Microsoft recently purchased Skype, a popular video and chat service, for $8.5 billion. The move is the software giant’s largest purchase ever, and it keeps Skype out of the hands of competitors Google and Apple. But was it worth it? And what does it mean for Skype users, who are used to free chats?

Guests

  • Michael Cherry Analyst, Directions on Microsoft
  • Rob Pegoraro Technology Writer

Transcript

  • 13:06:40

    MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. Later in the broadcast, how Washington, D.C. may be losing out on commercial property taxes. But first, calling your overseas friends, checking in back home while you're far away, there's a good chance you've used the popular voice and video chat service, Skype, to do so.

  • 13:07:15

    MR. KOJO NNAMDIWell, recently Skype was bought by software giant, Microsoft, and consumers as well as tech investors are anticipating change at $8.5 billion. This is Microsoft's biggest purchase ever. But Skype has never turned a profit. And its customer base, which is mostly used to free serve, might shy away from paying. Here to discuss Microsoft and how it might change the Skype we know is Rob Pegoraro.

  • 13:07:43

    MR. KOJO NNAMDIHe's a tech writer and former personal technology columnist for the Washington Post. Rob, good to see you again.

  • 13:07:49

    MR. ROB PEGORAROIt's good to be back.

  • 13:07:50

    NNAMDIAnd joining us by phone from Washington State is Michael Cherry. He is an analyst for the firm, Directions on Microsoft, which watches the company’s business and technology decisions. Michael Cherry, thank you for joining us.

  • 13:08:04

    MR. MICHAEL CHERRYOh, you're welcome.

  • 13:08:05

    NNAMDIRob, what do we know, for sure, that will change for Skype users?

  • 13:08:12

    PEGORAROWell, it's really not clear. What I do know...

  • 13:08:15

    NNAMDIYou know nothing for sure.

  • 13:08:16

    PEGORARO...yeah. My thesis is Skype has just not been a very well company, in some respects. Their mobile software development strategy has been, pretty much, incoherent, especially on the Android platform. So there's a lot of ways that Microsoft could make things worse, but I think Microsoft knows the value of getting a lot of market share and being -- getting your service in front of as many people as possible.

  • 13:08:40

    PEGORAROSo considering how they've done their other most development efforts, I think they could actually improve things for Skype a little bit.

  • 13:08:47

    NNAMDIWhat do you say, Michael? What do you know for sure?

  • 13:08:51

    CHERRYWell, one of the things, I have to agree, we know nothing for sure. But Microsoft doesn't have the best reputation or -- in terms of acquisitions where it has had products that worked on non-Windows platform, keeping those non-Windows platforms alive, everything that Microsoft does, always runs best on the current version of Windows.

  • 13:09:17

    CHERRYAnd so there has to be some concern for what this means to people who use other platforms, whether it's Apples, iPads or iPhones or Macs, whether people use the Lenox as an operating system or any of the other devices that people want to use as part of their communications.

  • 13:09:39

    NNAMDIWe're taking your calls at 800-433-8850. Do you use Skype? How and why? Are you concerned that Microsoft's ownership will change Skype for maybe the worst? 800-433-8850 or go to our website, kojoshow.org, send us a tweet at kojoshow or email to kojo@wamu.org. Michael, how can we expect to see Skype integrated into the products Microsoft already has?

  • 13:10:07

    CHERRYI can envision that we would see Skype be added into products such as the email products. Some Microsoft has Windows Live Mail and Outlook, which are clients for doing email. And it's very conceivable that what you would have is a new button, if you will, on the toolbar or the ruler that says, play Skype call. And you just click on that button and you're using the same list of contacts that you would for email, but you're going to make a voice call over the internet as opposed to sending an email.

  • 13:10:40

    CHERRYSo that kind of integration, I think, makes sense. We could also see it integrated into the Xbox games as well as -- Xbox already has a private network that could expand on into a more public network. And we could see it into small businesses. Microsoft has a large product for enterprises that does voice communications as well as instant messaging. We could see Skype become the basis for that service to small businesses.

  • 13:11:11

    NNAMDIIndeed our computer guy, John Gilroy, wanted to know what does Skype mean to the VOIP or Voice Over Internet Protocol offering that Microsoft has now. Michael, you say that's how it might be integrated?

