[Windows Phone 7 General] abhilaksh:
Of Facetime, Skype, and the Future of Tech in General.

Sure, Skype has weak privacy and such, and would hence not make a good (spam-free) video solution for WP7/xbox, but what people haven't pointed out is that Skype was not the only thing MS bought. Earlier this year, Skype took over Qik, which, from personal experience, is secure and good. [the take over was somewhere along the margin of $150 mil or so, making the takeover in question just slightly less outrageous.]

(For those unaware, Qik basically lets you stream video live over the internet. The steams can either be public, or private - hence security is ensured. There's also an option to archive videos.)

Now with all this in place, one should see this acquisition in two ways:

1) The sprint:

WP7/WM/XBOX/PC get the equivalent of face time.

MS gets an instant increase in user base (just under 200 million active users, if i'm not mistaken).

It gets a huge improvement over the video/audio (p2p) streaming facilities they presently possess (WLM/Lync). This includes some excellent transmission codecs (which coupled with Nokia's excellent call quality history would be unparalleled).

2) The marathon:

This is, and has always been, Microsoft's forte: they're in it for the long run. (okay, maybe ballmer doesn't come across as farsighted, but there must be something to him, right?)

Here are the point:

The situation two years ago was this: Skype had just been dumped by ebay, and had a market value of about $2.5 bn.

Today: the investors of Skype just received returns of over 300%. 7 billion dollars is a lot of money (the company was in a debt of $1.5 bn).

The point here are the investors. People are powerful and influential. Some of the investors behind Skype (Marc Andreessen, for example) sit on boards of big tech-brands, like eBay, Facebook, HP, AOL, even Digg. Making powerful people rich and happy will make future deals/partnerships so much more easier for MS (and difficult for others).

Another point is Opportunity Cost involved. As people have mentioned, had skype not been bought by MS, it would have eventually been picked up by someone else (such as Google). Google's already proven it's worth in the field (think Android, Search, Mail, Maps, host of other services). The one service which was comparatively weak was communication. Google Voice is not popular, and a lot less people use gTalk than I had thought would be the case. Skype would bolster their stand quite remarkably. Microsoft probably believes this scenario would result in (greater) costs which they aren't willing to take on, and so avoids it by an acquisition.

A last point. Imagine a scenario of the future: With the rate at which ip-based communication is progressing, it's only a matter of time before it would overtake traditional phone systems (Voice/Video over ip is cheaper, more efficient, and, on the whole, simpler). At this tipping point, it would be quite possible for MS to release a communication device which bypasses Mobile phone operators to a degree (imagine getting an 'only-data' plan, with no minutes/texts, as they aren't needed anymore - it's all over the internet. This would save consumers so much money [operators may not be happy]).

This last point, is the major business point here. It's high-risk because of the costs involved, but it's high yield too, because it has the potential to make MS "a hit with consumers" (as The Guardian paper seems to phrase it), because of the simple fact that Nokia and Microsoft together would contribute to a (very, very) large volume of the handsets of the future. I said before that operators would not be pleased.

This is where another strategy could come into place: a sudden restriction on the usage of Skype: only certain operators (naturally, MS partners) would (be able to) support it. :eek: exactly. Imagine a manufacturer-induced operator lock. If you don't get locked, you can't use certain facilities, and will have to stick with legacy methods of communication. So a select group of operators will first see a massive decline in their prices, and then an exponential increase in customer-base, which should adequately benefit them. For the rest of the operators, it's doomsday.

In some ways, I like this strategy. Communication in today's world ought to be free. Customers would be happy. And Microsoft would be monetizing it all.

I've not mentioned a few points in this post (mostly because I have an English exam come Monday morning), but i'll list them here anyhow:

Business networks - skype+ms office+switchboards

P2P television (and advertising).

A possible middleman-free global communication system.

Well that's that.

I would let you all draw your own conclusions. these are my views, and I may be terribly wrong.