UPDATED 11:14 EDT / MAY 18 2011

Bill Gates Advocated Skype Takeover as Microsoft’s Shadow Looms Over Mobile

microsoft-cell-tower Like the Cylon’s from Battlestar Galactica, Microsoft obviously has a plan and the software giant has probably been scheming ever since they laid down a cool $8.5 billion to purchase Internet calling software company Skype. Even giant multinational corporations don’t just rush off to spend that much money for a business segment that nobody thinks is really worth that much, even while Skype has been losing money for the past few year, unable to find its niche in the consumer market.

Bill Gates is now on record with BBC News as advocating the Microsoft purchase of Skype,

“I was a strong proponent at the board level for the deal being done,” Mr Gates, Microsoft’s chairman told the BBC’s Hardtalk programme.

The multi-billion dollar deal is Microsoft’s largest ever acquisition.

“I think it’s a great, great deal for Skype. I think it’s a great deal for Microsoft. The idea of video conferencing is going to get so much better than it is today. Skype actually does get a fair bit of revenue,” said Mr Gates. “It’ll be fascinating to see how the brilliant ideas out of Microsoft research, coming together with Skype, what they can make of that.”

Perhaps we can already made a few solid guesses as to where Microsoft might take software like Skype. At first glance, the giant price tag and the exclusivity agreement (i.e. Skype couldn’t shop around to other bidders after they accepted Microsoft—as if anyone else might exceed $8.5b) showed that the software giant felt really strongly about the acquisition. Right now, Microsoft does look like it’s locked in competition with Google, Apple, and Cisco over the future of the Internet teleconference and telepresence markets.

However, it’s the revelation of rumors that Microsoft might be acquiring Nokia’s mobile division for $20b next week that lay out an adventurous and surprisingly innovative future for the Microsoft-Skype deal.

Out of every other Internet telephony service, Skype has shown itself to be the best at drawing in the public. The Internet telephone software runs on almost every device—including smartphones capable of 4G and WiFi access—as an app, it permits customers to transcend the hardware of their voice networks and use the Internet connection in their phone for voice communication instead.

What if Microsoft wants to leverage the sheer popularity of Skype and its proven-to-work communication network to change the way that mobile carriers work?

Technologist Kevin Fox has outlined his thoughts on the matter at his website Fury.com with excellent supporting details of exactly what Microsoft might be up to and it could be a doozy,

To create a new full mobile pipeline you’d need to control the mobile phone hardware, the mobile OS, and the carrier. It’s incredibly hard to start a new cellular network because placing cell towers all over the country is extremely expensive and permits for individual towers can take years to obtain, so most small carriers lease capacity from one of the major mobile carriers, which gives small carriers a disadvantage when it comes to pricing. Also, leasing access from a primary carrier doesn’t let you bring much new technology to the table. The data is still going through their limited systems using their stagnant protocols, which leaves Wi-Fi and cellular data as the ways to go. Our phones already use Wi-Fi for data access, falling back seamlessly to the cellular network when Wi-Fi isn’t available. Wi-Fi usage is essentially free, so a ‘soft carrier’ could drastically lower their costs by routing calls over wi-fi when available, and buying data access from a primary mobile carrier’s network when Wi-Fi isn’t available.

android-wifi Perhaps we can see what Microsoft has done there, except that they haven’t done it quite yet. The acquisition of Nokia’s mobile division is still only rumored; but the potential for a whole new era certainly seems well thought out.

If MS takes the reigns of mobile manufacture they’ll have two-point-five of the tree components of the trifecta: hardware, OS, and a soft-carrier. Now they’ll just have go build strong relationships with hard-carriers with their hardware chips and maneuvering in the market.

Looking at Google’s sheer interest in opening the empty TV spectrum white-space, this might be the tip of the iceberg when it comes to the clash of the titans over soft-carriership. Move over Cisco and Apple, Google already has products such as Google Voice and has been pushing Google Android deeper and deeper into 4G data and WiFi integration. Include deployment of their own city-spanning WiFi networks, combined with existing 4G LTE networks and smartphones designed to take advantage of them, Google could deploy their own Skype-like network.

Bill Gates built a career about knowing where to position himself and constructed a framework for a multi-billion-dollar empire. No doubt, his direct advocacy of the Skype buy for Microsoft means big things for the software colossus. If they intend to enter the mobile market with these innovations in mind and Google accepts an invitation as their rival we may see the next evolution of smartphone connectivity.


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