  • 13:11:22

    CHERRYIt could be integrated into that. There's a lot of issues in voice over IP that Skype has been able to ignore up until now. And that, in an enterprise or in a business, you probably can't. And that one of those is the 9-1-1 location service. So, for example, if a Skype user were to call 9-1-1 in an emergency, the operator at the 9-1-1 service has no way of knowing where the person is located.

  • 13:11:49

    CHERRYIt's not like when you call in on a landline. And right now, Skype just warns users of that issue. And they say, do not use Skype to place 9-1-1 calls. In a business, a business probably can't just walk away from that liability.

  • 13:12:04

    NNAMDIWhat has been your experience using the Skype app on your phone? Has it been worth it? Call us at 800-433-8850. John Gilroy wanted to know what Skype would mean to Windows Mobile users, but I'm just interested, Rob Pegoraro, in hearing your thoughts about, well, how Skype might be integrated into products Microsoft already has.

  • 13:12:22

    PEGORAROWell, definitely I would expect to see some kind of Skype button in Outlook and Windows Live Mail and maybe even Hotmail as well. It would be a logical thing to include in Windows Phone 7, Microsoft's considerably improved mobile operating system. The Xbox is a definite thing. If you have the Kinnect sensor, which has a camera in it to see your movements, that already came bundled with the video calling feature that I tried.

  • 13:12:45

    PEGORAROWorked okay and I thought at the time, this is great, but most of the people you might want to call from your living room, probably are already on Skype and they're not going to want get a Windows Live Messenger account. Problem solved.

  • 13:12:57

    NNAMDIMichael, Microsoft recently emerged from scrutiny over anti-trust practices. Would it have made this purchase while the department of justice was watching?

  • 13:13:07

    CHERRYYeah, I think so. And you have to remember that, without regard to the oversight ending, this will still have to go through regulatory approval by both United States and European authority. So it's an acquisition. Acquisitions get reviewed. You have to remember that that oversight was about a particularly narrow set of issues that the court defined as middle ware. And the courts definition of middle ware is not one that probably the rest of us would use.

  • 13:13:37

    CHERRYSo that was actually fairly restrictive. I also think that Microsoft has changed, as has the market, since that went into...

  • 13:13:45

    PEGORAROYep.

  • 13:13:45

    CHERRY...effect. And so I don't see that that would've made a difference, one way or the other. And they'll still be under scrutiny, as will Google and Apple and all the others.

  • 13:13:57

    NNAMDIMaybe you have an Xbox. How would you feel about using Skype while gaming with your friends? Call us at 800-433-8850. Given the high price tag, Rob, couldn't Microsoft have just developed its own Skype-like services?

  • 13:14:14

    PEGORAROThey could have. But, I mean, if you go back to it, if you're -- anyone remember the term net-meeting? This was a Skype-like. It wasn't strictly (word?) calling. But, you know, internet conferencing that was built into Outlook, way, way back when. Yeah, it's a lot of money, but this is Microsoft we're talking about. They have plenty of money left in the bank. Although, you know, they're no Apple, at this point. You know, I wouldn't spend my money that way.

  • 13:14:38

    PEGORAROBut, you know, this is -- in this context, I don't consider it completely insane. I guess that's not a huge endorsement, is it?

  • 13:14:47

    NNAMDIWhat do you say -- what do you say, Michael? Could Microsoft have developed its own Skype-like services?

  • 13:14:53

    CHERRYThey could've. I mean, they've got the technology to do it. As to the price tag, I guess the analogy I use is, it's as if, you know, a husband and a wife are out maybe looking for a house and maybe it's not that way it is in the market today. But remember back when houses were hot and they would think that there were other couples that were going to bid on the house and so, you know, the wife or the husband really wants the house and they overbid on the house.

  • 13:15:16

    CHERRYMicrosoft was looking at the house. The house was Skype. They thought Facebook and Google were also looking at the house. They put in a bid to win.

  • 13:15:28

    NNAMDIAnd, $8.5 billion later, they won.

  • 13:15:31

    PEGORAROKa-ching.

  • 13:15:32

    CHERRYWell, you know, the -- when people get into that kind of a bidding battle on a house, they overpay as well.

  • 13:15:38

    NNAMDIMichael Cherry is an analyst for the firm, Directions on Microsoft, which watches Microsoft's business and technology decisions. He joins us by phone from Washington State. Joining us in studio is Rob Pegoraro. He's the tech writer and former personal technology columnist for the Washington Post. We move onto Cherene (word?) in Sterling, Va. Cherene, you're on the air. Go ahead, please.

