Microsoft deal should vastly expand Skype

Associated Press

SAN FRANCISCO

Imagine using your Xbox and switching from a game to a video chat with a faraway friend holding an iPad. Or going into your office email to invite Grandma to a virtual family reunion beamed on TV sets to relatives across the country.

Microsoft’s $8.5 billion purchase of Skype is supposed to make using the Internet for video phone calls as common as logging on to Facebook or instant messaging is today.

If it wins regulatory approval, the deal announced Tuesday provides Microsoft, the world’s largest software maker, with the means to sell more digital advertising and offer more popular conferencing tools to help businesses save money.

Skype’s services also span hot markets — online socializing, mobile phones and digital video — where Microsoft has been struggling to catch up with Facebook, Apple and Google.

Analysts and investors couldn’t seem to agree whether Microsoft is wasting its money on an unprofitable service or has pulled off a coup that will help it restore clout. Microsoft stock was virtually unchanged, falling 0.6 percent.

About 170 million people worldwide use Skype regularly for calls and chats. Microsoft believes it can attract hundreds of millions more by weaving Skype into its products. Not just Windows, which runs on eight of every 10 computers and servers on the planet, but also its Outlook email program, software for phones and the Xbox video-game console.

Microsoft already has a Skype-like service called Windows Live. But the real Skype is far more popular and bridges various computers and phones. Already, someone using the Skype application on an iPhone can talk to someone who has it installed on a Dell laptop.