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EBay Admits To Bad Call On Skype 297

Posted by Zonk
from the fun-for-users dept.
MaineCoasts writes "The Times online reports that two years after buying Skype for 2.6 billion, Ebay yesterday warned shareholders that they may have made a mistake. In essence, they vastly overpaid for the company. ZDNet offers analysis of the announcement: 'Clearly, the current business model is not enough to satisfy eBay in light of how much the company spent on Skype. And the reason is simple. Even though Skype has done a very good job of getting users to download its software client, most people who use the service do so to make free Skype-to-Skype phone calls. The only way that Skype makes money from its subscribers is when people use its Skype-In or Skype-Out services. Skype-In allows users to pay to rent a phone number, which people on regular phones can call. Skype-Out allows users to call traditional phones or cell phones for a fee.'"
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EBay Admits To Bad Call On Skype

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  • by Anonymous Coward on Tuesday October 02, 2007 @11:25AM (#20823687)
    SKYPE - 200 million+ users - Used, LIKE NEW! A++++ SELLER

    Buy It Now: $2,000,000,000
    Current Bid: $5.50
  • Bubble (Score:4, Insightful)

    by Artimaeis (1164311) on Tuesday October 02, 2007 @11:27AM (#20823713)
    Hmmm... smells like the bubble could be collapsing.
    • Re:Bubble (Score:4, Funny)

      by Spy der Mann (805235) <spydermann DOT slashdot AT gmail DOT com> on Tuesday October 02, 2007 @11:32AM (#20823791) Homepage Journal
      Hmmm... smells like the bubble could be collapsing.

      Look! A needle! :D
    • Re:Bubble (Score:5, Informative)

      by oliderid (710055) on Tuesday October 02, 2007 @11:32AM (#20823793) Journal
      I still remember that Ebay had difficulties to explain how Skype could integrate their core business.
      There was no point for them to invest so massively in such a service.

    • Umm... yeah... that smell's the bubble collapsing... the bubble.
    • by fbjon (692006)
      I just hope that I'll be able to continue using SkypeOut. In some cases it's cheaper across the world than local phone calls.
    • Re:Bubble (Score:5, Insightful)

      by Lord Ender (156273) on Tuesday October 02, 2007 @01:12PM (#20825357) Homepage

      Hmmm... smells like the bubble could be collapsing.
      When one company (and, of course, its shareholders) buys in to a risky, unprofitable business, you call it a bad investment.

      A bubble is when EVERYONE buys unprofitable assets. That's a pretty important distinction you are overlooking.
  • by darthflo (1095225) on Tuesday October 02, 2007 @11:28AM (#20823715)
    Just out of interest: Of everybody you've ever hear talking about Skype, how many mentioned the free Skype-Skype calls and how many mentioned you can pay to call others, too? (It's about 50:1 with quite a lot of non-techies in the 50 and an ex-coworker in the 1 group...)
    • by apdyck (1010443) <aaron.p.dyck@ g m a il.com> on Tuesday October 02, 2007 @11:39AM (#20823897) Homepage Journal
      I personally use the Skype Out service. I have one contact in Skype that is a Skype user, and he uses it for work (that'd be my father). I paid $17.50 CAD for a year of unlimited long distance, and I tell everyone what a great deal it is and how they should sign up for the service. As of yet, not a single person I've told about Skype has even downloaded it, let alone used the service. Perhaps people are just afraid to try something new?

      That said, there is one thing I have noticed. I get great call quality with Skype when I call my parents in Ottawa, or my friends nearby, but when I call my in-laws (up in the Northwest Territories), I have anywhere from 3-10 seconds lag, and the quality of service is poor. It would seem that the quality of service is limited by the available bandwidth - they just got 768K 'high speed' Internet there a few months ago! After all that, I plan to continue to use Skype Out, and when they finally start offering more Canadian phone numbers, I may even consider using Skype In.
    • by Fizzl (209397) <fizzl@f[ ]l.net ['izz' in gap]> on Tuesday October 02, 2007 @11:45AM (#20823993) Homepage Journal
      When I was working in sweden for couple of months, I actually used both skyp-out and skype-in to call my relatives. The international call prices are ridiculous between Finland and Sweden, even when me and the other end are on the same companys network! (TeliaSonera)
      • by Jaseoldboss (650728) on Tuesday October 02, 2007 @11:58AM (#20824213) Homepage Journal
        I've also used it from Holland, leaving my cellphone in the UK. Nearly every internet cafe has Skype installed and, even including the internet fee, it's cheaper than making an international call.

