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Microsoft, Facebook could use Skype against Google

Facebook may reap benefits from Microsoft's big purchase, analysts say

May 13, 2011 02:16 PM ET

Computerworld - Facebook may not have bought Skype, but the social networking company may still reap the benefits.

Earlier this week, Microsoft announced that it had reached a deal to buy the voice and video communications company for $8.5 billion in cash.

In a press conference Tuesday, Microsoft CEO Steve Ballmer said the software maker will connect Skype to major Microsoft services, like the Outlook email client and its Xbox and Kinect gaming systems.

Industry analysts, however, surmise that Microsoft may be willing to go outside its corporate walls and connect Skype with online partner Facebook.

"Facebook could get a little goodness out of the Skype deal, given its close relationship with Microsoft," said Dan Olds, an analyst at Gabriel Consulting Group. "I can see where Skype could play a role between them and provide benefits to both sides. Adding Skype-like capabilities to Facebook would give Microsoft a ready-made marketing platform for it and give Facebook a new tool to offer its users."

Microsoft and Facebook announced last October that they were working together to make search more social. Both companies made it clear at the time that the move was an extension of their ongoing relationship. Qi Lu, president of Microsoft's Online Services Division, said in October that with the pairing, users should expect more tools and technologies from the companies in the future.

Before Microsoft announced that it was buying Skype, most online speculation had Google and Facebook, which have increasingly become competitors, both vying to scoop up Skype. During Tuesday's press conference, Skype CEO Tony Bates did not answer when a reporter asked him what other companies had shown interest in buying the video communications company.

Rob Enderle, an analyst at Enderle Group, said Facebook may have lucked out with the Microsoft-Skype deal.

Instead of having to pay a hefty price to get Skype on its own, Facebook may be able to work out a much less expensive deal with Microsoft to use Skype communication tools on its site.

And considering the fact that both Microsoft and Facebook are engaged in a heated competition with Google, it would behoove Microsoft to help its partner take on its biggest foe.

"If anybody, Microsoft would rather Facebook have Skype capabilities," Enderle said. "It wouldn't surprise me if Microsoft offered this up, treating Facebook more like a partner. Better to take on Google together."

While Microsoft and Facebook would like to make it tougher on Google, Facebook could also benefit from gaining some Skype services for its users.

"If Facebook can strike this kind of deal with Microsoft, it could give them the best of both worlds. They'd have the ability to integrate Skype into Facebook without having to buy or manage it," Olds said. "This would make Facebook stickier by keeping users on the site for a longer period of time, which adds up to more advertising impressions, which is the name of the game."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at Twitter @sgaudin or subscribe to Sharon's RSS feed Gaudin RSS. Her e-mail address is sgaudin@computerworld.com.

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