Microsoft dumps the Messenger for Skype after brought Skype for $8.5 billion
Although made billions of dollars through the selling of its computer software, Microsoft was struggling in trying to catch up with Google Inc. on the Internet market and was losing money due to fruitless attempts. The company was so desperate that it was even trying to buyout Yahoo Inc. for $47.5 billion, which was double the amount of what Yahoo’s market value worse at the time.
Last summer in 2011, Microsoft took another hard try to stand in the Internet market by buying Skype, an internet telephone service, out for $8.5 billion, which is more than triple of Skype’s IPO, $2.75 billion at the time. So unsurprisingly, on this Tuesday, Microsoft announced that it will discontinue its Messenger service in all countries, except mainland China, in early 2013 to ask its users to make the transition to Skype, merging the accounts and contacts for both services.
I think the decision that Microsoft made is at least a good bet. Although $8.5 billion is undoubtedly a lot of money, the huge customer base Skype has is able to offer Microsoft a competitive advantage over Google and other major competitors. Also, Microsoft has the money power to support the decision. Even if the return might not be immediately shown in terms of cash, Microsoft now has the ability to be able to enhance other services that Microsoft has developed, through Skype.
Related links:
1. http://www.cbc.ca/news/business/story/2011/05/10/microsoft-skype-sale.html
2. http://www.cbc.ca/news/technology/story/2012/11/06/microsoft-skype-messenger.html