MICROSOFT BUYS SKYPE FOR $8.5 BILLION

In its biggest deal ever, Microsoft announced today that it had purchased Skype, the company that permits users to make audio and video phone calls over the Internet, for $8.5 billion. But it was not clear what the company plans to do to make Skype profitable. While it said that it would merge the company with its gaming devices and incorporate Skype software into its mobile smartphone systems, analysts speculated that Microsoft sees Skype’s 170 million users as a ready-made audience for video-on-demand services. (Some 40 percent of calls made on Skype employ video.) Other analysts have suggested that Microsoft bought Skype simply because it has enough cash reserves on hand to do so. Some accounts put Microsoft’s cash hoard at around $55 billion. In a related matter, Google’s YouTube announced that it is increasing the number of movies available for rental by more than 3,000 and said that they will be made available on the same day that other video-on-demand services do — for $2.99 (older releases) to $3.99 (newer releases).