Microsoft, Skype and reasons to worry that a good technology is about to die

LAS VEGAS--Yes, HP took some shots at Cisco. And yes, there was plenty of reminiscing about the early days (this was after all the 25^th Interop show and, oh, how things really have changed), but there's no question that the best discussion, the most ubiquitous discussion, going on at the show was about Microsoft's acquisition of Skype for $8.5 billion.

From my first briefing, with Polycom, to my last, with Advantech, the Microsoft/Skype deal was almost always a part of the conversation.

First, a quick look at the edgy relationship between HP and Cisco.

Dave Donatelli, HP EVP and GM for networking products, called out Cisco during his keynote Tuesday morning for what he said is a lack of innovation by the networking giant. And, he used a Gartner study, which pointed out that a single-vendor network isn't the best way to go, to underline the lack of competition in the networking space.

An HP exec Wednesday was a little more direct, telling me: "Legacy networks--and by legacy, I mean Cisco--are at the breaking point. Their management tools are a joke, they're just crap. We think we can fix that."

And, then there was Vint Cerf, Google's Chief Internet Evangelist who, during his keynote Wednesday, compared the early days of the Internet and those of non-connected email systems, to the emerging cloud environment of today.

"Today cloud is like email in [the] 1980s," he said. "It's not interconnected and now you can't interface between clouds. That will change as the same pressures that got to email to get to the cloud."

Through it all, though, ran a vein of MS/Skype. The consensus? "Wow!" would pretty much sum it up. But as to whether Microsoft can make the acquisition work, well, there really wasn't any consensus.

Microsoft partners offered the obligatory atta boys, an abundance of pundits reveled in the acquisition, talking about how much Skype was going to benefit Microsoft and vice versa.

But my favorite comment (yes, because I agreed with it) came from someone who had a long history of working with and around Microsoft, and it was far less complimentary: "Microsoft has always had the ability to take really great technology and ruin it," he said. "I don't think Skype has a chance."

Another networking vet told me that Skype has some squirrelly ways of working its way through networks; their code is nearly impossible to look into, it's hard to pin down. And that's just not going to fly in the button-down world of the Microsoft campus.

The financial world already is lambasting Microsoft for paying too much for the money losing service, possibly as much as twice as much as Skype is worth. And they're worried about how it will ever recoup its investment.

"They paid a headscratcher of a valuation," Patrick Becker Jr., a principal at Becker Capital Management, which owns 1.5 million Microsoft shares, told Reuters. "One of my big fears is that by the time they design this into Outlook, Xbox and their phone software it's going to be overtaken by Google and Apple from a capability standpoint."

Microsoft, of course, has a legion of supporters who are going to pooh-pooh any discussion that is despairing of the company. But what I found most interesting as Interop was the number of folks, folks who know Microsoft on a partner level and who generally think they have a solid culture, who were simply worried that Microsoft was going to be ham-handed in its handling of Skype; that the company was incapable of managing a real consumer product.

They, obviously, pointed to Kin--you remember Kin, the D.O.A. phone the company quietly buried two months after its launch?--talked about the flatlining Windows Phone 7, and the absolute lack of traction Microsoft has been able to obtain with its own line of non-traditional communications options.

There was a lot of chuckling about CEO Steve Ballmer's comments about how Skype would be integrated into Microsoft's Lync and Xbox and the synergy it would generate. It's far more likely that Skype will be swallowed up than integrated into anything Microsoft... except the bad memories of other once-promising technologies the folks in Redmond have managed to acquire and kill.--Jim