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eBay To Buy Skype For $2.6 Billion
rfunches writes "It's not a rumour anymore. BBC News online reports that eBay will pay 'half the amount in cash and the other half in stocks to create an unparalleled e-commerce and communications engine'." The $2.6 billion purchase would give eBay access to the VoIP market, of which Skype claims it has 2 million users online at any given time. BBC speculates that eBay will use Skype to allow sellers and bidders to communicate via voice; I have also heard that live auctions a la Sothebys might also be a possibility. Also reported at Wall Street Journal (registration), New York Times."
How are they going to earn that back from a "free" VoIP service?
One of the reasons eBay has is that they can use Skype to let buyers and sellers talk to each other; but my eBay name and Skype name aren't the same. If some contacts buyer/seller through Skype with eBay screenname as Skype name, they're is going to be some potential for social engineering.
With a large US company owning Skype I think we can take for granted that getting SkypeIn sorted out with the telecomm authorities of smaller, European countries will simply not happen. I expect Skype will now grow much more US-oriented than before - I simply can't imagine why Ebay would bother with, or even understand those Euro-centric problems.
Time to start looking seriously at the existing competition, small as it is.
Hrrmm. would they transfer my skypeout balance to my paypal?
LOL!
It's good to see that hot air still sells, dang this is almost like the heady days 97-98!!
2.6 Billion dollars for what? A client list? A gateway to copper lines?
Sheesh!
-if at first you don't succeed, stay the heck away from paragliding.
Yeah, but Skype has a client base... they are buying the customers as much as they are buying the infrastructure
Although people may disagree because its cool to hate paypal, but look at ebay and paypal? completely vertical markets,
Not really, as paypal's main reason for existence is paying for online auctions (ie eBay). Sure, paypal has some use beyond that, but you could at least see a link between paypal and ebay.
It's a lot harder to see what Skype has to do with online auctions. What's next, eBay search?
eBay mail(especially as they already have an email like function in my ebay)? ebay news & weather? Maybe it is like others have said and that the link is with PayPal's micropayment system than eBay.
At some point, somewhere, the entire internet will be found to be illegal.
Also, remember that Skype is not an open protocol. You cannot write your own client should support for your platform be discontinued.
There is nothing wrong with Paypal and eBay that wouldn't be cured in a heartbeat by some credible competition, but I don't see any credible competition at the moment. Auction sites (and similar listing sites) come and go, as do online payment systems. I have a few such sites that I like (e.g., Blujay.com and TheHighBidder.com) from the standpoint of user-friendliness and lower cost, but they can't deliver the traffic like eBay. One alternative for online payments that should definitely be avoided is the latest Ponzi scheme from Damon Westmoreland, called GreenZap. I have some hope for either GooglePay or AliPay (from the B2B site Alibaba.com). I would not mind seeing both competing head-to-head with PayPal. Unfortunately, in the Internet world, there is a tendency for only one company to completely dominate any particular niche -- and #2 is usually way down in the noise.
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You want examples? The whole "diworsification" trend of the 70s and 80s. GM bought a satellite company (Hughes) and a data processing firm (EDS), for instance. See how well that worked out for them. The idea was that they'd use these businesses to ride out the slumps in the economic cycle...in reality, all it did was divert management's attention from their core business.
All of the derived wisdom in business is that you find what your company is great at and put everything behind it. Read Good to Great.
eBay buying Paypal makes sense because there are obvious synergies - you buy something on eBay and pay for it with Paypal (and Paypal was also profitable). Sometimes big acquisitions make sense - Oracle buying Peoplesoft and Seibel, or Ford buying Hertz (though after 15+ years they're now ditching it). Sometimes the deals are more of a stretch...e.g., FedEx/Kinko's and UPS/Mailboxes are both based on a very specific strategy and set of assumptions.
eBay buying Skype makes zero sense to me. If eBay had bought Christie's or Sotheby's, I might understand...but buying Skype is (a) reaching waaaay over to a completely different market where the synergies are very speculative, and (b) investing in an unproven, unprofitable venture with a LOT of cash, reminiscent of the dot-com days.
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I'm not saying that the German government can't throw a spanner in the works, I'm saying that they won't.
Politically, no Western government is going to engage in a drawn-out witch-hunt, mandating the involvement of banks and credit cards companies.
To draw a relevant comparison, European companies have still not managed to universally enforce VAT collection despite threatening to sue American service providers selling to European customers. They are willing to chase that because it's huge money, potentially 15-20% of transatlantic commerce, but it hasn't been easy or very successful.
Notice that they have chosen not to pursue the simpler path of accessing their citizen's bank account and adding a VAT charge to every online service transaction. This is because there are very real blocks, both cultural and legal, that, for the most part, render bank accounts sacred - such access would force to rich to shoulder their fair share of the tax burden and that will never be allowed to happen.
In the case of pursuing the much smaller fish of premium phone services, the only electorate that actually like to see their government flying in the face of the advances that the Internet allows are the French. Every other government knows that stopping their people from benefiting from better services and lower prices is a vote loser and, at the end of the day, that's what it's all about.
BTW, Paypal/Ebay will, absolutely, collect VAT on behalf of European governments, Skype already adds it to your top-ups if you don't have the foresight to say you don't live in Europe. All I'm saying is that the premium phoneline providers are going to lose their monopolies and, with their passing, the market will bloom.