Cisco (and Google) Looks to Scoop up Skype

by Matt Klassen on September 1, 2010

If there’s one golden rule about the latest telecom news it’s that when it rains, it pours. So it should come as no surprise that after a week’s worth of news about Google Voice, Cisco communications, and VoIP services that a report issued by TechCrunch has both Cisco and Google potentially vying for the acquisition of VoIP giant Skype.

While this report has yet to be verified, insider info states that Cisco, one of the world’s leading IP service providers, is looking to acquire the VoIP powerhouse Skype to strengthen its already strong business communications portfolio, while Google may be in the running to eliminate a key competitor for its fledgling Gmail phone service released last week.

But with an estimated price tag of around $5 billion dollars, is the cost for Skype too steep for the likes of Cisco and Google?

Regardless of whether or not any of this speculation is actually true, I’m almost positive Google will have nothing to do with the acquisition of Skype. Antitrust issues aside, the simple fact is that Google has seen some very positive initial success with its new Google Voice/Gmail integration project, and with its low international rates and free nationwide calling, Google is sure to steal its fair share of customers away from Skype anyways.

Sure it would be nice to have one less major competitor in the VoIP market, but paying billions of dollars to eliminate that competitor may be too rich even for Google’s wallet.

For Cisco, however, this purchase makes a great deal of sense, as it immediately gives the communications company a huge leg-up in the VoIP market, a nice little service that Cisco will be now able to provide as part of a business communication package.

This interesting tidbit of news, though, comes at exactly the same time Skype is assembling an Initial Public Offering (IPO) package, a process that Skype is hoping will give the company some added valuation as potential suitors like Cisco and Google decide if acquiring the VoIP giant is worth their while.

But as we wait to see if any of the details of this story are confirmed, it remains doubtful to me that either company will scoop of Skype. For Cisco, I have yet to see the IP service provider really go out on a limb with any of its recent acquistions—although in 2005 Cisco did acquire cable set-top box maker Scientific Atlanta for a cool $6.5 billion. Further, even if Google wanted to spend billions eliminating its competition, as other bloggers have mentioned, there’s simply no way the search engine giant would get by the Federal antitrust concerns.

Anyone else have a spare $5 billion lying around?

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