What if Microsoft really has a plan for Skype

As the news broke today that Microsoft is close to buying Skype for $8.5 billion, my first reaction is ‘Are you crazy Microsoft? That’s a lot of bs!!!’ and ‘Haven’t you learnt from the aQuantive acquisition or the almost fatal Yahoo!!!’ and like many skeptic, I blogged on facebook about the stupidity of the deal and so forth…

But as I travelled home today and ponder on it… Could I really know better than Microsoft? A few scenario plays out… Either

1) Skype and its investor really can SELL!!!

OR

2) Microsoft team really don’t know how to negotiate a deal!!!

OR

3) Microsoft REALLY do have a plan to get those 663 million Skype user to come onboard some bigger ecosystem play and get them to pay X amount for a premium experience

It is arrogant of me to think that I know better than Microsoft (Steve B). We have seen failed acquisition from Microsoft over the years over super large deals and it’s a known fact that those deals always carry with it lots of baggage and integration is always hard, staff attrition as a result of duplicate jobs… and I always think that Microsoft would learn or have learn or know what they are getting themselves into. I am pretty sure they do at the time of every deal / negotiation. Retrospect is a powerful friend and regardless whether one can argue whether those past acquisition were a success or failure depending on point of view and point in time, I am sure with $8 billion on the table, they know why it’s there.

In this Skype case, I have to safely assume that it’s 3) that has caught Microsoft attention. I did up a quick diagram on what I can recall the different entities that Microsoft has and if you based on the assumption that Microsoft is no stupid company, then we perhaps why 8 billion may not necessary be a bad deal IF they can integrate well into other existing software + services.

*Fact is out of those 663 million users, some are actually paying Skype for credits to make calls to land lines

The question I should ask is HOW COULD MICROSOFT GET THOSE 663 MILLION USERS TO PAY A YEARLY LOW FEE OF X AMOUNT FOR A BETTER EXPERIENCE? (after integration work of course, give it 6-9 months) 

Existing free services like Windows Live (5 gig skydrive…) and Live mail remains free and Ad supported… But should the integration gone well, Microsoft could go the freemium model and offer ad free, feature rich, yearly subscription model.

Assuming there is no attrition from the existing Skype user after 6-9 months, it is plausible to imagine say, $20 a year fee for a whole suite of service + software feature that will be enabled with my subscription. Another premium tier for more set of features… tapping into Xbox, Zune, Windows Next, Windows Phone, Microsoft Auto, Windows Live, across Desktop, Living Room, Car, Mobile, Tablet. It could be very HUGE!!!

Not forgetting of course how the Skype technology can be integration into Enterprise solutions which I won’t get involved at this article.

There are of course the duplicate set of technology or talents as a result of this acquisition but those will be sorted out like all acquisition. Putting those aside, and just looking at the potential for charging user a small fee a year for extra suite of services, I would pay if it’s reasonable. THE BIG IF of course is how the integrated experience will play out across all the devices and services and how fast Microsoft can integrate their backend / user account and all those transition stuff…

Microsoft knows they have to get the whole ecosystem right. Microsoft has always been in the ecosystem play but they have never fought a tougher battle than now with Apple and Google and all the cloud stuff going on… Microsoft have to unite all its software + services and make a big push to win user back!!! And they know it. Windows.Next is integral part of that strategy and how they can really nail it this time. We will know when they most likely preview the next Windows in the September PDC 2011… It’s a make it or break it year for Microsoft in 2012.