Hey, for $8.5 billion, you’d expect a little extra as part of a deal, and it turns out that Microsoft’s Skype acquisition will include a bonus in the form of Qik, the streaming mobile video company acquired by Skype for $121 million this year.
Microsoft today confirmed that Qik will come along with the Skype acquisition, but details beyond that are scarce, because the companies aren’t talking about specific product plans while the deal is still pending.
Skype will operate as its own division inside Microsoft. In response to our inquiry about Qik, a Microsoft representative pointed to Skype CEO Tony Bates’ previous blog post talking about the technologies that Qik was bringing to the table in streaming mobile video.
From a mobile perspective, the overall Microsoft and Skype deal is somewhat ironic. Skype has apps for iPhone and Android but not for Microsoft’s Windows Phone 7. Qik has apps for Android and iPhone, and Windows Mobile, Microsoft’s older mobile operating system, but it doesn’t offer a Windows Phone 7 app.
It’s clear that integration with Windows Phone (not necessarily just offering an app) will be one of the goals of the combined companies. During a news conference with Microsoft CEO Steve Ballmer today, Bates talked generally about the importance of mobile video.
Mobile is clearly moving to be a rich communications capability above and beyond just voice. We introduced two-way video recently in terms of our iPhone products and our Android products, and we’ll work together with Microsoft to keep enhancing and enriching those, and you can see just how much video is going to dominate the traffic as we look for the next few years. It’s one of the fastest-growing parts of the industry, and Skype’s well-positioned.
Video is in our DNA, it’s in the technology that we produce, it’s in the way that we think about communications. Over 40 percent of all the traffic that Skype delivers today is already video. Video ads is one of the biggest opportunities that we see moving forward. And we’re just at the beginning of that in the U.S. Less than 5 percent of the market is there today. Video itself we think as an overall market both for advertising and for rich communications around collaboration and finding ways to create that engaged user base is one of the fastest-growing areas of the market. We estimate 45 percent growth just in video-based ads over the compound annual growth rate just over the next few years.