eBay To Buy Skype For $2.6 Billion
Posted by
Zonk
on Mon Sep 12, 2005 07:12 AM
from the that's-a-lot-of-voice-communicating dept.
from the that's-a-lot-of-voice-communicating dept.
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."
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Games: Skype, Sony Working to Offer On-Demand iTunes Rivals 43 comments
The field of on-demand video services continues to grow. Both Sony and Skype have announced their intentions to challenge the dominance of iTunes via download services. Sony is going to be offering movie downloads via the PSP, no doubt as a partial rebuff to Microsoft's entry into the field. Meanwhile, Skype is planning to roll out a broadband television service they are calling 'the Venice Project'. Funded with the money made when Skype was sold to eBay, the beta version was apparently launched last week. From the article: "On his blog, Mr Friis said the partners had been 'quietly testing with a small circle of people' for a few months, and that they would now expand the circle. The service will offer high-quality programs through an ad-supported platform. The project aims to bring quality TV programs free to consumers who have a broadband internet connection, the spokesman said."
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Paypal (Score:5, Funny)
Re:Paypal (Score:5, Interesting)
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!
comments (Score:5, Funny)
Skype is a dead-end. (Score:5, Insightful)
Furthermore, eBay has a history of poor human rights concerns [internalmemos.com] and owns PayPal, probably the worst on-line payment site ever created [paypalsucks.com].
I predict more consumer-hostile behavior from eBay and will continue to boycott all of its products.
Re:Skype is a dead-end. (Score:5, Insightful)
As opposed to what? How can you justify this opinion? Worst on-line payment site created, but most used. I can't think of any alternatives, please list some?
Re:Skype is a dead-end. (Score:5, Informative)
Alternatives to PayPal (Score:5, Informative)
Re:Skype is a dead-end. (Score:5, Insightful)
Skype is not built on open standards like SIP and remains isolated to its own so-called "Peer to Peer" network. It is to the Gizmo Project as AIM is to Jabber.
Just because it's proprietary doesn't make it a dead-end. You may as well say that every 'open' project will be huge.
Grrrrreat (Score:5, Funny)
over $1000/user (Score:5, Interesting)
Re:over $1000/user (Score:5, Funny)
Re:over $1000/user (Score:5, Informative)
Re:over $1000/user (Score:5, Funny)
1 ringy-dingy
2 ringy-dingy
"Hello, this is eBay calling to tell you about some fantastic purchasing opportunities available exclusively to our Skype customers.
"Yes, sir, I understand that you're eating dinner. No, sir, we do not have a no-call list, as we are not governed by-
"Now, sir, there's no need to be rude. I'll let you get back to dinner.
"... and call you back in five minutes. Every five minutes. Until you die."
Re:over $1000/user (Score:5, Informative)
It's about 2 cents a minute for outbound calls in the US. This is called SkypeOut.
And in order to get an real phone number, you have to pay for SkypeIn, which looks like it is going to cost about $60 a year, though its still in beta.
So, if you make 500 minutes of calls, its slightly more expensive than the Vonage SoftPhone.
If they made it a flat rate for unlimited calls, I'd buy it in a second.
More spam calls (Score:5, Insightful)
From the article :
.... eBay is also attracted by the idea of letting its buyers and sellers talk to each other via their computers ...
Personally, I'm not sure that I would want eBay buyers and sellers to contact me by voice. For a start, it means that to buy or sell effectively, you would need to be online a lot of the time.
Plus, once they have your Skype address, it would open up the system to SPAM voice calls pestering you to buy more things that you don't want or need.
Re:More spam calls (Score:5, Insightful)
I've only done around a hundred auctions, but my experience has been that the questions come 18-24 hours before the auction ends. People looking much earlier than that tend to know exactly what they're looking for and don't ask many questions. People looking later than that are grabbing the first thing they see. People in that 18-24 hour time range, though, seem to ask lots of questions trying to figure out whether or not they should bid.
And of course, these people don't even end up winning the auctions. They're the ones who are new to Ebay, don't understand the concept of sniping, think that they're really going to get a Tivo for the $1 opening bid, and even still, they want to ask questions first about the item.
Wow (Score:5, Funny)
Maybe not...
Online Phone card type thing? (Score:5, Insightful)
Ebay is not an auction company (Score:5, Insightful)
It sounds to me like ebay is trying to transform itself into a "business solutions provider" company. Starting a small business? Sell your stuff using ebay with "buy it now". Want to accept credit cards and do other business banking? We can do that. Want to offer a toll-free (or non-toll-free) number to your customers? We can do that, too.
I would not be overly surprised if they went after Quicken or a competitor next. Possibly even a shipping or storage company, too (but less likely since those aren't virtual).
Large Techs Making VOIP Plays (Score:5, Informative)
Just recently, Microsoft purchased Teleo, which will allow MSN messenger users to make PC-to-Phone calls. Yahoo purchased Dialpad, which has similar capabilities to Skype (PC-to-PC and PC-to-Phone). And of course Google introduced Google talk, which is the first step in the process. eBay just doesn't want to be left out.