        However, from the article:

        "Skype has been focused on user acquisition, and it's done a great job. But we also feel like we can find new ways to monetize those users."

        I'm very wary of what 'monetize' might mean. I'm surprised that they didn't plaster ads all over the application soon after eBay bought it to be honest.
    • by FewClues (724340) on Tuesday October 02, 2007 @11:56AM (#20824165)
      It was pretty obvious to a lot of seniors living in deep southern Texas. A lot of us have canceled our AT&T long distance and gone with the annual Skype premium service. The annual charge was about what we paid a month with AT&T and we now can chat without one eye on the clock. I don't know about the non-techies in the 50+ bracket that you know - but I can introduce you to hundreds in the 65+ that Skype out constantly.
      • Skype has advantages over services like Vonage because you can get into the basic parts of it for free. And chat with people online, and pay a small fee to replace your phone service with it. It's quite popular. Of course I often wondered why ebay saw such huge value in it. Maybe google will buy it and combine it with a google phone.
    • Skype is good. It works, it's easy, it supports your platform. Seems like there will be ways to make money from it, that doesn't seem like a really difficult problem to solve.

      Now what I don't get is how/why ebay is in the mix, this doesn't seem to have anything to do with what ebay does.

    • by everphilski (877346) on Tuesday October 02, 2007 @12:07PM (#20824351) Journal
      I use SkypeIn and SkypeOut, paid up for a year. For what my wife and I paid in cell phone bills for a month (2 phones), we now have home service for a year (we have a paid-by-the-minute phone for emergency purposes when traveling). Roughly $70 a year. I can't complain. We don't use free skype-to-skype calling because none of our friends/family use it yet.
      Just wanted to let you know that we saved a ton of money on our phone bills by switching to Skype!
      • I tried to use Skype in. The number they gave me wasn't in my LATA. I couldn't get anyone to respond at Skype to help resolve this issue, so I paid for a year of service that was useless to me. I use skype out on a regular basis, to talk to a friend who moved to Russia for a few years. On two occasions, my Skype Out credit, nearly $20 worth each time) vanished for no apparent reason (it doesn't seem to have been stolen, since there were no logged Skype Out calls using it up, it seems to have been a syst
    • by griffjon (14945) <GriffJon@ g m a i l .com> on Tuesday October 02, 2007 @12:59PM (#20825207) Homepage Journal
      The problem with skype is that their income is in inverse relation to their network size, making it a particularly poor "web 2.0" network-driven company. The more people who have skype (and a connection to support it), the fewer people will use skype(in|out) services. For example, my girlfriend lived in China over the summer. At first I called her using skypeout. When she finally got Internet, tho, we just used skype-to-skype, because of better call quality and video capabilities.

      Skype has to find a way to increase their revenue as their network of users increases; probably through an ad-revenue stream to their in-calling services. Doing this the wrong way, though (pre-call audio ads, etc.) will just scare people off to IM services with voice chat capabilities, which is increasingly all of 'em.

      Good luck to 'em. I like skype (except for the lack of "quit/exit" in their file menu!)
    • by phorm (591458)
      I'm in a distance relationship (yeah yeah, cue the lame jokes about slashdotters not having relationships. Oh, and yes we've met in person I just haven't yet found work in her area to move permanently). Both my GF and I have subscriptions to the skype PC->phone service, which means that we can call each other so long as one of us is near a PC. When we're both at home, we just use skype-to-skype since the audio quality is better (in fact, often better than phone-to-phone).

