Microsoft is to acquire internet telephony services company Skype Technologies, in a deal worth $8.5bn.
The $8.5 billion acquisition is integral to Microsoft’s plans to take on Google, Apple and Sony.
Microsoft CEO, Steve Ballmer, said: “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”
Microsoft says Skype will support devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.
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Skype filed for a proposed initial public offering (IPO) of its ordinary shares in August 2010, but put the plans on hold after appointing chief executive Tony Bates in October.
Analysts say Skype's acquisition would give Microsoft a recognised brand name in the online world as the company seeks to shift away from its core Windows business.
They say Skype will give Microsoft a boost in the enterprise collaboration market through Skype's voice, video and sharing capabilities.
Others are speculating that Microsoft is planning to integrate Skype with Windows Phone 7 to compete with Google's internet telephony service, Google Voice.