'It could (also) be a defensive strategy from them. Magnus Rehle, managing director of Greenwich Consulting, said Microsoft is 'buying a brand and a big chunk of customers.' Microsoft will also support Skype clients on non-Microsoft platforms. The companies said Skype will support Microsoft products like the Xbox game console and Kinect motion controller, Windows Phone and a wide array of Windows devices. Microsoft and Skype said the deal has been approved by the boards of directors of both the Redmond, Washington-based Microsoft and the Luxembourg-based Skype, which is owned by investor group Silver Lake. Microsoft unsuccessfully tried to buy Yahoo! in 2008 for $47.5 billion in another bid to make an online splash. Microsoft's biggest acquisition until now had been its 2007 buy of digital marketing firm aQuantive for $6.3 billion. Skype bypasses the standard telephone network by channeling voice and video calls over the Web.īuying Skype could be a way for Microsoft to shed some of its business software image and gain momentum in a hot smartphone market at a time when Internet lifestyles are going mobile. Tens of millions of people use Skype to make low cost or free phone calls over the Internet using their computers or smartphones. Microsoft said Skype will become a new business division within Microsoft with Skype CEO Tony Bates assuming the title of president of the Microsoft Skype Division, reporting directly to Ballmer. The acquisition of Skype, which had reportedly also attracted interest from Cisco, Facebook and Google, is the largest ever by the US software giant.

Microsoft is buying Internet phone service company Skype for $8.5 billion dollars in a move aimed at carving out a bigger presence in an online arena dominated by Google and Facebook.

Skype ceo