Microsoft’s Online Head Qi Lu: Skype Deal Is “Key Addition” of Marquee Consumer Brand

5/13/11Follow @gthuang

Microsoft’s biggest acquisition to date was on display this week, in Boston. I’m not talking about Skype. I’m talking about Qi Lu.

Lu, the president of Microsoft’s online services division, was in town on Wednesday to meet with employees at the firm’s New England Research and Development Center (NERD) in Cambridge, MA, and, in addition to private meetings with local companies and universities, to give a public talk that was co-hosted by Xconomy.

For those who don’t know, Lu was brought in at the end of 2008 by CEO Steve Ballmer to spearhead Microsoft’s fast-growing online efforts—including Bing, MSN, and mobile advertising. Before that, Lu was a senior exec at Yahoo for a decade, where he ran engineering for the search and advertising group. He had previously worked at IBM’s Almaden Research Center and Carnegie Mellon University.

So Lu is basically The One, charged with bringing the world’s biggest software company to a more competitive position in the digital, online, and social era (no pressure). And he was quite a steal—especially compared to the $45 billion that Microsoft offered to pay for all of Yahoo in early 2008.

This week, when he was in Cambridge, Xconomy sat down with Lu for an exclusive interview. Between that and his talk at the NERD center (see photo below), we learned a great deal about Microsoft’s (NASDAQ: MSFT) evolving strategy in search and the Web—and where the company sees itself playing across the various fields of consumer online services. We’ll have a separate story on that soon.

But first, we had to get Lu’s take on the big news of the week, and what everyone was buzzing about—Microsoft’s $8.5 billion acquisition of Skype, the Luxembourg-based Internet phone and video firm (which has a big Silicon Valley presence). Skype will become a separate division within Microsoft; it won’t be integrated into Lu’s online services division. Partly because it isn’t in his direct purview, Lu didn’t go into much detail. But from the high-level comments he made during our interview, and at his public talk, it sounds like there are plans to use Skype’s technologies across a wide range of Microsoft businesses.

“This acquisition is very strategic,” Lu told us. “Certainly we are very confident that … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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