Microsoft acquisition of Skype: Marketing Matters Arising

The fact that Microsoft has acquired worldwide leaders in the VOIP scene Skype is no longer news. What is news however, are the chances of Microsoft making marketing headway with Skype in the mobile platform, especially through its mobile strategic partner Nokia.

According to industry analysts, it is not clear what kind of impact the software giant Microsoft’s acquisition of Skype could have, for instance on the fortunes of Microsoft's new partner Nokia. Microsoft Corporation announced recently that it has acquired Skype, the company behind the software application that allows users to make VOIP calls and chats over the Internet, for EUR 5.9 billion.    

In February, Microsoft and Nokia announced that they were to enter into a major strategic partnership agreement, under which Nokia would start to use Microsoft’s Windows Phone 7 operating system as its primary platform in smartphones.

In a recent report issued by International Data Corporation (IDC), senior research analyst Rosalind Craven estimated that the deep integration of Skype software into the Windows phone operating system would be a ”major selling point” for Nokia’s upcoming smartphones.  Skype’s current client software can already now be downloaded to mobile phones based on Android, iPhone OS, and Nokia's own Symbian platforms.

According to Craven, Microsoft could nevertheless wish to include in the Windows Phone version for example special features which would not be available for any other systems. When integrating Skype technology into its Windows Phone software, Microsoft could actually give its new handsets an attractive edge that could be used to compete against the Internet features provided by iPhone and Android-based mobile phones.

However, Craven warns that there is a downside: some operators could take a negative attitude towards the use of Skype becoming more common on mobile phones. Operators, even in developing markets like Nigeria, are not overly fond of Skype, as using the Internet phone company’s software and services allows consumers to make free or very cheap calls, taking money out of the operator's pockets.

Controlling the existing phone networks, operators exercise power over mobile handset markets as well. In many countries, operators are selling a major part of all handhelds in bundled deals with a mobile connection thrown in. Research company Morningstar’s analyst Sunit Gogia estimated that it will require some effort from Microsoft to turn the Skype deal into a money-spinner.

There’s no question that Microsoft snapping up Skype is as big as corporate deals get, and even though both companies have interests across a wide spectrum of consumer technologies, the deal is particularly significant for the mobile space. On the most basic level, it obviously means getting a Skype app up and running on Windows Phone 7 will now surely be a higher priority than before.

As things stood, however, the app was expected out in Q3, so it probably wouldn’t have affected Nokia’s Windows Phone handsets anyway, which are only expected to appear after that. And with Skype used by 170 million people worldwide, Microsoft would be foolish to rock the boat and start favouring one platform over another. In fact, Microsoft boss Steve Ballmer has already said directly that “we will continue to invest in Skype on non-Microsoft client platforms”.

But all the same, we have to agree that this move can only work out well for Nokia and its forthcoming Windows Phone 7 handsets. With Qualcomm and Nokia working together on the hardware and Skype and Microsoft on the software side all pulling in the same direction, it surely adds up to a serious recipe for smartphone success – or as My Nokia Blog puts it, “that’s NOT a juggernaut to mess with”.