  • 13:15:59

    CHERENEHi, Kojo. Thank you for taking my call. I just wanted to share with you that I'm probably one of the million users which have loved Skype. My family is in India and I pretty much seen my niece and nephews grow up on Skype. You know, I saw them as soon as they were born. And now they are three, four years old. And every day -- in fact, just this morning I was on Skype for an hour. So I am really worried that Microsoft has taken over Skype.

  • 13:16:26

    CHERENEOne, because I'm a Mac user and I don't know how it's going to change my usage with Mac. Two, I don't know about the free service and I don't know if it's going to be the same. So thank you, thank you for letting me share that.

  • 13:16:40

    NNAMDIWhat do you think, Rob Pegoraro?

  • 13:16:42

    PEGORAROThat's funny, Skype just recently introduced a new version of its Mac software, Skype 5 for Mac. And a lot of Mac users hate it, think the interface is a lot worse than the old one. It's much more confusing and cluttered. Meanwhile, Microsoft has done some pretty good Mac software. Office for Mac is a well liked program. It's, you know, a lot of useful and good updates. So I am not that worried, honestly, about the support of Skype on other platforms.

  • 13:17:05

    PEGORAROI think, this is a case where, you know, the term, Network Effect, comes into mind. You want to have as many people as possible. Microsoft recognizes, maybe, not in every building on the campus and (word?), Washington, but I think they recognize that they're not going to get everyone to upgrade to Windows 7. So get your customers how you can some other way.

  • 13:17:24

    NNAMDICherene, and you have much more than a million Skype users for company, over 120 million users per month.

  • 13:17:33

    CHERENEWow.

  • 13:17:34

    NNAMDIYep.

  • 13:17:34

    CHERENEYep, I totally -- I can see. I can see why this connecting thing -- and I think Skype is just wonderful, you know, grandchildren, grandparents connecting. And it's just wonderful. I just hope it just continues to be that.

  • 13:17:48

    NNAMDIThank you very much for your call. Michael, are we likely to see or hear advertisements on Skype in the future? How would that work?

  • 13:17:56

    CHERRYYou know, that really concerns me, especially because we seem to be getting into increased concern over privacy. And, you know, there's hearings going on right now in the Congress and in the Senate over privacy of mobile devices. And this really worries me about a service like Skype because the only thing I can envision that would be acceptable to me from a privacy perspective would be random ads.

  • 13:18:24

    CHERRYBecause I don’t want them targeting ads based on who I call because frankly, I don't want them thinking about that that way and I don't want them giving me ads based on the conversations I have. So I’m very concerned about ad based service. Because I think ads would have to be very random and intrusive.

  • 13:18:43

    NNAMDIWell, ratchet...

  • 13:18:44

    CHERRYBut at the same token, somewhere Microsoft has to get some money for this.

  • 13:18:49

    NNAMDIWell, ratchet up your concern a little bit, both you Michael and Rob, because here's this tweet we got from Jenn. "Yesterday, I noticed the Skype app on Facebook now requires you to give 100 percent access to your Facebook account, including chats. Why?"

  • 13:19:04

    PEGORAROI don't know. I haven't seen that.

  • 13:19:06

    NNAMDIYes, well...

  • 13:19:07

    PEGORAROMy thought on the, you know, how does Microsoft make money? If they can't make money with what they call a freemium strategy where you sell for things, you already have to pay to call someone's phone...

  • 13:19:17

    NNAMDICorrect.

  • 13:19:17

    PEGORARO...line in Skype. Or make an international call.

  • 13:19:19

    NNAMDIYou don't have to pay if you're doing computer to computer, laptop...

  • 13:19:22

    PEGORARORight.

  • 13:19:23

    NNAMDI...to laptop.

  • 13:19:23

    PEGORAROOr even, like, group video calling, that costs something.

  • 13:19:25

    NNAMDIOf course. But if you're calling a phone number...

  • 13:19:27

    PEGORAROYeah.

  • 13:19:27

    NNAMDI...you have to make it as a payment.

  • 13:19:28

    PEGORAROAnd you've -- if you can make money off that, you know, Google is -- Google Voice covers its costs from everything I've read just from charging for international calls. They give you free long distance domestically. I would have to think Microsoft would be able to -- maybe they're not going to make that $8 million purchase price, but at least get an operating profit out of Skype.

