Microsoft to buy Skype for $8.5 billion & integrate with Xbox 360 Kinect

Microsoft has officially confirmed Reuters rumors that it intends to purchase internet communications company, Skype for $8.5 billion from an investment group led by Silver Lake who originally purchased Skype from eBay in 2009 for slightly more than $2 billion.  Microsoft has stated that the board of directors both for their own company and Skype have approved the agreement which is now awaiting regulatory approval.

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Of immediate interest is exactly how Skype will be integrated in Microsoft's business strategy and what will happen to some of the current employees including CEO Tony Bates.  Microsoft is planning to create a separate business division for Skype and will have Bates lead that division.  Bates will report directly to Microsoft CEO Steve Ballmer. No comment has been made about the rest of Skype's workforce being integrated into Microsoft though Ballmer does express excitement over the idea of new ideas being brought to Microsoft's workforce by those employees.

“Tony Bates has a great track record as a leader and will strengthen the Microsoft management team. I’m looking forward to Skype’s talented global workforce bringing its insights, ideas and experience to Microsoft,” Ballmer said.

Microsoft swiftly addressed how they plan to leverage Skype in their existing technologies and attempted to calm non-Windows users as to the continued support of the technology on other platforms.

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"Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms."

Integrating Skype with Kinect, Xbox Live, and Windows Phone 7  is a smart move for Microsoft, giving them a way to compete with Apple's Facetime functionality and Google's chat options.  Kinect does already have video chat functionality but it is only implemented for Kinect to Kinect chat.  The addition of Skype could give a nice boost to that technology.  Whether Microsoft honors this statement and gives equal support to Skype implementations on iPhone, Linux, and Mac OS remains to be seen.

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