Microsoft buys Skype in $8.5bn deal

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Microsoft pays top dollar for Skype

Microsoft has bought Skype in a deal worth $8.5 billion (£5.2 billion). The telecommunications company was valued at $2.5bn 18 months ago yet Microsoft have agreed to pay over three times this rate in its biggest acquisition yet.

The deal, subject to regulatory approval, sees Microsoft attempting to rejoin the game against web 2.0 rivals. Rumours suggested last week that Google and Facebook were also in the bid for Skype but Microsoft's win has shown how seriously it is taking the online industry.

Microsoft now has more to offer

Microsoft intends to roll out Skype's video calling capabilities to all its existing devices including smartphones, Xbox and email. This enables Microsoft to offer both online and mobile services to consumers and businesses alike.

It has also been confirmed by Steve Ballmer that they will continue to develop Skype for non-Microsoft enabled devices. Skype currently obtains the majority of its revenue through international calls. They experienced the largest volume of international calls of all phone companies in 2010.

For Microsoft, which has seen its computing dominance suffer following the growth of the likes of Google, this move could reposition them within the online industry as they add a new dimension to their services.