For those of you who don’t know.
He is the..


I think Mark heard Xbox and wanted
to pop in, so Mark “Rizzn”
Hopkins wants to come in and share opinion now.
Mark “Rizzn” Hopkins is our editor.
He’s a young guy on
the team compared to us but
is a resident Xbox and
has been following the story around the Xbox.
We’ve had conversations and discussions,
debates, but also agreement that
Xbox is the preferred
user experience for a class
of users, like my son,
who is a very big Xbox user.


So, Xbox and the
gaming environment and the
gamification is ultimately
going to be a tactical thing
that people are going to be
doing in the future, in a work environment, possibly.
So, share with us your vision
on Xbox’s relevance to, say, the Skype announcement.


For quite some time that the
Xbox could be central
to the like the
living room experience in a
way more than just what console gaming will provide.
But it seems like
with the release of the
Kinect is where Microsoft really got that vision.
Because right around the same
time they released the Kinect, they
also released the…or put prominently
ESPN live sports.


They also just recently put Hulu Plus on there.
They already had Netflix.
So most of what
they call cord cutters
could want from a home
entertainment experience is now available on this Xbox.
It’s become more of a…with
Kinect, it also got live interaction.


Cord cutters being untethered users.


Untethered cable or telco entertainment users.
Right, exactly.
Similar to that, they
were also trying to integrate
the Xbox with the Microsoft
Live experience, which is,
of course, MSN messenger and
all the unified log in
that Microsoft has across all of their sites and properties.
The Skype acquisition was
exciting to me because you can
see, you know, something that has
massive adoption, like Skype,
for a communications tool, taking the
place of that live,
that whole live connecting thread that they have.


Skype on the Xbox, making
that your communications tool, not just
with other gamers but actual people
that, you know you’d want to use.


Gordon Bing, who is a
partner at Clina Perkins, with
John Durr are putting five
hundred million dollars on the
social fund and he used
to be CEO of EA Gaming.
And he says, because they’re also an investor in Zynga.
He says that the folks out
there who are gamers are probably
most prolific, will become
the most prolific doctors and or
workers in corporate America, because
the work environment, from the
collaboration standpoint will look
like multiplayer online gaming.


There’s a headset, there is communications
involved, there’s a little bit
of operational teamwork and so
in a virtual setting I mean,
I think Xbox truly emulates,
in my opinion, what the
future work environment will look
like and that is, gamers will
be the most prolific, productive
 resources in society.


We’re talking about Microsoft, the big
deal, that was just recently
announced late last night was Microsoft
buying Skype for 8.5 billion dollars.
And I’m not sure if that
includes the 600 or so million dollars of debt, but still.
Microsoft’s largest acquisition ever.
We’re talking to Mark “Rizzn” Hopkins.


I’m here with John Furrier, both of Silicon Angle.
Let’s break this down for people.
So that was what was announced.
They’re buying it from Silver Lake
and Andreessen Horowitz and making
– making a tidy profit on this deal.
Those guys bought it from
– from Ebay a while back.
And making – making some nice cabbage on that.


Why…

Fast, too.
They made a fast turnaround of
their investment and I
believe they were under a lot of pressure to sell that.
I’m going to dig into that when I get home into Palo Alto.
I think they were under a lot of pressure to deliver results.


So why is Microsoft — let’s start with John.
John, why is Microsoft making this move, in your opinion?


I think Microsoft is irrelevant to
the outside world of a new generation of workers.
I mean, EMC team of
cloud speaks data about a new future direction.
Hadoop speaks to a new strategy
of a futuristic society where
big data and new value propositions are going to be emerging.
Chuck Hollis talked about
that in the blog at EMC.


Microsoft has just been sideways
and they have this huge franchise of business,
they make millions of dollars, yet
they got these pockets of innovation like Xbox.
They got a great R&D.

And
really, Microsoft, since the Justice
Department put the handcuffs on
them when Bill Gates
was at the helm after they
destroyed Netscape in the
browser wars, really haven’t
done anything and so Ballmer
has been trying to move the
battleship around and ultimately they’re losing on every front.
So, I think what I
see with Microsoft is a unification
of failed strategies.


Unified communications, Voice Over IP,
the phone service, the
phones that they had, the Kin,
and other windows phones.
So I think Microsoft is kind of regrouping.
It’s a positive signal in my opinion that they’re unifying it.
I think Xbox.
is a shining star in Microsoft
if they could weave that in
there, I think it ties together with Voice Over IP.


I thought that Mark Hopkins.


I don’t disagree as much as
I like to because Microsoft is
one of those companies that I want
to love and I want to evangelize
and champion because I’m such
a fan of the Xbox and what
I think the potential is there,
but Stephen Hotson,
Kid Dotson, over at Silicone
Angle, are working with us on
the editorial, primarily the ones
on the Microsoft beat, and they
will readily, and they’re Microsoft
fans and they will readily agree,
that yeah Microsoft doesn’t have it together.


And it’s very difficult to defend Microsoft at times.
However, they do have lightning
in a bottle, if they could just get coordination.


Expand on that, lightning in a bottle.
Be specific.


Well I mean, I was
just, let me give you an example, I was talking on the computer last night.


Spit it out.


So, just kind of
going with the usual suspects on
Twitter about the news about Microsoft,
everyone is talking about how
Microsoft is going to screw
this up, because that’s all they
know about Microsoft, is how they
‘ve always tended to fail
in spite of themselves and I’m
like, hey doesn’t Skype
on the Xbox excite anybody?


Like, yeah but Xbox is not really Microsoft.
I’m like, are you kidding me?
People don’t identify the Xbox with Microsoft.