      Since I bought into mine last y
  • by eldavojohn (898314) * <eldavojohn.gmail@com> on Tuesday October 02, 2007 @11:28AM (#20823723) Journal
    You're going to see a whole slough of articles on this because it's now very easy for everyone to criticize after the facts are in. But, I caught this in The New York Times Blogs [nytimes.com] yesterday and I found these lessons learned to be quite accurate:
    1. Just because a company has a huge and growing audience doesn't mean it can find a huge revenue source. Skype's appeal is that it offers services free or very cheap. That limits its ability to raise prices. And it turns out that there are limited opportunities for advertising or add-on services.
    2. It's almost impossible to pay for a deal through "synergies." EBay executives talked about how Skype would be useful to connect buyers and sellers in its marketplace. This always seemed to be hooey. The eBay market is already full of chatter, mainly by e-mail, and sometimes by phone. Sure, some of that might well be handled by Internet phone, but how much and what value was created by eBay owning its own voice chat system? Not much, it turns out.
    I think the second point is the most important. This deal was easy to criticize because they didn't know what the hell they were going to do with it. They had no forward plan. Where were they taking Skype? What were they going to do with it? How was it going to make money? Nobody knew. And, most importantly, eBay didn't either.

    So why did they make the deal? Maybe they felt pressure. Maybe it looked like easy cash. One thing is for sure, it never came to fruition whatever they saw in the company. I personally liked the tool but once you start asking for cash, you can expect to see your user base taper off. You're competing with something that is already incredibly cheap in the states. If it ain't free, you're going to have problems operating in the black. If it is free, you better have some mad advertising revenue or market data stuff to sell ... I don't know but that's why they over paid for it.

    Google knew where they were going with the YouTube purchase. It's now pretty clear eBay didn't know exactly what they were going to do. But, hey, they could treat it like Microsoft's original Xbox venture, "We lost a lot of money but fsck it, we've got a ton to lose and I'm bored with being the top dog in a single market!"
    • by Billosaur (927319) *

      Shades of AOL/Time Warner, no? A little different, in that AOL was actually a money-making proposition, but I don't think Time-Warner knew exactly what it was going to do with AOL, save hook its star to it, place some of their content on the site, and watch the money roll in. Flash forward and now TIme-Warner looks pretty stupid.

      • by Znork (31774) on Tuesday October 02, 2007 @12:36PM (#20824781)
        Eh, well, except it was actually AOL buying Time-Warner. Merger, wherein AOL owners got 55% of the new merged company stock.

        They later changed the name and refocused as the dot-com bubble collapsed and the 'AOL' part approached worthlessness in evaluation, and the company didnt exactly need the loadstone of a posterboy for the bubble as a name.

        As to the flash-forward, the merger structure and name changes makes it fairly difficult to figure out exactly who the most stupid party was, but anyone left holding stock in the joint company probably had more left than if they'd been holding only AOL stock. Which doesn't exactly make them less stupid for touching AOL stock at all.

        It's sortof sad how the high-flying corporate execs appear to have learned very little about how to avoid getting brainslugged by clever marketers.
    • by packetmon (977047)
      I see the same issue coming around the corner for Google/YouTube. "What the hell to do with it." I wonder how long after the lawsuits (infringements) start hurting Google's pockets before they turn around and shoot themselves in the foot for buying YouTube. Provided videos.google is still around, I personally feel Google mad err there
      • by kebes (861706) on Tuesday October 02, 2007 @12:11PM (#20824399) Journal

        I see the same issue coming around the corner for Google/YouTube. ... Provided videos.google is still around, I personally feel Google mad err there
        The Google acquisition of YouTube makes much more sense than eBay/Skype. Google has a solid business model based on advertising, and YouTube fits with that. YouTube has a huge userbase, so the ads that are now running (selectively) on YouTube are undoubtedly generating income. Of course I don't know if the income is enough to offset the bandwidth (and legal!) costs, but I suspect Google is still confident that they can turn it into a profit center, since they are continually de-emphasizing Google Video in favor of YouTube (e.g. nowadays most of the "related" links in Google Video point to YouTube).
    • by kebes (861706) on Tuesday October 02, 2007 @11:55AM (#20824155) Journal
      Excellent post.

      Skype's appeal is that it offers services free or very cheap. ... once you start asking for cash, you can expect to see your user base taper off.
      I think it's further worth noting that Skype has had some unfortunate technical issues. The business model behind Skype is something along the lines of "get people interested in the product by offering free Skype-to-Skype calls, but charge for calls to/from conventional phones." I think many users, including businesses, seriously considered using Skype for their international calling needs. It seemed like a good fit.

      However Skype has certain stability problems. In my own usage, I've noticed that it can sometimes be a bit flaky. Moreover, the entire Skype network went offline [slashdot.org] for many days. As a result, businesses stopped thinking of Skype as a serious, reliable option.

