Microsoft to buy Skype for $8.5 b in biggest deal ever

Wednesday, 11 May 2011 00:00 - - {{hitsCtrl.values.hits}}

REUTERS - Microsoft Corp on Tuesday agreed to buy Internet telephone company Skype for $8.5 billion in cash in its biggest deal ever, as the technology giant seeks to plug a hole in its mobile offerings.

Buying loss-making Skype would have no immediate impact on Microsoft's finances, but would make clear its intention to compete with rivals such as Apple Inc and Google Inc.

Reuters first reported about the deal earlier on Tuesday, quoting sources.

Microsoft already has video chat as a function in its Windows Live Messenger service, but it is not available on its Windows Phone 7 software.

Skype, which allows people to make calls at no charge, would also give Microsoft a foothold in potentially the lucrative video-conferencing market as global businesses seeking to reduce expenditure shift to lower-cost ways of communicating.

Skype also makes versions of its own service which can be used as an application on the iPhone and iPad, Research in Motion's BlackBerry and Android phones. It cannot be used on Microsoft phones.

Microsoft has already put more energy and resources into mobile and internet technologies as the use of PCs, which underpin its Windows and Office franchise, is under threat.

This change was starkly illustrated last year when Apple’s portfolio of coveted consumer goods propelled it past Microsoft to become the world’s most valuable technology company.

The maker of iPhones and iPads has since been named as the most valuable brand too, overtaking Google.