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Ebay Rumored to be Buying Skype
JDStone writes "Rumor has it that trusted sources from The Wall Street Journal say Ebay is interested in buying Skype. Later after the announcment, Ebay Inc. shares fell 4.3 percent."
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While they have a strong track record for supporting business and tracking developments in the business world, I take nearly everything they offer as rumor or opinion with a grain of salt. Remember that it was the WSJ that was an early flogger of Cold Fusion. They were speculating about the enormous potential of a science "discovery" that hadn't even been vetted by the larger scientific community. I wonder why they don't have a cold fusion section in their paper an more.
This marriage between Ebay and Skype does have some marginal plausibility due to the need for Ebay to spend some of its reserves capturing markets outside of the online auction business. Skype needs cash to fend off Microsoft's entry into VOIP. The rumor has some potential traction, but the market has given its opinion to the deal. A drop of nearly 5% in your stock price is something a CEO and board of directors can't easily ignore.
"Rocky Rococo, at your cervix!"
If this happens, I'll put money on it that the free pc to pc calls will become adware.
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They're buying it because they think it will make them money.
Simple as that.
Just because they started out providing one type of service doesn't mean they can't offer something new.
Technology, the cause of and solution to all of life's problems.
You ask a good question--usually, companies don't bother buying other companies unless they see the potential to leverage some synergy between the parent and child.
It may be something hard to see from the outside, but I had a few ideas:
1) Ebay has a ton of core compentency in connecting and managing a VERY large number of users, especially in near-realtime transactions. Their auction business is dependent on their technical abilities to have an easy-to-use front end for a huge user population, as well as a reliable back-end that can manage how those users want to interact with each other.
2) Ebay has a large userbase. Skype's ultimate success depends on reaching a large enough mass of users to amortize its fixed costs, and so that network effects will make its service more attractive to new users. There's a cross-selling opportunity, here, along the lines of Google offering IM on top of its email services.
3) Fraud prevention. Ebay doesn't do a perfect job of preventing fraud (phony accounts, stolen accounts, etc), but it had a lot of experience dealing with it. I would imagine that a telecom service like Skype has similar issues with people abusing accounts, or that they foresee such abuse as the service grows more popular. All of the skills and expertise needed to deal with fraud in a massive userbase (like behavior pattern analysis, customer interaction, etc.) may be cross-applicable to both industries.
But these are just guesses. I imagine that there are possibilities that Ebay and Skype see, but that are hidden from outsiders. Might as well wait and watch what happens.
They're buying it because they think it will make them money.
Simple as that.
Just because they started out providing one type of service doesn't mean they can't offer something new.
Investors want to see the value add. If there's no benefit to the merged company, then they won't be interested in the deal. You have to keep the investors in mind when talking about a public company.
And when a company is deciding who will buy them, they tend to look for the same. True, they look at the offer price, but since those offers often have some kind of dependency of future profits, it's in their best interest to find a good match.
The only exceptions to this are your large conglomerates like GE or SPX, but they offer management and financial backing to the companies they own (though they will frequently drain a company for all it's worth before selling it off if it doesn't make them money).
...I need a Paypal account to SkypeOut? I can see in the future that Skype will no longer be free but a "subscription service", brought to you by EBay.
It is not our abilities that show what we truly are... it is our choices.
Ebay/Paypal is the model of what internet business should NOT be about. Their tech support is as aweful as it can get. They innovate very little, and hardly improve on their tools to make life for users easier.
No wonder their stocks are taking a hit. They don't even know how to run their own company right, how can anyone expect them to do the same with a totally different company?
eTrade SUCKS
Funny? Parent should be insightfull. Seems like every other day we see XXX plans to buy out Skype stories. Though (I don't think) we've heard any buzz from Redmond yet, I wouldn't be suprised if they pull out thier checkbook. Proprietary protocol? Check. High uptake? Check. Potential for ongoing, rather then one-off, sales? Check. Crossplatform compatability? Check. (Not that they want it, but rather they can't stand other's having it.) Sorta similar to services they allready offer, but with a much better implmentation? Check.
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The parent has been modded funny, but believe me... ther ain't nothing funny about a company that takes your money gladly, and then basically tells you to Fuck Off when problems arise.
eTrade SUCKS
In all seriousness - as WSJ intimates, automated buyer to seller / buyer to previous buyer / etc VOIP calls, could improve ebay's model of doing business.
Explain to me exactly how VOIP calls are going to help "auction success rate" and consequentially ebay's business model? As a regular ebay purchaser and occasional ebay seller I will NOT download and install skype so that the freaky people that buy and sell stuff on ebay can talk to me via voice. I much prefer the relative anonymity of email, where I can delete abusive messages, to actual voice conversations.
With ebay's HUGE userbase, there are a large number of people out there that can't even read. If you have ever attempted to sell anything on ebay, I'm sure you've been bombarded with questions that were clearly answered in your description. Adding voice capability is just going to make dealing with these bidder more annoying. With many ebay sellers selling multiple items at a simultaneously, who is going to have time to discuss problems over VOIP?
ebay has the online auction business well dominated, why would they want to branch into something completely unrelated?
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1) If you don't like eBAYskype(tm) don't use it.
2) People who do like eBAYskype(tm) can use it.
Problem is, ebay is going to potentially spend BILLIONS of dollars to acquire skype. They must have a better plan than 'use it if you like it'. Adoption rate would have to be rather signficant for this deal to be worthwhile for ebay - and I can't see that happening.
I see skype as being more useful - and I certainly see the use in being able to talk to someone I am buying from.
From a buyer's perspective, I would agree. It's not my personal preference, but I can see many people who would want to talk to a seller. The barrier I see here is on the seller's end (if there's anyone out there that sells consistently on ebay, chime in here). Most regular sellers I know have difficulty keeping up with email - why would they want to make their lives more complicated?
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