Microsoft to buy Skype? $7 billion deal, says WSJ

skypeYesterday Om Malik reported that negotiations to buy Skype, at first a two horse race between Google and Facebook, had taken an interesting turn with new of interest from Microsoft.  Now, a day later, the Wall St. Journal is reporting that a deal for Microsoft to acquire Skype for some $7 billion could be announced as soon as tomorrow (Tuesday, May 10).

Skype, originally started in Luxembourg in 2003 and purchased by eBay in 2007, sold again to Silver Lake Partners in 2009 and has been up for sale.  The peer-to-peer internet voice and video calling system has been becoming increasingly popular as a way to communicate via mobile devices.

The tech press has been a bit taken aback by yesterday’s news, wondering aloud what Microsoft would want/do with Skype.  The Wall Street Journal speculates that Skype would give Microsoft “a recognized brand name on the Internet at a time when it is struggling to get more traction in the consumer market”, and could strengthen Microsoft’s corporate communications client, Lync, which is now offered as part of Office 365.

The acquisition might also be somewhat of a blocking move against both Facebook and Google, who both have far more traction in the consumer space than Microsoft.

The Wall Street Journal also speculates that Skype could help with Windows Phone, and indeed a planned demo of Skype working on Windows Phone was apparently pulled at the last minute at last month’s Mix web developer’s conference, replaced by only a slide and a mention.  Whether this news had anything to do with the lack of a keynote demo is purely conjectural, of course.

We’ll have lots more on Skype and what it might mean for Microsoft and its competitors as the news develops.  As the WSJ says, “(n)egotiations were wrapping up Monday evening, and a deal could still fall apart, the people cautioned”.