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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

October 14, 2011 at 7:24 AM

Microsoft-Skype deal closes

Microsoft and Skype announced that the software giant’s acquisition of the Internet phone company has closed.

Skype now becomes a new business division within Microsoft. Skype CEO Tony Bates assumes the title of president of the Skype Division, and will report directly to Microsoft CEO Steve Ballmer.

Baller and Bates.jpg

Skype will presumably support Microsoft devices including the Xbox, Kinect, Windows Phone and other Windows devices, and Microsoft will integrate Skype with its services such as Lync, Outlook and Xbox Live.

The Skype division will continue to offer its current products to millions of users globally, according to a Microsoft news release.

“Microsoft and Skype will remain focused on their shared goal of connecting all people across all devices and accelerating both companies’ efforts to transform real-time communications for consumers and enterprise customers,” the release says.

The release did not specify if the current Internet voice and video calling features that Skype offers for free will continue to be free. It also did not specify how Skype will continue to work on non-Microsoft platforms although Microsoft has said in the past it would invest in and support Skype clients on such platforms.

A Microsoft spokesperson said “customers should not see any changes to their Skype experiences.”

In a video (see below) where Bates talks about the merger, he says: “I’m sure in a lot of people’s minds post-merger is the simple question: Will the Skype experience change? The answer is an emphatic no. The value proposition of Skype is being multi-platform across different devices, whether it’s PCs, desktops, mobile phones, whether it’s in the living room, and that’s key and that must stay. We’re committed to that.”

But he did not specify in the video whether free and low-cost Skype services would remain that way.

He did say in the news release that, together with Microsoft, “we will be able to accelerate Skype’s goal to reach 1 billion users daily.”

Ballmer said in the release that “Skype is a phenomenal product and brand that is loved by hundreds of millions of people around the world. We look forward to working with the Skype team to create new ways for people to stay connected to family, friends, clients and colleagues — anytime, anywhere.”

Microsoft announced its plan to purchase Skype for $8.5 billion — its biggest acquisition ever — last May. The purchase had to get regulatory clearance from several countries and regions before it could be finalized. It won the approval of U.S. anti-trust regulators last June and cleared the EU last week.

The acquisition is still under review in a few countries, and will be completed in those countries when such reviews are closed, the news release says.

About 170 million people monthly use Skype for voice and video calls and text messages over the Internet, either free or at rates cheaper than most landline and wireless calls.

Skype employees will continue to be located around the world in offices including Estonia, the Czech Republic, Russia, Sweden, the United Kingdom, Luxembourg, Japan, Singapore, Hong Kong, and the United States, according to the news release.

[Update 7:50 a.m.: Whether related to the merger or not, Tom Warren at Winrumors noticed that Skype released an updated version of Skype 5.6 for Windows, removing Google’s product bundling. The release note on the Skype blog says: “In this Skype release we have removed Google product offers from the Skype install flow. We have also released the same update for Skype 5.5 for Windows.”]

Here’s the video with Bates talking about the merger:

[do action=”custom_iframe” url=”http://www.microsoft.com:80/presspass/silverlightApps/videoplayer3/standalone.aspx?contentID=Tony_Bates_Profile&src=/presspass/presskits/skype/channel_embed.xml” width=”640″ height=”360″ frameborder=”0″ scrolling=”no”][/do]

(Video of Tony Bates, and photo of Steve Ballmer and Bates from Microsoft)

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