Facebook + Skype = Microsoft

One minute you’re a villain and an idiot named Steve Ballmer and the next you are a saint and a genius named Steve Ballmer. That is the way the industry flows. This past week, Facebook CEO and boy wonder Mark Zuckerberg announced something he dubbed, “awesome” and then proceeded to unveil video chat for Facebook using Skype.  Today Skype is in the process of being purchased by Microsoft for the paltry sum of $8.5 billion.  For Microsoft this Facebook announcement would strike either of pure genius or luck.  In any case it raises a lot of eyebrows as there is a lot to think about from the future of technology to the survival of Steve Ballmer.

When I think about the future of communications and how we are evolving, Facebook is a great place to look and ingest what is happening with how interact as humans.  Several months ago my old alma matter, Sammamish High School,  had its 25th year high school reunion for the Class of ’85 .  It was a bad day that was chosen (no fault of the organizer), the Friday of Thanksgiving weekend, not many people went, for obvious reasons.  I would have liked to have gone, but it just was not going to happen with all my family commitments. Later in May a bunch of my old high school buddies got together for a weekend get together and as we were walking on the beach we started talking about the recent high school reunion.  My old high school buddy Mark made the astute observation that Facebook has killed the high school reunion.  That is true.  I don’t need a reunion to hear about people from that pasts lives, I see and read about them every day.  It’s both great and sad, but technology keeps evolving making these societal changes happen. Bringing us up to date with the new deal between Facebook and Skype we may finally be on the brink of a new communications paradigm that will see live video streaming reach the masses.  The deal for Skype is huge as it gives instant access to over 600 million Facebook users.  It will be global in scope as Facebook is growing faster outside the US than in the US.  It will give users an old fashioned way to communicate in a new paradigm: face to face.  I must admit in today’s world of email, text messaging and social networking I miss the dynamic of taking the time to get together and talk, freely.  However maybe to a certain extent maybe this paradigm shift will bring face to face communications, back but in a different physical medium.

What should be interesting is to see how this “new” communication tool is used.  Facebook is great for reaching out to old friends, but it also allows you to reach out to those high school classmates I did not know (and in some cases I did not really want to know).  In short Facebook could become like my own personal phone book in the cloud.  Some of the things envisioned in science fiction novels and film may now be on the verge of being reality.  What will be cool is as the quality of streams get better we will have this full screen – no more little windows on our desktop.  We should have instant – on capabilities, meaning the moment a user accepts my request (in old terms, “answers the phone”) the video stream will instantly commence.  Keep in mind as great as technology is there are somethings it still does not as well as the technology it replaces, case in point are old lan line phones.  I have no doubt that eventually performance will be better and the experience, as is already evident will be much richer.  There will be a large amount of excitement in this new paradigm.

A big winner here could be my old employer, Microsoft.  They invested early in Facebook and now their recent acquisition, Skype, has a deal with the world’s most popular social networking site.  This could be a “killer” app for Facebook (ok..I am getting so tired of the term “killer” app).  I would caution senior execs at Microsoft against re-branding this with the “Microsoft” name.  I can hear the arguments already, “Microsoft is one of the worlds most recognizable brand names, who wouldn’t want this brand plastered all over their site?”  But an interesting study might be how do younger audiences view the name?  It’s never the first question that gets you to your answer but the fourth or fifth.  This deal could help Skype get into the stratosphere of mainstream technology, to be our phone service of the future.  It should be interesting if other services like Twitter, follow suit.  Leave well enough alone is my final verdict on this one, but internal corporate politics I am afraid will get in the way.  It’s hard t change things in your DNA.

Finally there is Steve Ballmer, the long serving Microsoft CEO, who is in desperate need of a win.  Both externally and internally.  Externally he has had 10 years of a stock that besides a meager dividend, has provided little value back to shareholders.  Internally he is loathed for his inability to provide a vision and strategic direction to the company and its employees.  The Skype purchase was initially considered overpriced and a waste of money by Microsoft, for a bunch of technology they already had.  This announcement by Facebook, already has reduced the pressure,as in has provided a little “panache” to an increasingly stale company.   It remains to be seen if long-term this could be a turning point for Microsoft.  But at least in the in term they can breathe a little easier and maybe do something rare at Microsoft these days…smile.

Good Night and Good Luck

Hans  Henrik Hoffmann July 14, 2011