Microsoft: Skype or hype?

So Microsoft has purchased Skype and will integrate voice communications into various MS hardware and software products. The company paid an enormous amount of money for Skype ($8.5 billion), which is a projected future value of the voice communications firm. Microsoft obviously hopes to monetize what they bought, but what did they really get? VoIP technology is hardly cutting edge, and Microsoft has plenty of smart software folks that could cough up equivalent software in short order. What Microsoft really bought is the Skype customer list (hundreds of millions of people) and a brand name.

The problem Microsoft faces is a lousy track record of overpaying for technology and then running it right into the ground. Anyone remember WebTV? I do. It was doing extremely well when Microsoft bought it, then the whole product line disappeared rather quickly--Microsoft lost the entire investment. During the heyday of the dot-com era, Microsoft bought dozens of firms and then failed to execute.

What Microsoft has never been able to understand is that not everyone wants to use Windows, for a whole variety of reasons. Instead of trying to create great products, Microsoft has stubbornly tried to create scheme after scheme to force everyone to use Windows. How's that working out for them? Not so well.

If Microsoft is smart, they will maintain Skype as a completely separate unit within the company, keep the Skype brand, and avoid spamming current Skype users with forced efforts to drive them to Internet Explorer and/or Windows. If they don't do that and use heavy-handed marketing strategies that annoy Skype users, that will be a market opportunity for some other VoIP company to grow very rapidly--now that hundreds of millions of people are comfortable using VoIP instead of the phone, it won't be hard for all those folks to switch to some other service.