Can any good come out of Microsoft's $8.5 billion Skype buyout?

No.

Microsoft will run Skype to the ground, and here are three major reasons why:

1.  Poor track record of product and service launch.
Microsoft has a poor success rate of launching new services or relaunching existing services, such as:

Search engine.  In a span of 10 years, Microsoft attempted three search websites: MSN, Windows Live, and now Bing.

Soapbox.  Never heard of it? It was Microsoft's version of Youtube which never really saw the light of day.

Zune - Microsoft's MP3 Player was always one step behind the iPod in terms of what it had to offer. It also lacked marketing commitment and wide distribution.

Kin phones.  Microsoft's Kin smart phones had extreme limitations, and was discontinued after just 48 days on the market. Kin phones were intended to appeal to a younger demographic but most tweens and teens would rather have an iPhone or Android phone.

Other failed services, among others, include Cashback, MSN Direct Smart Watch, and Web TV.


2. Microsoft is too slow
The company also has a track record for being slow when it comes to releasing new products, therefore getting beaten to the punch by much faster rivals.

Microsoft was slow to jump into the search engine and operation system wars.

In the time it took to release Vista, Apple had come out with a number of its own operation systems.

Although Microsoft had a head start in the smart phone industry with the release of the Windows Mobile operating system in 2000, it wasn't until 2010 that Microsoft finally came out with a version that could compete with iPhone and Android. 

To add to their mobile problems, Microsoft has yet to release a tablet operating system that can compete with the iPad. 

There was, however, high praise for Microsoft's Vole's Courier project, a dual screen tablet project that Microsoft had been working on. Yet, this was scrapped before ever being released.   The failure to grab the mobile market didn't sit well with the Microsoft board either, resulting in Steve Ballmer's yearly bonus being cut in half last fall.

3. Microsoft's Corporate Culture Problem
This doesn't just apply to products, but the company's system in itself. 

Due to department in-fighting, many innovative ideas end up dying or taking longer than they should to be released.   

The only exception to this rule has been Xbox, which has enjoyed independence from the internal politics that have plagued other MS products.

So what's the problem?

Microsoft is stuck in its old ways. It may have worked for Bill Gates, but it's time to break out of their own ecosystem and status quo to join the rest of the rapidly changing tech industry without internal politics getting in the way of out of the box ideas.

Ex-Microsoft executive Dick Brass described how a dysfunctional corporate culture, has turned Microsoft into a clumsy, uncompetitive innovator.

The big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence, Brass explains.

Microsoft's stuffy company model compelled bright workers to leave for other companies or start their own business. Despite Microsoft's attempts to change for the better, they lost a great deal of time, resources and a competent work force.

Unfortunately, Ballmer doesn't plan on giving up the reins of Microsoft until his youngest kid leaves for college (in 2017 or later). And the board is not likely to fire him unless Bill Gates approves, which probably won't happen anytime soon since Steve Ballmer was Bill Gates' best man at his wedding

The conclusive forecast:
As long as the corporate culture inside of Microsoft continues to maintain its course, Skype most likely will meet a painful demise, leaving room for competitors to pick up the pieces. 

Skype will either slow in its development, allowing competitors to race ahead, or will be axed altogether in order to be integrated into another MS service.  Either way, Skype's glory days are behind it.  The only thing Skype's founders and investors have to look forward to is a big payday.

Skype's founder Niklas Zennstromm, on the other hand, said Skype's full potential hasn't been realized yet. He thinks that Microsoft has a huge opportunity to integrate it into a lot of their different services,

Skype's shares fell more than 6 percent since the deal was announced.

Ouch.

 

 

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