  • 13:19:47

    NNAMDIOn to -- oh, by the way, we have an 800 number here. Does -- if somebody is calling us -- calling this number using Skype, if they were simply using a telephone, of course, they -- it would be free, but if that person were calling using Skype, would that person have to pay? Do you know, Michael?

  • 13:20:05

    PEGORAROI don't know.

  • 13:20:06

    CHERRYI don't know the answer to that.

  • 13:20:07

    NNAMDIAh, stumped the panel. Here is Dave in Frederick, Md. Dave, you're on the air. Go ahead, please.

  • 13:20:13

    DAVEHey, Kojo.

  • 13:20:14

    NNAMDIHey, Dave.

  • 13:20:15

    DAVEI mean, I use my Skype pretty regularly. I have family overseas and, you know, in other states and this is the way I see my nieces and nephews and family. And this is the way I can catch up with them. I'm really concerned about the fact that Microsoft might disrupt my service and, you know, make it near impossible for me to, you know, do it. Skype was a beautiful program when it was just by itself. It really made me feel like, you know, I could connect with my family. And I really do -- I'm concerned about Microsoft taking it over.

  • 13:21:02

    NNAMDIWell, it's a startup that's had a couple of owners since it was a startup. But I suspect it's not really in Microsoft's interest to be able to prevent you from doing what it is you and other Skype users love to do, Rob Pegoraro.

  • 13:21:16

    PEGORAROYeah, I mean, this is not the same company we saw in the late '90s when you had Steve Ballmer saying things like, to heck with Janet Reno, the Attorney General of the U.S. at the time. There -- you know, it doesn't mean they couldn't make a mess of it. The sort of worst case scenario, look what happened when Microsoft bought a company called -- the unfortunately named Danger, Inc. maker of the sidekick phone. Total disaster, trying to bring this phone over to Microsoft software and services.

  • 13:21:42

    PEGORAROBut on the other hand, you know, there are cases of third party apps and services and programs that Microsoft has bought that have, you know, come a long pretty well. I think Hotmail has had some shaky steps, but it's looking pretty good these days compared to the way it was a few years ago.

  • 13:21:58

    NNAMDISpeaking of Steve Ballmer, Michael, our computer guy John Gilmore says Steve Ballmer just announced Windows 8 for next year. How many desktops do you think will be around next year? Will Skype integration be part of the new operating systems do you think, Michael?

  • 13:22:14

    CHERRYWell, actually a strange thing has happened. Mr. Ballmer, the other day, did announce Windows 8 and he did say it was in 2012. And then, immediately, the company said he misspoke. You know, that seems strange that the company would be called out for misspeaking. Microsoft is working on the next version of Windows. There's great debate about when it will be available. I don't think it's -- it'll be late in 2012, if it's in 2012. I tend to be a pessimist on this. There's a lot of work has to be done for Windows 8.

  • 13:22:55

    CHERRYI do think it will have some Skype integration in it now that they've purchased Skype.

  • 13:23:00

    NNAMDIOkay. We've got to take a short break, but you can still call us. Do you use Skype? How and why? Are you concerned that Microsoft's ownership will change Skype for the worst? 800-433-8850. What has been your experience using the Skype app on your phone? Worth it? 800-433-8850 or go to our website, kojoshow.org. Join the conversation there. I'm Kojo Nnamdi.

  • 13:24:59

    NNAMDIWelcome back to our conversation about Microsoft buying Skype and inviting your calls at 800-433-8850. We're talking with Rob Pegoraro. He's a tech writer and former personal technology columnist for the Washington Post. Michael Cherry is an analyst for the firm Directions on Microsoft, which watches Microsoft's business and technology decisions. He joins us by phone from Washington State. We'll go immediately to the phone to talk with Arhum (sp?) in Fairfax, Va. You're on the air. Go ahead, please.

  • 13:25:28

    ARHUMHi, Kojo. Thanks for taking my call.

  • 13:25:29

    NNAMDIYou're welcome.

  • 13:25:31

    ARHUMSo I may be one of the few in the minority of actually using Skype and paying for the services because I have -- my family lives in Bangladesh and actually pay Skype to call my parents on the landlines and the cell phone. So I love the service. Also, I'm going to use the Skype app on my iPhone.

