Skype: Lost focus or an exit-play after all?

Image via CrunchBase

When companies first launch, they’re often best at focusing in on their mission, on what they do best or – ideally – on the single biggest market problem they can address. Point is, they focus. And while this is often thanks to a strong leader, it just as often can be the sheer force of capital restraint (ie. only have enough cash for one thing at a time). It’s once companies mature, have cash or have public investors to manage, that distraction sets its. And it can kill, or at least injure – see Cisco for more on this phenomena.

Last year I mused to those that would listen (not that many) that Skype was falling victim to just this – the curse of distraction. After years of excelling at what it did best, suddenly it aspired to grow old overnight and become everything to everyone. This included a very aggressive and capital intensive play for the enterprise market – a segment that, if a car, would be ticketed for going too slowly. And if a club, would have a very strict, blue-blood membership policy. The new Skype’s been seen angling to  to be your SIP trunk by day and your living room conference room by night. Again, see Cisco for more on how this story goes.

For my money (and it certainly wasn’t mine) I thought the two biggest opportunities – and I tend to think it terms of markets companies can own, and not just about sheer size – was to flat out dominate the small business collaboration market, with a voice spill over, and to heavily exploit the developer generation by opening up the platform and network to them.

Alas, Skype had bigger ideas. But while it looked like they were ramping all these new markets to appease would-be Wall Streeters, perhaps it was all about an exit after all. Think about it: there was no way enterprise revenue was ever going to pump fast enough to impress anyone. But, having an enterprise foundation – including staffing and partnerships (as Dave Michels talked about earlier this week when he called out MSFT as the buyer) - may have given them that extra oomph towards bumping up its valuation.

Ultimately Facebook could only drive value out of their consumer business; Google could have found a way to drive something out of the consumer and corporate units, but – as Andy Abramson commented before the deal – they may done the deal just for the joy of slowing Facebook down. But Microsoft, they have the money and their hand in all sorts of spots that Skype could juice if well executed. Including, albeit ironically, enterprise. And who knows, maybe with the help of their BizSpark program, developers will get their hands onto Skype after all.

Other Random Thoughts on the Deal:

• Gaming just got voice. While ViVox has made big strides putting VoIP in gaming, this changes everything.
• Consultants don’t know crap (who said focus is a good thing…?)
• Inflation has come in a serious way to VoIP: In 2005 MSFT bought Teleo (I’m guessing for under $100M to, yes, better integrate voice into into products. Granted that was a technology and not community buy, but still.)
• Even when something is free like Skype has been, when performance tails off people will complain – and it will hurt the brand. Although apparently not the valuation.
• Favorite quote of the day: “Great. Now it’s up to MSFT to fix my Skype 5.0 for Mac…”)
• Nice to have such big, huge valuation news in our space. Seems like the last time was when MSFT bought TellMe for $800M.

Enough said.

Tagged as: MSFT, Skype