Apparently customers are worth roughly $12.82 per unit when purchased in bulk.


Microsoft Corp. (MSFT) agreed to buy Skype Technologies SA for $8.5 billion in cash to gain the world’s most popular Internet calling service and its 663 million customers.

Of course this happens right after a I do a post arguing that Ballmer is an unfairly judged CEO who has served Microsoft well despite some mistakes. Not only is this is one of those mistakes, but one that can easily be contrasted to the embrace/extend strategy a smarter 90s Microsoft would have implemented.

The appeal of owning Skype is obvious. It gives Microsoft control over a large and established customer base while enabling them to incorporate Skype calling as an integrated, Windows-centric feature on desktop and mobile.

These same benefits could have been achieved by simply licensing Skype technology at a fraction of the cost and without the headaches associated with acquisition. Microsoft would still have been able to leverage access to Skype’s attractive user base with a compelling integrated solution developed in-house and would have also gained influence over the technology’s direction as Skype’s sugar daddy. Windows exclusive Skype would be a reason for ownership, but is unlikely since doing so would be quickly erode the customer base Microsoft paid so dearly to acquire.

I still think Balmer is unfairly judged mostly because I think most other CEO’s in his position would make even more frivolous acquisitions where as Ballmer only seems to make one every 4 years.