      My point is that things could have turned out differently if the Skype technology had become mature and stable enough to be a viable option for reliable international calling. They could certainly have gathered a large, paying customer base if the system was bullet-proof. But, as is, many people are (rightly) dubious of the reliability. I think Skype's business model has merit, and the program is very useful. But, eBay certainly overpaid in as much as they paid as if they were buying a mature technology/solution, when in reality there are still many growing pains left in that technology sector.
      • Re: (Score:3, Interesting)

        by LWATCDR (28044)
        Part of it is proprietary nature. We use Asterisk at my office for our phone system. I would love it if we could pay a small fee and make calls too and from our phone system using skype. Sort of a Skype toll free number. Some of our overseas customers use Skype but there isn't any good way to integrate Skype with our current phone system.
        A Skype module would also be nice to put into our software. Just click a button and call tech support over the Internet.
        Skype has potential but not in it's current form.
        • Re: (Score:3, Interesting)

          by petermgreen (876956)
          I wonder if it would be feasible to run skype in a jail with it's audio redirected, it's display routed to a dummy xserver and the skype API controlling it.

      • Skype blew quite a few opportunities.

        Due to technical glitches (contact list lost, etc), it did not build customer confidence nearly as well as it could have. I am on my second Skype ID (the first one had its contact list erased twice), and as such, not willing to put up money up front on skype in/out.

        Also, they did not go at all after corporate customers. I'd love my university to have Skype officialy, and just be able to type the name of the person I want and boom, I talk to them. But no, there ha

      • Re: (Score:3, Informative)

        by Bardsley (946251)
        Flaky is the word. I got Skype (and have used Skype-In and Skype-Out for around a year) simply because I didn't have a land line and rinsed £30 on a mobile to mobile (cross network) call in 1 night to my girlfriend. Skype has saved me money on such calls but just tonight Skype crashed twice in a 1 hour call. This is totally unacceptable for a "phone" service. I do quite like the Skype-Pro in that it allows free calls to landlines (this is in the Uk by the way) but when the calls get dropped on such a
    • Re: (Score:3, Interesting)

      by mpapet (761907)
      Oh, but you and the summary are missing the many, subtler issues that suggest real, bottom-line trouble for ebay with the skype acquisition.

      - About a half-billion dollars of the charge is for a payment to Zennström, Friis, and other early Skype investors. Cha-CHING! I've been on the wrong end of a couple of similar (smaller) acquisitions and what typically happens in a well-negotiated deal is ebay (in this case) doesn't pay them whatever they agreed to beyond a token up-front signing payment. Right
    • Re: (Score:3, Interesting)

      by 14erCleaner (745600)

      Google knew where they were going with the YouTube purchase.

      Did they? I think Google is just flailing around these days, trying to figure out what to do with all their money. Buying YouTube made no sense to me; basically YouTube is like Napster for videos, except that they have to pay for their own bandwidth. Google bought it because it was cool and popular, not because it made sense financially.

    • Re: (Score:3, Interesting)

      by iksrazal_br (614172)
      "Just because a company has a huge and growing audience doesn't mean it can find a huge revenue source. Skype's appeal is that it offers services free or very cheap. That limits its ability to raise prices. And it turns out that there are limited opportunities for advertising or add-on services."

      Skype-in and Skype-out are currently their main revenue sources, and they both have horrible quality. I live in Brazil and have family in the USA and other states in Brazil that do _not_ have internet. I tried skype
    • Re: (Score:3, Interesting)

      by owlnation (858981)

      You're going to see a whole slough of articles on this because it's now very easy for everyone to criticize after the facts are in.

      Yes, this is true. However, in this particular case there were a whole host of critical articles before, during and after the buy-out of Skype. All decent analysts pretty much said eBay were fools, and overpaid for hot air. I do not recall seeing any, any at all, serious article that said this was a good deal. As (unfortunately) someone who holds (worthless) eBay stock I follo

  • by smooth wombat (796938) on Tuesday October 02, 2007 @11:29AM (#20823727) Homepage Journal
    most people who use the service do so to make free Skype-to-Skype phone calls.


    Imagine that. You offer a free service to people and they use it. Seems a bit odd to now say you're not making money because people aren't willing to pay for one of your other services.

    To top it off, a technology company now claims they paid too much for you.

