Skype's Purchaser

I just read Cringely's theory about Skype's near purchase by Rupert Murdoch. He thinks it was to put Skype into play as a takeover target by another telecom company. His guess is that it will be either a mobile phone company like Vodaphone or NTT DoCoMo, or a cable company who wants to get into the VOIP market, like Comcast.

I must say I disagree with him. Comcast already has a digital phone service, which uses VOIP. What use would they have for Skype? I don't buy it that they want those 20 million subscribers to sell movies to. Why would Skype's customers switch to Comcast? Many of them don't have broadband, and more are international (and Comcast isn't). So they wouldn't be eligible for such downloaded movies.

And a mobile phone company? They'd be just as interested in killing Skype as the normal telecom companies. Skype can be used by any device that can connect to the internet, basically. People in coffee shops can use Skype on their laptops. People with PDAs can talk whenever they have wireless coverage, as if their PDA was one of those PDA-phones that cost much more.

That gets me to my counter-theory: Skype will be purchased by a company that wants to expand into a new market and sell their own product to go along with Skype. They will blanket the US and possibly Europe with a wireless signal (WiMAX?) and sell PDA-like devices whose primary use is as a phone, but it also inherently has full access to the internet.

Who would do something like this? I would guess that it would be either Intel or Microsoft. Intel wants to build and sell WiMAX transmitters and cards. They want to expand into more markets, including the home. Basically, they want to put an Intel chip in as many places as possible. They'd get their WiMAX chips in every consumer's laptop, PDA, and especially the Intel-branded PDA-device that goes with the service. They could offer such a service at similar cost to a cellular phone, available both in the home and on the road. They could take over the mobile phone market and the traditional telecom market it one fell swoop. And they'd make a lot more profit, because they wouldn't have to launch satellites like the cellular companies or invest in underground or expensive infrastructure. They would only have to put a WiMAX station or two in a few score major cities and get a good amount of bandwidth.

But Microsoft could do the same thing. They're looking for ways to grow the company, and they always love expanding into new markets. Additionally, they just announced that they're planning to acquire more companies in the near future to use their technology. Skype could be one of these purchases. Microsoft sells the mobile OS that Skype runs on. They'd love to be able to build their own phone and sell it to people directly, getting hardware revenues instead of software licenses. Of course, they would also continue to license the OS, so they're still getting those revenues. They'd use the same strategy that Intel would, but would probably push it a lot harder and market it a lot better. And they'd tie it directly into Windows, and the MS-phone would cooperate with it perfectly ... when you're sitting at your Windows Vista computer with your MS-phone in your pocket and you get a call, you see it on your screen (maybe it pauses your music or movie), and you can either answer it with your computer or use your MS-phone as the handset.

I can see Microsoft spending a few billion dollars to make that happen. If they did this (with their OS monopoly), they could rule the world for quite a while longer.

So I say be wary of MS looking into Skype. I'd much rather have Intel do it, or have Skype continue under its own sails. There's nothing wrong with a private company that makes $70 million dollars a year and has awesome growth potential. So there's no need to sell it.