It was not a surprise to anyone when Microsoft announced today that it was buying Skype for $8.5B. Based on reading the volumes already written about the deal in the blogosphere and the general press, there is general agreement that Microsoft paid too much in an effort to keep Skype out of Google’s hands, but little
Clear Loser - Where customers and revenues shrink, market share declines sharply and profits are elusive. This would be the result of micromanaging the product, ignoring customer feedback, adding worthless features, insisting that developers to force fit Microsoft technology into the product, devising confusing bundles, and finally, overcharging. There are very low barriers for customers to switch services, so this is a distinct possibility if they get fed up with Microsoft.
Clear Winner - where revenue and market share continue to grow, and it turns a healthy profit. This would be the outcome of Microsoft making smart moves: allowing it to operate independently, providing the capital and marketing muscle to grow the business, providing new growth outlets (for example, Xbox/STB integration) and discovering profitable business models.
“Walking wounded” - where the service grows modestly, and makes some money but does not outpace the market.
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