Microsoft buys Skype for $8.5 billion

  • Microsoft plans to bring Skype to Xbox, Windows Phone, Hotmail, and more
  • Skype currently has 170 million connected users across the world
  • Attempt to catch up in revenue to smartphone and tablet market dominant Apple

Microsoft has bought Skype for $8.5 billion and plans to bring the service to Xbox, Windows Phone and other Windows devices.

Skype was one of the pioneers in VoIP and has 170 million connected users across the world. Microsoft plans to integrate Skype services into its Windows Phones, Xbox Live, Hotmail and Messenger products.

The deal will help Microsoft expand its telecommunications presence and will see Skype become even more ubiquitous as it is included in more products.

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

VoIP is becoming an increasingly popular way for people to stay in touch, as a Skype call is either free or usually cheaper than using a landline or mobile service. VoIP is ideal for customers who make a lot of long distance calls, have a Naked connection but still want a telephone number, or who just want to save money on their call costs.

As more consumers switch to smartphones with data included, Skype can be used on the go as well as at home or at the office on a fixed broadband connection.

Microsoft has lost ground to Apple in the smartphone and tablet markets boom, and a deal with Skype could increase the popularity of its services with customers. This will also benefit Xbox gamers, who already use the Xbox Live service to chat with other players within their games.