Why Microsoft buys Skype for $8.5bn

Microsoft has confirmed that it will buy internet telephony service Skype for $8.5bn (£5bn)
 
The acquisition will see Skype as a separate business division, called Microsoft Skype, alongside XBox Live, Kinect and Windows Phone.
 
According to Microsoft, the deal will benefit consumers and enterprises. "Skype is a phenomenal service that is loved by millions of people around the world," said Microsoft chief executive Steve Ballmer.

"Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world."
Tony Bates, the Skype chief executive, will become president of Microsoft Skype and report directly to the technology giant's chief executive, Steve Ballmer.
 
In 2005, Skype was purchased by eBay at $2.6bn (£1.6bn). However, the site sold the majority of its stake in 2009.
 
Skype is a way of boosting the mobile phone market, with its Windows Phone 7 offering still struggling for market share. Microsoft wants to make this a must-have application/service to have a competitive offering to Google Voice and Apple’s new communication platform, Facetime.

Facebook will benefit from this deal massively, with Microsoft being an investor in Facebook, video and voice services will be available on Facebook through Skype.