UPDATE, TUESDAY AM: Microsoft will pay $8.5 billion for Skype, which will become a business unit of the software giant, the companies announced today. The acquisition, Microsoft’s biggest ever, will connect Skype’s web-calling service to Microsoft’s Outlook email, Xbox game system and Windows mobile phones.
PREVIOUS, MONDAY PM: This is a deal that could have far-reaching ramifications for the infotainment community — if it happens. Although Skype is best known as an inexpensive Internet phone service with 663 million registered users worldwide, it’s poised to become a major advertising medium. Skype said in March that it will begin to put some ads on its home tab and that NBCUniversal, Nokia and Groupon had agreed to be the first to sell their wares there. If ads make it profitable (it lost $6.9 million last year on revenues of $859.8 million) it wouldn’t take much to keep going and turn Skype into an all-purpose communications medium that could blend phone calls, radio-like programming — and let your imagination run from there. You can be sure the ideas are flying at Microsoft. It’s been struggling to leap from its near-monopoly control over computer operating systems and office software to become a dominant player in smartphones, video games, and TV set-top boxes. What would happen if every PC, Xbox and Windows Phone 7 device could automatically connect to Skype? If the WSJ story is accurate, we’ll probably hear a lot about that soon.