This morning Microsoft and Skype held a press conference that would outline the future of the formerly separate companies. There was a lot of exciting talk about integrating Skype into their 'Microsoft Skype Division' which would entail extending the Skype service to Win Pho 7, Xbox Live, Kinect, Outlook and more. It seems Microsoft and Skype hope to integrate devices and services that will bring together the users business life and personal life, as they become increasingly more mixed with one another. Take a look at my notes from the press conference for more in depth information. Just keep in mind that all of this is paraphrased for all of our conveniences.
Microsoft creates a better life for millions of people and companies around the globe. Bing helps people make decisions, Xbox 360, and Kinect created an enjoyable entertainment experience.
They dream about building experiences that aren't limited by distance or device. Microsoft sees more of this opportunity by combining Skype with them.
The Skype brand has become a verb that is synonymous with communication. Skype has 170 million users with 600k new registrations per day and more than 40% are on video.
Microsoft made an unsolicited offer to Silver Lake, finalized the price on Apr. 18th and sealed the deal on May 9th 2011.
Microsoft is dedicated to Skype and once integrated Tony will be in charge of running the Microsoft Skype Division.
They want to optimize Skype for Xbox, Kinect, Win Pho 7 and the PC. They also want to extend the reach of Skype to Outlook, Messenger, Xbox Live and Hotmail.
If you are a user or consumer how does this impact you? Skype fits the context in the way that people live to connect the devices and things they do at work with those they use and do at home.
"Outlook is such a tool." - Steve Ballmer
To catch the rest of the news from Tony Bates, Steve Ballmer and Peter Klein, hit the break.
Tony Bates (one guy clapped):
Tony will share the 'Skype' perspective.
When they started developing Skype it was really volatile software.
They are excited to be a verb. (Skype me!)
They have an engaged user base that on average uses 100 minutes/ month per user.
They are a core communications service that laid on a premium service subscription package. Couple this with innovative technology and monetization through the premium service and advertising; they have a strong position and company.
They have focused heavily on mobile devices and video. They think video is the best way to advertise and increase an engaged user base.
Tony reiterates they are focused on mobile, core communications and video.
Tony walks off and only Ballmer claps.
Peter Klein the CFO of Microsoft:
Skype revenue was 860M; 20% growth year over year.
2010 earnings before interest, depreciation, taxes and amortization grew 40% year over year; At end of 2010 it was $264M so they have operating leverage.
$8.5B total offering for the buyout.
They hope to clear all the legal hurdles by the end of the calendar year.
Steve Ballmer closes out:
Microsoft is ambitions and forward looking, irrepressible nature.
Sometimes they build things themselves and sometimes they buy things.
This is a big day for Skype and Microsoft, promising next generation communications.
This is core to their mission and direction as a company.
Q: What measure will you look at to determine success?
Ballmer: They care a lot about users, innovation, revenue, and operating income so it's fairly classic in a business since.
Q: Could you provide more color on the deal?
Ballmer: Skype was on the path to IPO so they decided to make an unsolicited offer.
Q: Could you provide more color on new opportunities for Skype?
Bates: There are some things like home page advertisements for monetization of their free services.
Q: Were you being courted by other, pre IPO?
Bates: He essentially alluded to no or no comment.
Q: For the working mom or dads who will this make their life better?
Ballmer: It's obvious today not everyone is doing video participation from their phone. Take Kinect, you want someone to be able to fully participate in a family event. There are a lot of opportunities to innovate. We want to stitch together the world in a way that benefits the whole community.
Bates: They are ingrained in the PC and are looking to get into the mobile phone. They are already on 50M TVs today so devices are one piece. Connecting the services together is the second piece. Blending work and home together is the next step.
Not a fan of paraphrased notes? Then you should have seen it yourself. Luckily, the conference will be available to watch at the Microsoft News Center for your viewing pleasure. Also stay tuned for Episode 201 this Sunday at 9PM ET for an depth analysis and extended coverage.