Why Microsoft is Buying Skype for $8.5 Billion

Microsoft has bought Skype for $8.5 billion, in an all cash deal.

Steve Ballmer, chief executive officer of Microsoft is said to be a big champion of the deal, the largest in the history of the company. Skype has been up for sale for some time, thanks to some very antsy investors -- both eBay and Silver Lake Partners have been getting nervous about the delayed initial public offering and have been pushing for a sale of Skype. Facebook and Google were said to be earlier dance partners for Skype, and Microsoft was a late entrant and is now walking away with the prize.

• Skype gives Microsoft a boost in the enterprise collaboration market, thanks to Skype’s voice, video and sharing capabilities, especially when competing with Cisco and Google.
• It gives Microsoft a working relationship with carriers, many of them looking to partner with Skype as they start to transition to LTE-based networks.
• It would give them a must-have application/service that can help with the adoption of the future versions of Windows Mobile operating system.
• However, the biggest reason for Microsoft to buy Skype is Windows Phone 7 (Mobile OS) and Nokia. The software giant needs a competitive offering to Google Voice and Apple’s emerging communication platform, Facetime.