  • 13:25:49

    NNAMDIHow does that compare with what the overseas rates would be?

  • 13:25:54

    ARHUMI -- for the overseas rates, I find the rates on Skype to be much cheaper.

  • 13:25:59

    NNAMDIOkay.

  • 13:25:59

    ARHUMAnd that's why I've elected to use that over a land line.

  • 13:26:03

    NNAMDIOkay.

  • 13:26:03

    ARHUMAnd in fact, I don't even have a land line at home. So my concern is that -- I mean, I wonder if the rates are going to go up, now that Microsoft's bought this, to recoup their investment? And the second question I also had is we -- I was in a global ambient program a couple of years ago, finished it up, where we had students from different countries. And we used Skype extensively to communicate across the pond, so to speak. And I wonder if Microsoft will investigate in -- there's a market in the education area and expand their offering through -- you know, bonding with Share Point or any other portals that they have, which is surely extensive to use in universities. So those are kind of the two questions if you want.

  • 13:26:50

    NNAMDIStarting with you, Rob Pegoraro.

  • 13:26:52

    PEGORAROWell, yes. I think Microsoft -- they already sell a lot of different services and applications to, you know, companies and universities and whatnot. There were a lot of jokes when the Skype announcement was bought that we'll now have Skype Professional, Skype Small Business Edition, Skype Ultimate Edition, Skype Media Center. I hope they won't do that, but it would make a lot of sense to, yeah, bundle it to -- so here's your integrated set of, you know, Share Point, Live Skype, whatever.

  • 13:27:19

    NNAMDIAnd by the way, we got an email from Emma in Woodstock, Md. who says, "I use Skype to call land lines nationwide. It costs me just $30 a year for unlimited calling. Hope it doesn't change. And by the way, lots of 800 numbers don't work from Skype." So we got at least a partial answer to that question. Michael, I don't know if you wanted to weigh in on Arhum's question.

  • 13:27:40

    CHERRYYeah -- no. I think it's a tremendous opportunity. Microsoft does a lot of work in the education area and I could see that they could very easily to the video add in the ability to do presentations and offer a one-to-many kind of teaching opportunities using Skype as the underlying technology.

  • 13:28:04

    NNAMDIHere is Michael in Boonton, N.J. Michael, you're on the air. Go ahead, please.

  • 13:28:09

    MICHAELYes, hi. I also use Skype for my calls from home like (unintelligible)

  • 13:28:14

    NNAMDIAre you calling us using Skype even as we speak?

  • 13:28:17

    MICHAELYeah, I'm using Skype right now.

  • 13:28:18

    NNAMDIIt was able to get...

  • 13:28:19

    CHERRYIt sounds great.

  • 13:28:20

    NNAMDI...it was able to get this 800 number, correct?

  • 13:28:22

    MICHAELYeah, I had no problem. Actually, I've never had any problem with any 800 number using Skype.

  • 13:28:27

    NNAMDIWell, good for you. Go ahead, please.

  • 13:28:30

    MICHAELI don't know, but maybe the other person has, but I haven't come across that problem myself.

  • 13:28:34

    NNAMDIOkay.

  • 13:28:35

    MICHAELYeah, I just wanted to make a comment that I've really enjoyed Skype. And like the other person said, it costs $30 to make calls to any land line, unlimited minutes. And like the other person said, I don't have a land line for that reason. I have a cell phone and I use Skype so that I don't have to use my minutes, even if it's before evening or whatever. And I've been really happy with the service. However, if Microsoft takes over and increases the price by a lot, I wouldn't hesitate to drop it, though.

  • 13:29:08

    NNAMDIWell, here's the question for you, Michael Cherry. Given Microsoft's past experience with acquisitions, do you think it has what it takes to turn Skype into a profit-making entity without losing Michael in Boonton, N.J.?

  • 13:29:23

    CHERRYI mean, I think they have to -- I think they have to be very, very careful and I think they have to think about what they bought. On the plus side, they've left it as a separate operating division, which means that it's not going to be integrated immediately into a group of Microsoft that have, you know, products or ideas or technology that they have to protect, you know, with that sort of not-invented-here syndrome. So Skype has some opportunity to flourish on its own.

  • 13:29:49

    CHERRYI think part of what Microsoft purchased is the very customer -- the very loyal customer base of Skype users. It's a big base. It's also -- if Microsoft does mess with it too much and they start to lose these loyal customers, I think other -- I don't think there's that big a barrier for other companies to come up with similar technology and take those -- any customers Microsoft annoys away from them.

