Ben Horowitz on the Skype acquisition

I'm repeatedly impressed by Andreessen Horowitz. Every person I've met on their team rocks, and now we're starting to see how their investment thesis is panning out.

re: Microsoft + Skype:

Microsoft knows how to make a ton of money.

Microsoft is looking at an explosion of CPU cores on desktop computers. What are we going to be using those cores for? Embarrassingly parallel problems like 3D rendering, OS eye candy and video processing and compression. Multi user HD video chat is going to be happening really soon for really cheap. That's quite disruptive. (See Telepresence systems) [1]

The more peer to peer nodes that are added to the Skype network, the better the product. If Windows ships a Skype client turned on by default with every OS and copy of Office it sells... that peer to peer network starts to look like BitTorrent in size.

Cisco currently charges $300k for a telepresence room. Their 37" telepresence system runs about $50k last I checked. Skype chats just got blessed as an enterprise system. There's a _lot_ of money to be made here.

My nieces and nephews are in 3 different countries and about 6 different states. Every night, they live on Skype, and video chat for free. When I grew up in Central America in the 70's, a phone call to the US was $3/min.

Microsoft no longer has government oversight from the anti-trust settlement... Things might just get interesting.

ref: [1] http://www.cisco.com/en/US/products/ps7060/index.html

"We specifically thought that Niklas and Janus, two of the preeminent technology entrepreneurs of our time, wanted Skype to be a huge success and would do everything in their power to make that happen. As a result, we did not think the doomsday scenario that greatly concerned other investors--that the founders would attempt to shut down the company through the courts--was an actual possibility"

Wow. This and the comments about how much Skype's user base has grown since Google and Apple began competing in the same space are very interesting. Plainly, someone is wrong about the value of Skype (see the other stories submitted to HN about this transaction, for the clash in points of view) but just maybe the investors who just sold Skype to Microsoft are right.

Skype fits well into Microsoft's collection of assets. Its stronghold on the enterprise market will make Skype even more dominant. Moreover, this is a piece that might help Windows Phone 7 more competitive with iPhone and Android.

A key determinant of the value of this acquisition is how well they can execute the integration of Skype with their other products.

The network effect is the big thing. Free Skype-to-Skype calling is a powerful incentive.

Of course, ultimately exploiting that will depend on people using Skype as their primary way to make calls. And somehow keeping other means of communication from supplanting the phone call.

And since 2010 has been referred to as the year we stopped talking to each other, this investment still may not work out. Even the most basic calling plans give most people way more minutes than they can use.

Will heavy users and international callers spend enough to make it work? Or will international calls one day be as seamlessly made as domestic ones?

Editorializing in the title. "flip"?

I enjoy Ben's posts a lot, but what has actually happened to Skype since eBay sold it?

IP lawsuit was resolved, the Skype network effects continued to work, the economy changed, is there anything else? It doesn't seem to me like much value was created inside the company for these 18 months, more like the perception of potential buyers changed.

You have to give it to Fries and Zennström. They've essentially sold Skype three times, making billions each time.

FYI This is what your website looks like to me if you decide to use flash to display plain text. http://i.imgur.com/vrwUO.png

This guy got really lucky and he's hoping no one will notice.