Why Google should buy Skype

After reading an article on Why Apple should buy Skype on VentureBeat and on the Skype IPO filing on Techcrunch I am actually wondering why Google isn’t looking into Skype. I know there have been many rumours over the years but here are some of my thoughts on why I think it could be a perfect match:

1. The smartphone market. With Android catching up to Apple an integrated Skype functionality with free calls thanks to unlimited data plans would just be a killer feature. I know the telcos wouldn’t like it as selling minutes still is a cash machine for them. But with the flatrate data packages, a Google built phone and many telco players being no. 3 or 4 in the market they would actually be able to create something like Apple did with exclusively selling its iPhone through one telco operator. Just imagine one telco operator saying: Take the Google Skypophone, get the unlimited data package for $40 per month and have free calls to all your Skype friends. And now add video conferencing to that. Sweet deal.

2. The user base. Access to 560 million users (thereof 124 million active users) is not too bad even if some might already be Google product users. If you combine Skype and Gmail you end up with something similar to Google Wave. As innovative as Google Wave was one of the main reasons for failure is probably that people just didn’t get it. But: People are used to email and know how to handle Skype so it would be a rather easy transformation compared to signing up to a supposedly totally different service.

3. The billing relationship. Although Skype currently “only” has 8.1 million paying users having a billing relationship is crucial to easily tapping into the user’s wallet. As Techcrunch mentioned recently gaming and music only make serious money if you have a billing relationship. Combining Skype’s payment system with Google Checkout would make it a truely worldwide system. You could even think of buying minutes for your cell (see 1.) for non-Skype calls and establishing a revenue share with the telco operator.

4. Realtime status updates. Skype has a huge installed software base. It’s not like Google Buzz where you actually need the website to be opened in your browser. Skype is running in the background on 124 million machines every month. One click and you could give a public status update. The most recent number of Twitter users I found was about 100 million compared to 560 million (or ‘just’ 124 million active) Skype users. Nice way to catch up to Twitter!

5. Social network. With Google Me around the corner catching more information about the social graph over a user via his Skype profile and contact list won’t hurt. 560 million users sounds similar to the current number of Facebook users. Coincidence?

Just one last thought: Could the IPO filing be a way to extract the maximum price from Google? It’s offering just a fraction of all shares so just imagine what will happen once Google announces that it is going to buy Skype. I believe they’d have to offer a premium of up to 50% over the last share price. Nice play, guys!

What do you think? Share your thoughts in the comments.

Image credits: Copyright Google, Skype.

6 thoughts on “Why Google should buy Skype”

  1. @Georg: Saw it as well, haven’t made my mind up yet if that’s a smart move or not. Gut feeling tells me that most of my arguments for a buy wouldn’t work with Cisco, in addition Cisco is not an end-consumer company. But hey, someone’s got to supply all the necessary hardware for VoIP and Cisco is one of the largest (if not the largest) player in this market.

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