SuperSkype or Microsoft

date
Jun 29, 2011
slug
2011-super-skype-or-microsoft
status
Published
tags
MySpace
Microsoft
Skype
technology
digital
summary
SuperSkype-Microsoft Deal Raises Concerns About Competence and Potential Loss of Efficiency and Innovation.
type
Post
An apparent axiom in transactions involving mega-companies on the path to dinosaurism is the maxim of "we know how to do it". When Rupert Murdoch's NewsCorp bought MySpace five years ago, it knew what to do, of course. It replaced the company's CEO and changed the entire board of directors. Two years later, MySpace had lost half of its user base. It was the classic arrogant mistake of those with money thinking they know everything. And Microsoft is using the same map on the way after buying Skype.
Less than a week after the American government's approval for the €8 billion deal, the company fired three of its VPs in addition to the marketing director and HR. Two software developers bought by Skype earlier this year were also ejected. In the market, the justification was that firing the executives would save the company a good chunk of money in terms of severance and preferences for unused stock purchases by the fired ones. In HR terms, it was a "betrayal" of these executives, but a betrayal not only legal but also common practice in the market. That is, besides the bad publicity for treating its employees badly, no problem for the company here, besides serving as a warning to professionals that a proposal from "Skyposoft" may not be as honest as necessary.
There would be no problem with the layoffs if Microsoft was Apple or Google, or another company that knows the web deeply and the development of digital products. But it is not. Despite sounding incredible, Microsoft is already a dinosaur, just as IBM was in the early 90s. Bill Gates was a genius in understanding the rise of the PC, but inept at capturing the industry's switch to digital technologies on the web, clouds and other features that marked the rise of the "Big Four" of the current technological world, Apple, Facebook, Google and Amazon (to use a definition by Eric Schmidt, the capo of Google).
A basic and pertinent suspicion here is that Microsoft is meeting its internal political demands and demobilising the structure of Skype that made the product so efficient and competitive in the market. True, despite operational success (670 million users, almost US$900 million in revenue in 2010), the product still has a "small" profit - just over U$20 million in the same year. In marketing terms, it's a great justification for cutting heads, but the smell is much more of outdated directors wanting to assume positions of more prestige than the ones they already occupy.
In addition to the uncomfortable indication to the market that perhaps Microsoft is not making the best choices but the choices that the company thinks are the best (honestly, I would be suspicious if I were a Skype shareholder), firing professionals who were on a team that managed a successful project practically fits these professionals into the competition. And today, unlike what happened in the industry thirty years ago, it is easier to have success in a small company with investors' financing than in a dinosaur like Microsoft, which already has its geopolitically defined priorities.
Bill Gates, the week MS bought Skype, assured that he thinks the merger of the two companies opens very interesting and grandiose prospects. No one fully believed - not due to Gates' incompetence, but due to Microsoft's profile. By firing part of the board to save on bonuses for some executives, the company is unlikely to change the feeling that Skyposoft is more agile than it appears. Not really.
PS: 12 years later, after missing the business opportunity created by the pandemic (which turned Skype into a Zoom wannabe), it became clear how much the company needed a Satya Nadella to replace Steve Ballmer…

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