There Goes The Other Reason eBay Bought Skype
from the two-strikes-and-you're-out dept
Back when eBay bought Skype for $2.6 billion (potentially $4.1 billion), the company tried to justify the decision with a variety of vague statements. However, two specific rationales stood out: (1) it would be easier for eBay buyers and sellers to talk to each other (2) Skype was huge in China, where eBay had very little presence. The China story didn't make much sense. First off, as had been announced before the acquisition even occurred, Chinese telcos were looking at ways to block Skype, a process that has continued to move forward. However, even without that, it was never clear why someone who used a free VoIP system would then turn around and start using an online auction, just because it was the same company. The first point, about eBay buyers and sellers talking, didn't make much sense either. As we noted at the time, it's extremely rare that a voice conversation is needed in an eBay transaction. Turns out that we weren't alone in feeling that way. The executive director of the Professional eBay Sellers Alliance, a group that apparently represents the top sellers on the site, says that most of the group's members have no interest in Skype, and prefer to discuss auction results via email as they've always done. So, we've now crossed off the two big reasons why the company was worth buying at all (neither of which explained the price tag, either). What else is there?
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It's a steal..
Seems that the biggest online auctioning site has had a few lessons in buying and selling.
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Re: It's a steal..
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Re: It's a steal..
Think of it like a sports contract w/ performance bonuses
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Re: It's a steal..
:) Whoops. Thanks for catching that. Fixed now.
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Now, what might eBay be interested in selling?
Skype already has a large installed user base, and provides P2P transfer of much more than just voice - you can send files, etc. There is already built in user authentication, and a robust payment system capable of handling large numbers of small payments (for SkypeIn and SkypeOut). Hmmm...
Could it be that eBay wants to use Skype as a service for its sellers to automate sales of music, say? Its very own P2P merchandise distribution system? Just visit an eBay store and buy the latest hits? And how much of each sale do you think eBay might want for this if presented as a turnkey solution of MP3 distribution?
They may not even be really interested in the voice part.
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Re: Now, what might eBay be interested in selling?
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Re: Now, what might eBay be interested in selling?
So... it could still be used to buy eletronic media over the net.
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while ebay sure isn't growing as quickly as it used to, its still making truckloads of money.
they see value in skype, they aren't trying to hide anything.
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I don't think you understand
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Paypal
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Re: Paypal
SkypeIn & SkypeOut transactions add to PayPals user base. eBay can always use that to leverage more companies into using PayPal to process payments.
With the right marketing, they can get Skype into the business market. Then there would free VOIP contact with companies (on the consumer end), and thanks to PayPal, secure phone purchasing. Last I checked, QVC, HSN, and all the little As Seen On TV companies were still making a killing! More PayPal tranactions!
There are plenty of reasons for eBay to have bought Skype - there is a lot of potential for profit there. Just none of them seem to be relevant to the reasons they said.
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Re: Re: Paypal
Equally, since Vonage's revenues are lower than the marketing costs it's incurring to attract customers (see the IPO filings), it's not clear this is a great market to get into.
Hopefully there's more in the PayPal angle, or eBay has wasted a lot of money!
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Only a matter of time
Obviously ebay saw a large established userbase and sees a potential revenue stream.
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