though I'm sure Marc Andreesen's investment company is happy with their return. And I'm not going to comment on the impact on Xbox, Hotmail, and Live.com. And I don't think this has anything to do with Windows Mobile.

But I am going to comment on the impact of the deal on the enterprise, and specifically on content and collaboration professionals responsible for workforce productivity and collaboration. When you strip it down to its essence -- Skype operating as a separate business unit reporting to Steve Ballmer -- here's what you need to know about the Skype deal:

First, Microsoft gets an important consumerization brand. Skype is a powerful consumer brand with a reported 600+ million subscribers. But it's also a "consumerization brand," meaning that it's a valuable brand for people who use Skype to get their jobs done. Consumerization of IT is just people using familiar consumer tools to get work done. It's a force of technology-based innovation as we wrote about in our book, Empowered: Unleash Your Employees, Energize Your Customers, Transform Your Business. Google and Apple and Skype have dominant consumerization brands. Microsoft does not. Until now. And as a bonus, Google doesn't get to buy Skype. And more importantly, neither does Cisco.

Second, Microsoft gets another cloud service to sell. Microsoft's software revenues are under attack. That's one reason it has built Office 365 and Windows Azure. While it's true that Skype has been slow to make money off its service, the potential is there. Local phone numbers, three-way video conferencing, business administration, and making calls to real phone numbers are all things that people will pay for. Skype has never had the money to market these services. Microsoft does.

Third, Microsoft gets the opportunity to provide managed B2B video conferencing. Microsoft's Lync product delivers audio and video and chat and web meetings, but only to other other employees or close partners. But with a managed gateway between Skype and Lync, people could use Lync-to-Lync to connect to colleagues and Lync-to-Skype to connect to customers and partners with video, audio, and chat. "Can't I already do this today with Skype" I hear you ask. Yes, you can. But only if IT looks the other way. With a Microsoft-sanctioned solution, IT could sign off on the practice.

What are your thoughts?

Comments

Microsoft can market

I like your comment that Microsoft can spend to market services beyond Skype's ability - - so what is the value of (and all the buzz around) viral marketing? I think Skype has done something with viral marketing that no traditional campaign can - build a global peer to peer netwrok with loyalty and some notion of identity. They have already (as you say) built a consumerization brand - now cthe cahllenge for Microsoft is how to grow a profitable business on that network that C&C professionals are willign to pay for. I echo Ted's question - I'd like to hear what companies are willing to pay for (or hope to get) that looks like a likely by-product of this union?

Interesting post! If MS

Interesting post! If MS mismanages the P2P network, what's going to stop users and their friends from migrating over to a new solution? Because of its strong P2P network, I think it may actually accelerate the migration. From an enterprise and sourcing professional standpoint, I'd be looking for what the potential switching costs would be.
@cvillanu

Security and Manageability of Skype

While I agree that a Skype to Lync connection makes sense for enterprise users - I would not be formally recommending that to Infrastructure and Operations professionals until some work is done to enhance the security and manageabilty of Skype clients. Currently Lync manages authentication in concert with Active Directory and provides federated connections to public services such as AOL, Yahoo, and MSN. So the pieces are there to make this work, it simply needs to be done. Therefore this is key a roadmap question for I&O professionals to put to Microsoft.

I would point out that Skype

I would point out that Skype is encrypted as part of the protocol which is sadly lacking in most video conferencing tools.

Great article, especially the

Great article, especially the point about "consumerization". This may be Microsoft's window into the "consumer" market with players like Google, FaceBook, Apple. I disagreed with many people who felt the Skype purchase had major implications for the B2B market, because Skype is primarily a consumer product, or a "consumerizing" product. But you make a great point about it allowing Microsoft to allow close business networks to connect with wider networks.

How would Skype video interoperate with Lync?

Microsoft Lync and Skype each use different proprietary codecs for audio and video so how can interoperability between them be achieved in the real world? And furthermore , how can each end point talk to standards H.264 based video end points like Polycom or Cisco? Seems like more islands of video to me.

Skype interop

Good points, Rob. I think that interop is a huge problem to be solved. I don't expect interop between Skype and Lync any time real soon, but it would foolhardy for Microsoft to not create interop at some point in the future. Think of it this way: if Microsoft can make Skype a global VC defacto standard, then the other end points would have to find a bridging strategy to cope. Why wouldn't Microsoft do that????

Mr. Ballmer talks about how

Mr. Ballmer talks about how awesome Skype is. Skype is seeing 40% growth in users year over year and saw 207 billion calling minutes in 2010. It had 20% revenue growth year over year, as well. Apparently Mr. Ballmer was "Skyping" with Skype CEO Tony Bates, and there were 25 million concurrent users. He appears to be tickled by this fact. Tratamientos Celulitis

I recently found a great tool

I recently found a great tool for Skype which records calls. Its name Riviera for Skype - take it Skype Call Recorder