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Microsoft Reaches Agreement to Purchase Skype

Microsoft to purchase Skype
The Skype logo is pictured at Skype headquarters in Luxembourg, Tuesday, May 10, 2011. Microsoft Corp. said Tuesday that it has agreed to buy the popular Internet telephone service Skype SA for $8.5 billion in the biggest deal in the software maker’s 36-year history. (AP Photo)
Luxembourg Microsoft Mian
The Skype logo is pictured at Skype headquarters in Luxembourg, Tuesday, May 10, 2011. Microsoft Corp. said Tuesday that it has agreed to buy the popular Internet telephone service Skype SA for $8.5 billion in the biggest deal in the software maker's 36-year history. (AP Photo)

Microsoft Corp. announced Tuesday that it reached an agreement with Skype to purchase the popular Internet communications company for $8.5 billion.

The acquisition of Skype will give Microsoft access to the roughly 170 million users, who use Skype for free computer-to-computer video chats and instant messaging.

Microsoft said in a statement that Skype will support other devises like the video game console, Xbox and Kinect, as well as the Windows Phone, Microsoft Outlook and other Windows devices.

“Skype is a phenomenal service that is loved by millions of people around the world,” Microsoft CEO Steve Ballmer said in a statement. “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

According to the statement, Skype will become a division within Microsoft, and Skype CEO Tony Bates will become president of the Microsoft Skype Division. He will report directly to Ballmer, according to the statement.

“Microsoft and Skype share the vision of bringing software innovation and products to our customers,” Bates said in the statement.  “Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate.”

Skype was acquired by eBay in 2005, who then sold a large percentage in stake to an investor group led by Silver Lake in 2009.

“We are thrilled with Skype’s transformation during the period of our ownership and grateful for the extraordinary commitment of its management team and employees,” Egon Durban, managing director of Silver Lake said in a statement. “We are excited about Skype’s long-term future with Microsoft, as it is poised to become one of the world’s most dynamic and comprehensive communications platforms.”

Along with its free computer-to-computer video chat feature, Skype allows for phone calls to landlines and cell phones, which subscribers can pay for per minute or per month.

According to the Associated Press about 5 percent of the users pay to use Skype’s phone calling system.

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