Microsoft buys Skype for $8.5 billion , what’s going next?

After months of speculation about who would buy it, Skype finally has a new home. Microsoft swooped in at the last minute and nabbed Skype for $8.5 billion in cash, the largest acquisition Microsoft has ever done.

A lot of people are concerned about the future of Skype at this point since Skype has always embodied the grassroots ethos of the Internet by allowing users to do free voice and video calls to anyone on the planet using its peer-to-peer protocol and software. Now, Skype is owned by one of the world’s largest corporations, which we’d think would want to use it to draw more money out of the half billion Skype users around the world.

While Microsoft has rocky history with acquisitions, I don’t think we should be too concerned about the company destroying Skype or changing it from a free service to a paid service, and I’ll explain why.

First and foremost, Microsoft knows that it bought a consumer service that is loved by the public, and a most of Skype’s value is based on the huge number of users it has. Turning Skype into a paid service would immediately shrink the user base and decrease the value of the property. That’s the business reality of the situation.

Second, Microsoft plans to make Skype an independent business unit within the company, with Skype CEO Tony Bates as the head of the division. That’s a good sign that Microsoft plans to invest in Skype, do a lot more with it than just the stuff we’ve seen so far, and turn it into a larger platform rather than just a voice and video service. For more on that, let’s take a quick look at what the chiefs had to say about the deal:

Microsoft CEO Steve Ballmer said, “Skype is a phenomenal service that is loved by millions of people around the world. 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.”

Skype CEO Bates said, “Microsoft and Skype share the vision of bringing software innovation and products to our customers. Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate.”

That definitely sounds like there are already plans for growing and expanding Skype, which has been languishing for years with minimal new features and product development. With Microsoft’s resources behind it, there’s the potential that Skype could be unleashed to start innovating again.

In terms of Skype remaining free, remember that Microsoft has been running its Messenger for years (under various names such as Windows Live Messenger and MSN Messenger) as a free service. The big question there will be whether Microsoft converts Messenger to Skype to turn it into an even larger pool of users to compete more effectively against Yahoo Messenger and GoogleTalk.

The other big question is about Skype’s multiplatform support. Skype has traditionally released the newest features and updates for Windows first, but has also maintained versions of its client for Mac and Linux, which eventually get the latest features after a few months lag time. In its official release about the acquisition, the company stated, “Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.” However, I’d expect Microsoft to continue the Windows-first tradition and not unify the development of the three clients (which we might have gotten if Google had bought Skype).

Bottom line
Microsoft is likely to keep the status quo with Skype’s current consumer service, with only minimal changes. Meanwhile, on the high end, Microsoft will work on building a business communications platform with Skype by making it a corporate unified communications platform that is tightly integrated across Microsoft’s business software, servers, and services.

At the Skype press conference, Ballmer said, “We dream about experiences that are not limited by distance or device.”

Think of being able to securely IM a document directly from Microsoft Office to a Skype user on the other side of the world on a smartphone, or being able to use your Skype client to dial into a corporate telepresence system when you’re on the road. Those are types of things Skype has been capable of for years but hasn’t delivered on, and I expect we’ll see Microsoft focus on those opportunities.

Src: Techrepublic

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PlayStation Network credit cards protected by encryption

All credit card information stored on Sony’s PlayStation Network was encrypted, the company said one day after warning users their user names, passwords, birth dates and home addresses were stolen in a security breach.

“The entire credit card table was encrypted and we have no evidence that credit card data was taken,” Sony representatives wrote in the update, which was posted late on Wednesday. “The personal data table, which is a separate data set, was not encrypted, but was, of course, behind a very sophisticated security system that was breached in a malicious attack.”

The update clarifies statements Sony made on Tuesday that the stolen information may have included payment-card data, purchase history, billing addresses, and security answers used to change passwords. It didn’t provide details about the encryption used to protect card data, but assuming it followed standard industry practices, it was likely enough to prevent the information from being used by the hackers behind the break in.

Wednesday’s update follows multiple news reports that recounted PSN users who reported credit card fraud that seemed to coincide with the breach.

Noticeably absent from Sony’s update was the status of passwords used to log in to the PlayStation Network. Industry practices dictate they should never be stored in clear text, but rather should be run through a one-way cryptographic hash algorithm, which converts each string in plaintext to a unique set of characters that can never be reversed.

As we’ve learned from last year’s mammoth website hack at Gawker and numerous other security breaches, users frequently employ the same credentials for numerous accounts, making all of them vulnerable when a single one is compromised. Sony’s update strongly urged PlayStation Network users who use the same account name and password for unrelated services to change them.

The update said that Sony has sent the majority of its 77 million users an email informing them of the breach and the steps they should take to protect themselves in its aftermath. The company also said it is working to track down the perpetrators.

“We are currently conducting a thorough investigation of the situation and are working closely with a recognized technology security firm and law enforcement in order to find those responsible for this criminal act no matter where in the world they might be located,” Sony representatives wrote.

They said they expect some online PlayStation services to resume this Tuesday. The network has been inaccessible since April 20, when Sony took it offline. ®

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