Microsoft is buying Internet phone company Skype for $8.5 billion.
The cash acquisition, announced Tuesday morning, will give Microsoft a significant consumer brand online, access to 170 million people who use Skype for free or cheap calls, and Skype’s phone and video calling software, which runs on the Web and Internet-connected devices.
The acquisition is the largest in Microsoft’s history and signals a more aggressive business approach from Microsoft as it expands into cloud computing and tries to get some traction with mobile phones and tablets.
With 170 million connected users and over 207 billion minutes of voice and video conversations in 2010, Skype has been a pioneer in creating rich, meaningful connections among friends, families and business colleagues globally. Microsoft has a long-standing focus and investment in real-time communications across its various platforms, including Lync (which saw 30 percent revenue growth in Q3), Outlook, Messenger, Hotmail and Xbox LIVE.
Founded in 2003, Skype was acquired by eBay in September 2005, and then acquired by an investment group led by Silver Lake in November 2009. Skype has made impressive progress over the past 18 months under Silver Lake’s leadership, increasing monthly calling minutes by 150 percent, developing new revenue streams and strategic partnerships, acquiring the intellectual property powering its peer-to-peer network, and recruiting an outstanding senior management team.