Microsoft is the Google of it’s day
and they’ve hired smart people and they’ve always hired great computer scientists.
And back in the day, software developers all went to Microsoft.
This was before open source really took hold.
And if you had any chops in computer science, you went to Microsoft.
Now, what’s different about Microsoft now
and then is that Microsoft will
come into a market and launch
a Version 1, and it always sucks.


But they’re role was,
by the third release, it was
market dominating and that
goes back to the DOS roots of Windows.
Ever since Bill Gates lost the
DOJ, or case, when
the government went after Microsoft,
they have not been the same.
They’ve been gun shy, almost be decentralized.
They haven’t done anything big and
powerful and game-changing now, they’re making billions of dollars.


It’s a great enterprise franchise.


OK, but let’s break down the strategy.
We all agree, I
think, that Microsoft hasn’t had a
lot of wins or home runs
in terms of innovation, but they are obviously a for profit company.
They’re doing this for a
reason of competing, getting into a new market.
Mark, you’re saying they’re doing this
to basically superglue Skype
to Xbox as the primary platform.


What does this do for their business?
Talk about that a little.


It also plays into the
Windows Phone 7, because
when they announced the
Windows Phone 7, they were very
adamant about showcasing the integration with Xbox live.
This is a phone for gamers.
And now Nokia, which is
on the decline but
still a powerhouse in the
phone world.
Not necessarily the smart phone world but definitely the phone world.


They’re going to ave a
good platform to deploy Skype
across a wide swath of devices.
Windows Phone 7 still has
a great potential for success, cause
it always got great reviews, just not great adoption.


So what about the competitive landscape, obviously Google, right?


Right Telcos – are
telcos a competitor in this equation?
I mean, Skype, is Microsoft a threat to telcos?


On certain levels.
On certain levels it would
be a threat to – I
see a lot of conflict between Microsoft
and the telcos about getting
Skype on the phones, because that’s always the stumbling block for skype.
Skype always puts restrictions on
most of it carries about letting
VOIP traffic travel across their data networks.


I don’t see that changing anytime real
soon, even with Microsoft’s pressure,
especially because they don’t have
a lot of leverage and they’re not the dominant smartphone manufacturer.


So it’s really more about enriching the
Microsoft platform, be it
the Windows 7 platform, and
new emerging consumer devices like
XBox and providing that
VOIP capability for a
new form, new channel
of communications for Microsoft that’s embedded.
Right?


And when Skype has actually
probably almost as much
leverage as Microsoft in that
space because I know, just
from our conversations with Skype, that
they ‘ve been pushing really
hard with carriers just
to free up allowance,
like on the iPhone or other Android devices.
Let us do our
Skype thing, your users will love you for it.


So, maybe they’ll be
able to pull something off, but
I think Skype can be a great
unifying thread between all
the places where Microsoft is.


So John you were making the
point that Microsoft back in
the days of anti-trust litigation
became a little more
shy about going hard after, for instance, bundling.
This is, presumably, clearly a bundling strategy.
Microsoft doesn’t have the handcuffs
on it as it used
to from the D.O.J. So it’s
that we’re seeing, a recast of
the old Microsoft playbook and will it work?


Well I think Microsoft- well first
of all, I think that was one
fact of going into the Microsoft
kind of flattening out in my opinion.
But a lot of other factors have
come into play, too, like, for
example, Microsoft beat the
hell out of Sun Microsystems, which went
proprietary with their servers, right.


So back in the day, you had Sun as the server vendor, even HP.
But for the most part, HP was partnered with Microsoft.
Open source really took
hold, so, I mean, Microsoft was
a software company, and as
a computer science major,
ex-software guy myself, the joke
was really write good code.
So the Open Source movement
became a different paradigm than Microsoft.


So you were either on the open
software Unix movement or you were on the Microsoft camp.


Right Both had robust ecosystems.
So the combination of the DOJ
hand cuffing of Microsoft plus
the rise of open source kind of stagnated Microsoft.
So what that did was,
then Gates retired, but they’re making billions of dollars.
They became this massive company.
And they weren’t evil more, they were just kind of wimps.
So what happened then was Google came along.


The internet came along and expanded
so that after the dot com
bubble new stuff started happening.
Microsoft has been groping ever since.


Mark Hopkins, thanks for coming on, Appreciate your insights.
Thank you for breaking it down.
Its an interesting discussion, John.
I mean, I’m still a little
fuzzy on what the objectives are for the Microsoft acquisitions.
Clearly, the cool factor.
Clearly, I think to add value to the platform.
But there’s got to be more than that.


Let me try to break down the acquisition, in my opinion.
The way I see it is this: Skype came from eBay.
It had two main markets that Skype had.
They had great p2p technology.
Let’s just start with, they had massive user base.
They had 800 million registered users.
The 800 million registered users
were averaging about 50
million plus a day simultaneously
at any given time.


When you think about that’s bigger than Facebook.


So I wrote a post about that.
So, 800 million registered users
is bigger than Facebook, and
Facebook’s valuations- look at
that valuation, 50 billion dollars.


The second thing is that Skype
was a new company formed out
of Ebay, so it was
growing at a huge
rate and that growth
rate was just so
massive, and on the international
side, they were winning voice business in emerging countries.


And the third thing is, they had a massive video opportunity.
So all those things come together.
Skype was just growing too
fast, too big of an
asset, and I think
Microsoft was really smart by picking them up.


Question from Michael
Sean Wright, our creative
director: the role of Jeremy
Burton, the CMO of
EMC planning and the EMC event here?


I think Jeremy Burton played
a very big role in
this event, in the sense that EMC