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With Skype buy, Microsoft plays keep-away with Google

Sharon Gaudin | May 10, 2011
Microsoft forks over $8.5B to get Skype and keep it away from rivals.

While the move will prevent Google from attaining another strong brand name in Skype and will slow the search company's move into the voice and video communications market, Google has other options.

"Google has voice communications now, and there are a host of smaller players out there that they could partner with to build out the rest of their portfolio," said Olds. "Buying Skype would have gotten them there quicker, of course. But not having Skype isn't a huge barrier to Google. It just means they'll have to cobble together some pieces and build up a brand over time."

Ezra Gottheil, an analyst at Technology Business Research, said Google's success with Google Voice may have spurred Microsoft to grab up Skype for itself and prevent Skype from helping Google round out its own VoIP offering.

"VoIP and video chat over IP are potentially a strong, sticky business," Gottheil said. "It needs design, implementation, and a significant investment in infrastructure, but it's potentially a big winner. Skype would be valuable to Google or to Facebook, but Microsoft could get greater incremental value out of it -- if it doesn't screw it up."

He added that Microsoft has a lot of work ahead of it to build out Skype, and that should alleviate some of Google's disappointment.

"Google has a smaller distance to travel with Google Voice than Microsoft has with Skype," Gottheil said.

 

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