In September, 2011, the online movie company Netflix split their service into two component. Customer wishing to continue receiving DVDs by mail needed another separate account which require them to pay additional $7.99. Members who kept both services saw their monthly bill rise as much as 60%. This decision had upset most of its members. Netflix previously defended the split, stating it would help the company develop its streaming technology without keeping compatible with its delivery business.

However, the two services would not have been integrated well.The company had received many negative comments. By splitting the service and making it harder to use. They had a lot of brand equity tied up in the DVD and movie delivery business. By separating the services, they were tranishing that.  This decision has lost the company 1 million subscribers.

By abandoning the original plan, Netflix gained more than 4% in its shares. However, the firm’s focus is still remain fixed on digital delivery.

In May of 2011, Microsoft made its largest acquisition by buying the Luxembourg-based company called Skype for $8.5 bn. As people know, calls to other Skype users are free, while charges for those made to landline and mobile phones. Under the terms of the deal, Skype will become a new division under Microsoft. Tony Bates, Skype chief executive will continue lead the business and report directly to Microsoft boss Steve Ballmer.

Microsoft has spent $8.5 bn to buy an eight-year-old company that is not making a lot of money.However there are a lot of underlaying potential for Microsoft. First of all, Microsoft will take over the 600 million users that Skype has. Secondly, if Microsoft can combine Skype’s software with its Xbox Kinect system, Microsoft would make its way into millions of living rooms.  Xbox Kinect suddenly becomes more useful, such as teleconferencing for the whole family, home schooling or one-on-one training sessions. Lastly, Microsoft can integrate Skype into Window 8 will definitely gives them an advantage for marketing domination.

http://www.bbc.co.uk/news/business-15220895