eBay and Skype?

First of all, let me say that I love Skype.

Now that I've gotten rid of AIM and Yahoo Messenger, I have only two IM clients on my desktop, Trillian and Skype.  If everyone had a Skype account, I'd have only one and it would be Skype.

As Lucinda said in her comment to my Goodbye AIM post yesterday:

the ability to go to talking instantly and to conference is great. and the quality is better than on my vonage line.

Yes, Skype is awesome and everyone should get it. Skype is also a great way to do a group podcast over a long distance.

But why does eBay want to own Skype?

Forget for a second the rumored price of $2bn to $3bn.

What's in it for eBay?

This quote is from the Wall Street Journal's story on the rumored deal:

Skype offers the Internet auctioneer a thriving e-commerce business that benefits from so-called network effect, which is a good or service that has value to a potential customer based on the number of customers who already own that good or use that service, said this person familiar with the matter.

Yeah, so what?  I still don't see the synergy in the deal for eBay.

Back to the purchase price.  I think Skype is a bargain at $2bn to $3bn.  I think everyone should use Skype and I think it will be on every kind of communication device over time - cellphones, PDAs, etc.

I think Skype could be the ultimate phone company of the 21st century.

So owning Skype makes sense.  But I am not sure why it makes more sense to eBay than Verizon or BellSouth.  If Skype went public, I'd certainly want to own some shares.

Maybe some of my readers get this.  If so, help me out.  Let me know why you think eBay should own Skype.

Comments

[Ruchit]

It will provide a toll free international number to superstore ebay. You liked some product click an icon next to the product and get talking with some customer support agent.

Skype can provides an addon like a intelligent call center kinda call routing system for global support.

[sushi]

as for skypes user base in china: it might soon be zero, as china telecom is apparently starting to block it:
http://www.forbes.com/technology/feeds/afx/2005/09/08/afx2214918.html

[Calvin]

Sushi,

More here too:
http://www.shanghaidaily.com/art/2005/09/08/183095/VoIP_calls_may_be_banned.htm

From #3 market to ...?

In everyone's style drift into the China market, these kind of stories can be a bit of fly in the proverbial ointment.

[Manu Sharma]

People, this has nothing to do with Ebay's auction business. Ebay is clearly responding to the growing threat from Google by diversifying into internet telephony- "the next big thing". [plug]more here[/plug]

[JD]

For everyone who thinks this is a good idea, replace "Skype" with "SIP" and then replace "$3 billion" with "$0".

[David]

I think I would have to agree with nash...there are 3 reasons why I think this would make sense.

1. Competition. All of the big players are beginning to look more and more alike, and as they grow they will attpempt to encroach on other players' domain...Yahoo, MS, Google, Newscorp, AOL.
As google continues to improve froogle, and theer rumored gwallet payment service, ebay will eventually be forced to diversify.
Skype would be the first step in this diversification.

2. Payment. Additionally, I have read about major payment and account issues for skype. Tying paypal directly into this would alleviate alot of those problems, and with their new micropayment strategy they could sell small amounts of minutes and make it profitable.

3. Audience. I don't think that ebay sellers will talk to buyers or vice versa, but ebay customers are very cost conscious looking to save money. Ebay also services alot of small businesses who are looking to save money. This is a perfect fit for this type of audience.

[edasx]

I say get Skype out of your computer. It is like a virus, uses your bandwidth and memory for other users communication. How can you call this a good technology? If there is anything far beyond Skype it is Wavigo or Gizmo (using SIP). Any user who learn about Skypes article #4 in EULA (license ) which says: Permission to utilize your computer, i bet smart people will get rid of Skype very fast. The rest of users will eventually learn what that means for them and their computer.

[Dave McClure]

a couple folks above have already said it, but the explanation of the 'why it makes sense' is very straightforward:
- eBay monetizes user traffic easily with existing offerings
- more user traffic = more transactions = more revenue

for *ANY* decent-size portal, 'free' services that engage users to return more frequently / spend more time on site tend to increase monetization.

given that eBay can also take advantage of Skypes services for buyer-seller communication, existing large userbase, and viral growth, i don't see why anyone has trouble understanding this deal.

NOW, you might question how MUCH eBay would be willing to pay for Skype, but it certainly isn't a stretch of logic.

---

continuing this thought process even further, it would make even MORE sense for eBay to purchase / partner / private-label a hosted email service, and give it away to its customers (like Gmail, Hotmail, Yahoomail, etc).

in addition to the 'more eyeballs / more traffic / more transactions' argument, having an email product would enable eBay to reduce email fraud by encouraging users to move their primary email service to eBay. if eBay was able to move any significant percentage of its buyer-seller transactions to a closed-loop email system (or even only 1/2 of the txn), they could easily cut down on fraud in the system -- one of the biggest areas of cost for eBay and PayPal.

(full disclosure: i used to work at PayPal).

- dave mcclure
www.simplyhired.com

[David]

Ok, so I was wrong. Ebay is buying Skype for the most apparent reason. $4.1 Billion to allow it's users talk to each other? $4.1 BILLION?? Will this really add much value over the traditional means of communication on ebay?
Voip now requres another level of coordination to really work. Will I be available at the same time that the person has a question. Are ebay's users sophisticated enough to download another im/voip client and use it regularly. Will users even want to talk to someone that they have never met? They are not professional sales people, nor are they customer service reps. Not even AMAZON.COM wants to talk to their customers, why would Joe widget seller in Idahoe?
I have argued this for the past couple of months, that another bubble was NOT emerging, but if we continue to see **strange** acquistions like this for these types or prices its hard to argue any other way.

[john]

Its just for the secret service agencies to be able to control all conversations and communications of skype users.
Ebay was "invited" and used to buy skype, as it is a well known company worldwide.

cheers

John

[phoneranger]

This combo should be viewed as a banking deal. Add PayPal and Skype Minutes and you have a transnational currency. Use them for phonecalls, pay for Ebay purchases or trade 'em with your friends! No currency controls. No exchange rates. Not much govt. interference. For many underbanked parts of the world this could be a very big deal.

[eric goldstien]

I agree with the views of Oliver and Isaac. This makes a lot of sense for Ebay to keep them in the game with google, yahoo, etc. Also, as Fred pointed out on his blog, "Niklas and Janus are in the top tier of entrepreneurs having now done Kazaa and Skype. That's impressive as hell." It was reported that Niklas will be joining Ebay's executive team, so his next 'big idea' will (i assume) be part of Ebay's future. That's gotta be worth something!

[runnerdown]

auctions = selling based on intensive communication:
1. showcasing products (the annouced skypesee = video IM could be agreat tool in this)
2. bidding
3. information exchange based on trust in both directions: an instant talk, picture, live video in amny cases do say a lot more than the emailing of today

I think there'e a lot to say for integration of an auction service in a compelling messaging/communication service ....

[Justin]

The only use I can see is providing 800 numbers to they eBay store owners through Skype, and maybe giving bidders an option to call through the auction page.

But realistically, your average Joe isn't going to want to take questions via Skype, or even phone. If you listed an item, would you want people calling your home, or your computer asking you about it?

[Neubie]

This transaction is Ebay becoming a large stupid corporation. They could have invented their own Skype like product for about 1/100 of what they are paying. But if you have an aquisition department they need something to do with themselves.

[Ben degree]

Canadian Auto
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[Bob Ward]

What is to prevent someone from contacting a seller via free skype services to sell the item off ebay?

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[Shanghai Fan]

It's more of a long term deal with a huge fan base. Problem is nothing in web terms is really "long term", the web companies of last year are overtaken by new ones...