This is not really my insight. See for example:
http://news.ft.com/cms/s/d1218d8c-2097-11da-81ef-
The Key is not Ebay but Paypal. (Score:5, Insightful)
Ebay's interest in Skype has nothing to do with augmenting their auctions with calls between buyers and sellers. This is about taking those (alleged) 50 million non-paying Skypers and giving them an easy, more attractive way of paying for individual calls rather then stumping up $5. Pretty much everyone has a Paypal account and this sort of tie-up would get them using both Paypal and Skype more, with people more willing to leave cash sitting in their Paypal accounts because "I might need it for calls". This would consolidate Paypal's dominant position, something Ebay are probably anxious to do in the wake of rumours of a Google e-payment service - most people will only really bother with one payment service and, if it covers their phone calls too, sticking with Paypal will be a no-brainer.
The real killer argument for the Paypal/Skype tie-up is, however, the possibilities it opens up for a whole new generation of premium phone services and the recent repositioning of PayPal, missed by many, strongly suggests that Whitman et al realize this - after years of holding back the whole idea of micro-payments, they finally decided to granularize Paypal's fee scale, making smaller transactions viable. Before, you had to pay 30c + 3% of every transaction, leaving you with 67c from a dollar sale. Now, they are willing to take 5c + 5% instead, leaving you with 90c.
This is huge news because it makes viable a whole new layer of services. I don't think the timing of that introduction is a coincidence. I believe that Paypal are preparing the ground so that anyone who wants to set up a premium number can do so via Skype - if someone fancies themselves as a fortune teller, a Windows guru, a phone psychologist, a language translator, anything at all that can be conveyed over the phone, Skype will allow them to receive calls for which they can charge whatever they want per minute, taken directly from the customers Paypal account.
The rakes that the traditional telcos cream from premium calls are obscene, resulting in unattractive overall rates, crippling a potentially huge homebrew industry before it even began. Seriously, how many of you regularly turn to premium phone-lines when you have a problem? I can definitely understand how talking to another human being, one expert at tackling my particular problem, could be useful - the current cost, however, takes that option right out of contention. Generally, too, a premium service can only serve one country, barely giving it room to breathe market-wise.
A Skype/Paypal solution would be international, meaning a techie in Bombay could build a reputation for solving computer problems for customers in Baltimore, more easily than getting the kid down the road to drop by and certainly more cheaply than phoning Compuworld or Apple. It would also allow that kid in Bombay to keep a meaningful percentage of his per-minute fee, allowing him to keep it low. You would soon have a massive market of providers, ranging from amateurs to highly experienced professionals, all promoting their services via websites and forums, all adapting their charges and services to market conditions. By building the charging mechanism right into Skype, Paypal would find itself sitting happily in the middle of a new explosion of cash transactions.
Just like Ebay did.
Re:what a stretch (Score:5, Insightful)
So why buy skype? Why shell out 1.3 billion bucks for a piece of software, especially one so commonplace as Skype?
Skype is a great piece of software, but no doubt better can be made. But Skype has other things going for it: A) It's got reasonably secure encryption -- unlike practically every other chat and VoIP client out there. B) It's great at getting around firewalls C) As decentralized as it is, it requires minimal resources -- it hits one IP in Denmark and it's on its way. D) It has 40+ million users, of which 3 million are online at any given time, and the numbers are growing.
So skype delivers a lot of regular users at minimal cost. Heck, you don't even need to run adds on the Skype client itself, if you control the help, community and download pages. Controlling the #1 PC-to-PC VoIP client out there gives access to all kinds of non-obvious revenue streams, very few of which have anything to do with auctions.
Re:What is so special about Skype? (Score:5, Insightful)
- Skype has little or no problems with firewalls. Most workplaces wouldn't be able to use Skype if it wasn't for this.
- It's not only PC-to-PC, which indeed is a dime a dozen. It's also PC-to-phone and even phone-to-PC. You can get your own phone number(s) in some countries, e.g. get yourself a phone number in some other country and your friends there can phone you at local rates instead of international.
- With the latest version and its forwarding feature (still only in the Windows version) it's even phone-to-phone as well.
- Skype's PC-to-phone is cheap. I can go to the other side of the world and phone my mum or anyone at home for close to nothing, with a USB stick w/Skype and an Internet cafe.
There are other applications out there that can do part of what Skype can do, but it's either
- missing some features, or
- not as good PC-to-phone country coverage, or
- more expensive PC-to-phone rates, or
- none or extremely (even more than Skype) limited availability of phone numbers (what Skype calls SkypeIn).
- a smaller user base (which is a self-strengthening point)
In other words, a lot of stuff come together in Skype. The only point against I can think of is the missing interoperability with other software because of the proprietary protocols.
Re:Possibilities... (Score:5, Funny)
For things worth actual money?
I bid grgle-snrt I bid zzzzffff No, I bid kkkppp No first f-f-f-f-first! twenty eeeehooonnnggg but wait a wawawa twenty-eight pork
Great idea, boys.
Re:Here we go again (Score:5, Interesting)
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.