  • 13:30:19

    NNAMDIWell, we got this also from computer guy John Gilroy (sic) . Everybody beats up Microsoft for not complying to standards. What kind of phone standards are there out there and where does Skype play?

  • 13:30:33

    PEGORAROThere are standards for things like instant messaging and VoIP. But in terms of, you know, end -- sorry, buzz word -- solutions like Skype that really aren't around, and people have talked about doing it. Apple introduced a system called Facetime for video calling from the iPhone and now the iPad II and Max. And when they launched it, Steve Job said, we're gonna make this an open standard starting tomorrow. As far as I can tell, nothing has happened on that. It's as if Job's just made up that thinking, well, this'll sound great in the keynotes.

  • 13:31:03

    PEGORAROSo it's an open standard. Well, no, it's not 'cause no one's making Facetime compatible software for Windows or for Android that I'm aware of.

  • 13:31:11

    NNAMDIMichael in Boonton, N.J., thank you for your call. Michael in Washington State, did you want to respond to that issue?

  • 13:31:19

    CHERRYNo. I think that's what I would've said. Thank you.

  • 13:31:21

    NNAMDIOkay. Michael, thank you for your call. Here's Nick in Frederick, Md. Nick, you're on the air. Go ahead, please.

  • 13:31:28

    NICKHey, how you doing? I just wanted to make a couple of comments about -- one, I'm not too concerned if Microsoft decides to add advertising to Skype 'cause I could see it being just as easy as YouTube, where they just have a banner across the bottom that's not really going to bother anything. And, also on -- for cell phone calls with Skype now, I have a new phone and it has Skype for Verizon where if you're making a phone call to another cell phone, instead of using Skype, will cover through your cell phone minutes anyway. So those are what I wanted to say about that.

  • 13:32:04

    NNAMDICare to comment, Rob?

  • 13:32:05

    PEGORAROIt's -- I don't understand really what Skype was thinking when they signed this crazy deal with Verizon, 'cause if you have an Android phone and if you want to use Skype right now, you need a spreadsheet to get across how the features are or not available. On Verizon in Android, you can make Skype calls over 3G, but not Wi-Fi. If you have a non-Verizon Android phone, you can Skype over Wi-Fi, but not 3G. Oh, and video calling in Android? Not there at all. There's a post on Skype's blog saying, we'll add it to Verizon phones that are on Verizon's 4G LTD network. Who signs a deal like that?

  • 13:32:39

    NNAMDIDoesn't make much sense to me or to our producer A.C. Valdez who has an Android with the Skype app. Here is Wade in Baltimore, Md. Wade, you're on the air. Go ahead, please.

  • 13:32:50

    WADEHi, Kojo. I have a sort of speculative question so I expect answer to be speculative. I know Skype has just been bought by Microsoft. I'm not sure where either company is actually based technically, but I wonder if there'll be a homeland security component to having Microsoft, which is a big company that I'm sure works with U.S. government, now probably onboard with homeland security and monitoring possibly, lots of communication national, internationally and between foreign nations.

  • 13:33:23

    NNAMDIWell, speculative was the word you used, Wade. So I don't know if Michael Cherry wants to speculate.

  • 13:33:30

    CHERRYOh, I'm sure that there's concerns raised about how this technology could be abused as well as used. And so I'm sure that there's going to be a lot of work done in those areas by the agencies that already do that. I mean, there's already ways that land lines, cellular lines and that can be monitored and requires the correct government approval and processes for the most part. I don't see that Skype is going to remain immune from that.

  • 13:34:04

    NNAMDIOkay. Wade thank you very much for your call. We move on to Michaela (sp?) in Silver Spring, Md. Michaela, you're on the air. Go ahead, please.

  • 13:34:14

    MICHAELAHi, Kojo. Thanks for taking my call. I love your show.

  • 13:34:16

    NNAMDIThank you.

  • 13:34:17

    MICHAELAI am calling to comment on the Skype on mobile devices.

  • 13:34:21

    NNAMDIYes.

  • 13:34:22

    MICHAELAI have been -- I've had Touch, which can only use Wi-Fi. And I travel a lot especially in Latin America and not a very high budget. And I can use Skype to -- once -- like, if I'm in a hostel and they have free Wi-Fi, I can get on and call, you know, numbers in that country. I do have to pay for that, but it's much more convenient. In Latin America, a lot of times you have to find phone -- places where you can go use the phone and it's very difficult. So that's how I've been using the Skype on a mobile device.

