Microsoft (NASDAQ: MSFT) earlier this week announced an agreement to acquire Skype for $8.5 billion, which led some to deride the move. High price aside, there are many reasons why buying Skype makes sense. As Microsoft CEO Steve Ballmer put it: "The Skype brand is a verb," underscoring the Redmond company's hope to capitalize on the more than 120 million active (or "connected") users on Skype. Other observers argue that the acquisition of Skype will help Microsoft compete with services such as Google (NASDAQ: GOOG) Talk and Apple's (NASDAQ: AAPL) Facetime.

An insider privy to setting up the deal has apparently come forward with the rationale behind Microsoft's purchase. Despite Microsoft's play in the real-time communications space vis-à-vis its video chat capabilities in Windows Live Messenger and Live Communications Server, it was never really in the communications market, according to the insider. With Skype, Microsoft has effectively become the largest player.

Moreover, Microsoft hopes to "sell other products" to the huge user base, while Skype's peer-to-peer video chat is expected to give Microsoft an advantage. For now, existing Skype users should be assured as Microsoft has said that it will continue to support non-Microsoft platforms.

For more on this story:
- check out this article at San Francisco Chronicle
- check out this article at CNET News
- check out this article at CNET News

Related Articles:
Microsoft's Skype purchase could benefit enterprise users
Skype outage blamed on bug in its Windows client
Indian government: Local servers from RIM, Google and Skype please
Skype targets the enterprise with new SIP businesses