As most people will have heard, Microsoft officially acquired Skype last week. There are precious few details about what the end-state is going to look like with Lync and Skype integrated; or even what Microsoft really plans to do with Skype. With so little information available directly from either party, I decided to read between the lines and try to draw some conclusions on my own.
Microsoft’s Strategic Direction
With an $8.5 billion dollar price tag, Skype was the largest acquisitions ever made by Microsoft. Ultimately Microsoft is going to want to make their money back on this purchase of Skype, that’s a given. But the question is how will they do it? One thing we know is that it won’t do it by becoming a “PBX vendor”. I can deduce this because, according to a Wall Street Journal article, the communications giant, Avaya, is valued at around $5 billion. By my reckoning, for almost half the price of Skype, Microsoft could have tried to acquire the second-leading PBX market share leader (Avaya) instead of Skype. Or heck, MS could have picked up all of Nortel for a scant $900 Million back when they were on the auction block. Oh, and in case you were wondering: Cisco’s valuation of $94 billion dollars probably disqualified them from Mr. Ballmer’s shopping list!
This should tell you about Microsoft’s strategic direction; they aren’t interested in just making and reselling phones or phone systems. Microsoft is betting on the future. This wasn’t a short-term decision. It may not have even turned out to be a medium-term decision. But you have to believe that the folks in Redmond saw something special in Skype’s future that justified the price. What was it that MS saw? They seem to think that the future involves a global application for voice, video, and data sharing. How does Microsoft deliver on this promise? Looking into any cheap crystal ball will give you the answer: it’s cloudy.
Software-Powered Cloud Services
Two of the biggest buzzes in all of technology right now are “The Cloud” and “Consumerization of IT“. I think Skype hits both of these; today Skype is nothing more than a voice/video cloud service for consumers.
Microsoft’s stated vision is to deliver software via cloud, and they have been doing so for a few years with Office 365 and its predecessors. But one of the major gaps yet to be bridged by Office 365 is giving customers a cloud-based equivalent of Lync’s voice and video capabilities. In many respects, Skype is already doing this, and doing it well. Perhaps with a little tweaking, Microsoft will be able to leverage the strengths of both Office 365 and Skype. The well managed infrastructure comes from Office 365, the seamless delivery of voice and video comes from Skype. Everyone lives happily ever after.
The other major achievement of Skype’s is to have successfully “consumerized” UC. Skype is designed to please consumers. It’s easy to use, intuitive, cheap, and effective. Think about the Skype business model: No phone system, no handset, no expensive video units, a free client, BYOD (bring your own device), no boring classroom training. Skype just sells you the service – and you do the rest. People seem to like this and perhaps are starting to think it’s odd that they have better communications tools available at home than they do in the workplace. This plays right into Microsoft’s strengths of focusing on end-user software and services and letting someone else worry about the hardware.
With Skype potentially integrated with the enterprise-grade service of Office 365, we could see a cloud-based unified communications experience for home and business users alike. Given the ubiquity of Skype and Microsoft together, this could get interesting.
UC-topian Vision of the Future
Imagine for a minute that Lync and Skype are integrated seamlessly… businesses using Lync for communications, consumers using Skype. In this utopian vision, users of either system could contact each other with voice, video, IM and desktop sharing and all calls between services would be free. Skype/Lync clients are available on any computer, mobile device, or tablet. Anyone could communicate with anyone else in the world using just about any modality. VoIP calls from mobile devices connect to friends, family, and co-workers on which ever device is handy to them.
In this scenario – would you ever pick up a phone and dial a phone number again? Assuming calls between Lync and Skype clients remain free, the answer is a resounding “Heck, No!” You would use your work PC at work, your home computer at home, and your mobile device for everything in between. You would use ZERO minutes on your cell phone and ZERO minutes on your home phone.
But could you really connect with everyone in your life? According to the official MS press release, Skype is aiming to have 1 billion users: “By bringing together the best of Microsoft and the best of Skype, we are committed to empowering consumers and businesses around the globe to connect in new ways,” Bates said. “Together, we will be able to accelerate Skype’s goal to reach 1 billion users daily,” (emphasis mine). Factor in the Skype/Facebook agreement and a billion users seems pretty reachable.
In 2010, MS’s Windows Live Messenger boasted 300 Million users. I don’t believe MS publishes data on Lync/OCS users, but you get the picture quickly when you start adding Skype users + MS users. Maybe a quarter of the world as of right now? Maybe total world domination by 2020? (evil laugh mine).
Reality Check and Conclusion
It’s not unrealistic to imagine Microsoft/Skype ushering in a new universal way to communicate globally that connects literally everyone. Like I said before, I have to believe that Microsoft is looking to make their money back and then some on this Skype deal. Relegating the traditional phone networks to the dustbin – now that should be worth at least $8.5 billion.
But I do think it is useful to connect the dots of Microsoft’s stated vision (“to the cloud!”) and their decision to shell out record-breaking cash for Skype. We’ll soon hear more about what is really going on. But for now, reading between the lines leads me to believe that the possibilities are nothing short of world-changing.
But in reality, I know it’s way too early to declare the PSTN dead. Heck, Lync and Skype don’t even talk to each other today. We could be looking at many, many years before we see the true potential realized. I also realize that I’m open to the criticism that I may be over-eager to see something that justifies my existence. A friend of mine chided me when I shared my crazy future vision with him. He told me, “Yeah, and I was just as sure in 1999 that SIP trunking would end the PSTN, too.” OK, message received. But it is fun to speculate.