Skype founder sees upside for Microsoft after deal

PARIS Wed May 25, 2011 2:39pm EDT

Skype co-Founder Niklas Zennstrom attends a photocall in the Westbury Hotel to mark the opening of Founders in Dublin October 28, 2010. REUTERS/Cathal McNaughton

Skype co-Founder Niklas Zennstrom attends a photocall in the Westbury Hotel to mark the opening of Founders in Dublin October 28, 2010.

Credit: Reuters/Cathal McNaughton

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PARIS (Reuters) - Skype founder Niklas Zennstrom said Microsoft could capitalize on its $8.5 billion acquisition of the Internet calling service by expanding into mobile and improving video call quality.

"Skype's full potential hasn't been realized yet," said Zennstrom in an interview at the e-G8 forum in Paris, saying improvements in networks and devices such as smartphones meant the experience of using the service was still getting better.

"I think that Microsoft has a huge opportunity to integrate it into a lot of their different services," said the Swedish entrepreneur and venture capitalist.

Zennstrom, who along with partner Janus Friis started Skype in 2003 and grew it into an online giant with 145 million users a month, no longer has a management role at Skype and will sell all his shares once the deal with Microsoft closes.

Asked how Microsoft could incorporate Skype into its business, Zennstrom declined to provide specifics, adding that it was up to the software giant to comment.

"Of course they have so many different assets. If they do a good job integrating Skype, the company can grow even more."

Investors initially questioned the wisdom of Microsoft's acquisition, especially its high price tag. Its shares are down more than 6 percent since the deal was announced.

Microsoft could combine Skype with its software such as Outlook to appeal to corporate users, while the voice and video communications could link to Microsoft's Xbox live gaming.

Skype also would offer Microsoft another route to develop its mobile presence, an area into which it has already put more energy and resources -- for example through a partnership with Nokia -- as PC usage comes under threat.

Zennstrom said he thought the service was entering a second phase -- focused on mobiles and video -- after having started out as simply voice calls between desktop computers. "That is a huge opportunity that still has room to grow," he said.

"We still all travel a lot for meetings because you can't match the intimate experience of seeing someone in person, even with Skype video calling," he said. "There is a lot more work to do on the core technology to improve quality of video calls."

Zennstrom previously sold Skype to online auction house eBay in 2005 for roughly $3 billion. In 2009, he was part of a consortium that bought Skype back from eBay.

(Additional reporting by Georgina Prodhan; Editing by David Cowell)

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Comments (1)
PwlM wrote:
Nah!
Ballmer will just ruin it…

May 25, 2011 8:12pm EDT  --  Report as abuse
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