  • 13:34:58

    MICHAELAAnd I'm sure it's the same on an iPhone when, you know, you're in another country and you don't necessarily have the -- the 3D connection.

  • 13:35:06

    NNAMDIWhat is your concern?

  • 13:35:08

    MICHAELAI'm sorry.

  • 13:35:09

    NNAMDIWhat is your concern, if you have one, with Microsoft taking over Skype?

  • 13:35:13

    MICHAELAIt's not really about Microsoft. I just wanted to comment on that feature and I hope that it...

  • 13:35:17

    NNAMDISure.

  • 13:35:17

    MICHAELA...that, you know, that's how it's been useful for me.

  • 13:35:20

    NNAMDIRob.

  • 13:35:21

    PEGORAROYeah, absolutely. I mean, actually my first thought was I'm going to guess that the Wi-Fi in the hostel is probably much better than the $200-a-night hotel room in the middle of town. It always seems to work that way. But, you know, this is one thing that's really come out in all these calls. People place such a high value on Skype and, you know, I hope Microsoft realizes that.

  • 13:35:41

    NNAMDISpeaking of high value -- and Michaela, thank you for your call -- speaking of high value, Michael, bottom line was this purchase really worth $8.5 billion?

  • 13:35:52

    CHERRYYou know, we can't tell today. That's something that I think needs time. And you have to give them -- you have to give Microsoft and Skype time to work on this. But to guess that now, I'm just not able to.

  • 13:36:10

    NNAMDIWhat do you say, Rob? 8.5 billion?

  • 13:36:12

    PEGORAROYou know, I don't think they're going to make back that 8.5 billion any time soon, but, you know, really what else were they going to do with it? They could, you know, buy back their stock, issue a dividend. As an investment, I assume Microsoft is not expecting to make back that money. But if it lets them build other things, you know, we all have our little indulgences. Some are bigger than others.

  • 13:36:34

    NNAMDII was about to say, Michael, because it's my understanding that Microsoft is holding around $50 billion in cash. Does that mean it's pretty likely that we'll be seeing more moves like this in the near future?

  • 13:36:45

    CHERRYI don't know, you know, because when you're -- having the cash certainly gives you the ability to do it. But it has to be the right technology and you have to be very, very careful about what you're buying, whether you're buying intellectual property, whether you're buying the talent that works in that company and you're hoping that they will come and stay at Microsoft. There's a whole lot of considerations that go into it.

  • 13:37:13

    CHERRYI don't think this is the last thing Microsoft will buy. And I think they'll just continue to make strategic and tactical decisions based on what the various companies have and how it fills holes in what Microsoft has.

  • 13:37:28

    NNAMDIWe're taking your calls at 800-433-8850. Do you use Skype? How and why? Are you concerned that Microsoft's ownership will change Skype for the worst? Here is Fran in Laurel, Md. Fran, you're on the air. Go ahead, please.

  • 13:37:42

    FRANHi, Kojo. I recently purchased a computer a couple weeks ago and it has the Skype application on it. Never used it so I'm going to try it. Now, I'm hearing what Microsoft is doing with Skype. I would like to agree with the caller that called in and said -- or one of your panel people there -- excuse me if I’m not correct on who said what, but I’m concerned too about Facebook and perhaps even Skype checking what my interests are and secretly, you know, funneling that out to other links so people can, you know, find out different things about me and...

  • 13:38:23

    NNAMDIAnd sell you products.

  • 13:38:25

    FRANYeah, yeah, that's one thing that I would like to that -- not see happen. But I'm gonna try Skype and see what happens with it. But I’m like everybody, like your panel up there. I don't want anybody knowing my business, what I like or anything, which is why I really don't use Facebook, only to communicate with my niece. And even then, I do it behind the scenes. But I always keep in mind with any of these, you know, social websites or Skype, it's somebody else's material. And they can, without your permission, without your knowledge, go behind the scenes and look at your stuff. And you don't -- you can't do anything about that.

  • 13:39:07

    NNAMDIMichael Cherry...

  • 13:39:08

    FRANSo I just want to...

