Wednesday, September 29, 2010

Cisco should buy Skype not Facebook

Facebook and Skype are planning a deep integration partnership, which will allow its users to communicate with each other using voice chat or sms messaging. Sounds like an audacious plan. For the most part this is definitely good news to FB users. So Facebook has started adding value to its platform by providing communication utilities to its users. The strategy of Facebook is not to reinvent the wheel and instead use one of the existing products that can cater its users. It’s a smart move. Building a communication platform for 500 million users is not a trivial task. Also, Skype is the best when it comes to Internet Telephony. So the marriage is perfect.

Skype currently has more than 560 million registered users. So with facebook counting more than 500 million users, we are talking about a total of more than billion users. Off course most of the users could be registered on both Skype and Facebook. Apart from Voice and messaging, Skype brings the video chat, which is gaining momentum. Thanks to Apples FaceTime. Both these companies are very aggressively positioning themselves as the next generation communication and messaging platform.

So does it mean Facebook should buy Skype as Om suggest? I don’t think it makes sense. The first question I would ask anyone suggesting Facebook to buy Skype is-
How many FB users currently communicate to each other using Voice Chat. We all know what happened to some of the VoIP applications on Facebook who tried the same communication game and turned out to be a disaster. Even Skype had its own Skypeme app on Facebook, which didn't do well either. Some startups even closed shop. Even if FB users use Voice Communication, the call should be delivered via SkypeOut or SkypeIn in order for Facebook to make any money. Now this is a big stretch in my opinion. If its purely a VoIP call, there is no money.

Instead of Facebook buying Skype, I would still bet big on Cisco buying Skype. I think Skype fits well in the Unified communication arena. With Cisco very aggressive in the Unified Communication space, this makes a killer combo. Also Cisco doesn’t need to fight hard to enter the communication space, with Skype acquisition; they will have instant access to 560 million users. And Skype Video will blend very well with the telepresence and other UC related Video communication.

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