Skype Would Make Great Acquisition for Cisco

I love rumors. At least when they’re not about me.

Earlier today TechCrunch posted that Cisco is rumored to be poking around Skype. It’s unconfirmed (as most rumors are) and with Skype pre-IPO it could simply be savvy PR work to increase the news centered around the company so that potential investors are aware of the pending offering.

But since I love rumors, I thought I add to the fire.

In thinking about the possibility of Cisco purchasing Skype it makes sense since there are a number of synergies between the two companies.

Target Growth Markets

Skype’s biggest revenue growth plays are in video and business (small business). This is where Cisco has been buying companies and strategically focusing for the last two years.

Skype would get Cisco deeper into the small business (think agencies) video conferencing space ( and give them a video conferencing offering from individual to enterprise). It also gives them a low cost and suitable unified communications product which could get integrated into WebEx (free calls into WebEx via Skype or maybe a WebEx light for very small organizations) as well as call manager all powered at the desktop by Cisco handsets (which means selling more hardware).

Technology Dependent Customers

Skype has over 500m register users. That’s a nice customer list of people using the Internet.

Since Cisco owns 85% of the worlds network, almost all of those registered users are those that “could benefit from using Cisco hardware.” This could be a Linksys wireless switch, the Cisco Valet or catalyst switches.

And let’s not forget device such as the Flip. Imagine a wireless Flip that allowed for mobile Skype video calling.

Proprietary Technology

A lot of people bitch about Skype using proprietary technology and not actually owning it. These same people probably don’t like the fact that everything Cisco does in the voice space (SCCP) is proprietary.

(Yes, I know they support SIP, but it’s cost prohibitive in most cases.)

Point is that Cisco knows the proprietary game, is comfortable with it and obviously has done a great job pushing proprietary technologies into the hands of customers in a world that “demands openness.”

Consumer Brand

Cisco desperately wants to get more consumer friendly. Skype is a world wide brand that is well known by consumers (sometimes a downfall as they try to get into more businesses).

It’s considered to be hip and cool. That’s priceless in the consumer space.

The purchase of Skype would give them their best consumer brand name since Linksys.

Your Thoughts?

You’ve heard my thoughts. Now what are yours?

(Told you I love rumors)