  • 13:39:08

    NNAMDI...Michael Cherry, the business model that Microsoft comes forward with for this has to take into account the privacy concerns of an increasing number, it would appear, of users.

  • 13:39:18

    CHERRYYes. And people are finally, I think, getting concerned about the privacy. Although it's amazing how little you have to offer people to get them to give up tremendous amount of data about themselves. So I think it's going to -- you know, they're going to have to be very careful here. But Microsoft is very careful about privacy. They're very open -- they're actually one of the more open companies about it. It takes a while to track through all the different privacy policies, but they're very open when they actually collect information. And they're very open about what they do with that information. So they're -- right now, they're actually probably one of the better protectors of people's personal privacy.

  • 13:40:01

    NNAMDIOnto -- thank you for your call, Fran -- Tom in Springfield, Va. You're turn. Go ahead, please.

  • 13:40:07

    TOMHi, Kojo. Thanks. I'll use Skype to call friends in the Caribbean, but my favorite part of Skype is connecting with my daughter and my one-year-old granddaughter, and she recognizes us on Skype. And I think that's a great way for parents and grandparents who are away from their kids to be in touch and have that visual contact. So I hope that still continues to be something that's free and easy, even if it says brought to you by Microsoft down in the corner.

  • 13:40:31

    NNAMDIWell, even if it says brought to you by Microsoft down in the corner is one thing. Here is the other, Tom. I'd like you to listen to this e-mail that we got from Marsha in Windsor Mill, Md. "Skype is wonderful. Our daughter lives in China and we are able to see her, talk with her and she see us to talk for free. She uses Skype to call landlines in the U.S. which does cost her money, but not much. Even if she isn't on Skype, the call will transfer to her cell phone so that we can reach her at any time. Would we pay for this? Yes, if it was not exorbitant.

  • 13:41:01

    NNAMDIShe went to China in 2005 as a student, and then we gave her a cell phone to use to call us. Out of sights costs, too. When we discovered Skype, we were amazed with the quality and convenience of the calling system. I hope Microsoft doesn't mess it up." Messing it up for you, Tom, would mean what, higher prices or losing it completely?

  • 13:41:20

    TOMWell, yeah. Well, high prices for me, but I think for other people, you know, if they don't have the resources that I have, so even low prices might get in the way of them communicating.

  • 13:41:31

    NNAMDIYeah. I guess one of the biggest concerns with people who are used to using something for free, Rob.

  • 13:41:36

    PEGORAROYeah, exactly. I think one thing to keep in mind on all this discussion of, you know, what will Microsoft do? Microsoft fundamentally is not an advertising company. They sell products and services. So if they're having trouble, you know, balancing the Skype budget, I would expect them to look for ways to charge you, whether it could be maybe the international calling rates a little bit, because who's gonna notice a penny a minute difference. You know, more value added services.

  • 13:42:01

    PEGORAROI would fully expect that, you know, the -- whatever deluxe professional or ultimate edition of Skype they sell to businesses will come at a decent premium. Because, you know, if you've already got somebody signed up for any number of Microsoft web services or software contracts, you know, what's another item on your tab?

  • 13:42:18

    NNAMDIOnto -- thank you for your call, Tom -- Yosef in Washington, D.C. You're on the air. Go ahead, please.

  • 13:42:25

    YOSEFThank you, Kojo. I just want to comment on the security aspect of Skype. Skype is basically it's a peer-to-peer overlay network over the existing Internet. So Skype provides secure connection from end to end. So what I think is by incorporating Skype into Microsoft products, probably Microsoft might be attempting to provide end to end security from PC to PC, and that's my comment.

  • 13:43:00

    NNAMDIWell, we'll end on that optimistic note. Thank you for your call, Yosef. Rob Pegoraro, thank you for joining us.

  • 13:43:06

    PEGORAROYou're welcome.

  • 13:43:07

    NNAMDIRob Pegoraro is a tech writer and former personal technology columnist for the Washington Post. Michael Cherry, thank you for joining us.

  • 13:43:12

    CHERRYMy pleasure.

  • 13:43:13

    NNAMDIMichael is an analyst for the firm Directions on Microsoft which watches Microsoft's business and technology decisions. We're going to take a short break. When we come back, how some lawyers in the District of Columbia have pointed out that Washington D. C. may be losing as much as $100 million in commercial property taxes. We'll take with Mike DeBonis of the Washington Post. I'm Kojo Nnamdi.

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