    Those who cannot remember the past and all that comes to mind.

    • by Billosaur (927319) *

      Well, let's face it: your average eBay user probably does not know what Skype is, let alone that eBay bought it. Since eBay did little to integrate it into their offerings, this should not come as a shock. Also, eBay doesn't have the most sterling reputation, so you had to be wary that they'd poison the Skype pool somehow trying to make money out of it.

  • Shades of 2000 (Score:4, Insightful)

    by Valdrax (32670) on Tuesday October 02, 2007 @11:32AM (#20823775)
    Honestly, this was another classic case of someone with money looking at a wildly successful and completely unprofitable business and snapping it up without some serious thought to how to make it profitable or more importantly if it was possible to make it profitable.

    None of these businesses that provided expensive service for free and whose selling point was that it was free have ever managed to become profitable. eBay should've known better when buying a business in 2005.
  • is that however ridiculous ebay's "future bizness model" will be, it will be forced down the throat of skype users due to closed source and the proprietary protocol.
    • Re: (Score:2, Insightful)

      by Goffee71 (628501)
      Guessing here but 90% of Windows users don't know what closed source is, so they don't care and will go on something called 'quality of service'. If that's no good then Skype really is screwed and with all the bad press, that's all the typical user needs to hear to steer clear.
    • by delt0r (999393)
      This is true. However there are more than enough alternatives that people will switch too if the deal is to rough.
  • by Fross (83754) on Tuesday October 02, 2007 @11:35AM (#20823841) Homepage
    In exactly the same way as the first. "Old money" companies (as 1st generation dotcom companies like eBay are now, in comparison) paying way too much money in speculation, for a piece of the "next big thing". Next Big Thing fails to materialise as a sustainable business enterprise, money is wasted.

    3 years ago, it seemed like everyone and their mom was getting into VoIP. I remember asking someone writing one, how are they going to make any money? He answered, get bought out by a big corporation.

    Well, it worked for Skype, I guess.
    • Yes...but how do you suppose you ever do make money on the Next Big Thing, if you never take what looks at the time like quite a risk?

      The rate of return on an investment is always determined by its risk. That's because the rate of return is the "price" those who want the capital must pay for the right to borrow your money. Obviously if the investment is quite safe, borrowers can pay a low price for your money. That's why the US Treasury can pay a measly 4 to 5% interest on the money it borrows. It's a v
      • by Duhavid (677874)
        All that and more.

        But you don't invest in something just because it is a big
        risk, and therefore might well be a large return.
        You have to be bought into the dream of what it is
        going to be, you have to believe and act on that belief.

        I don't, in my heart, believe that EBay saw anything except
        the possibility of money.
  • by vlad_petric (94134) on Tuesday October 02, 2007 @11:37AM (#20823877) Homepage
    And what can I say — their service is getting worse and worse. At the beginning of the year it used to be much better. These days, the clients are buggy, the phone number I got from them no longer works ... so, sure, I'm only using it for skype-to-skype calls.

    To ebay – get your act together or you'll lose most of your current paying skype customers (and forget about growth)

    • Re: (Score:3, Insightful)

      by stg (43177)
      Something similar happened to me, last year. A little after they made local SkypeIn phones available in Brazil, I got one. At first, it was great - quality was pretty close to a regular call, and sometimes better.

      After a couple of months, the quality of the calls was awful, calls kept dropping or not connecting. So when it was time to renew, I didn't even consider it.

      Now I just use SkypeOut occasionally and mostly Skype-to-Skype.
  • I predict ... (Score:3, Interesting)

    by Kristoph (242780) on Tuesday October 02, 2007 @11:40AM (#20823911)
    This announcement is a prelude to eBay shopping Skype to the highest bidder. Even though it is not a cash cow Google, Microsoft and possibly Yahoo will be falling over themselves to buy for it's strategic value.

    Personally, I hope whomever buys it, they open up the protocol as, if it does open, it could be THE voice platform.

    ]{
  • by GreyPoopon (411036) <gpoopon@@@gmail...com> on Tuesday October 02, 2007 @11:40AM (#20823919)

    Clearly, the current business model is not enough to satisfy eBay in light of how much the company spent on Skype. And the reason is simple. Even though Skype has done a very good job of getting users to download its software client, most people who use the service do so to make free Skype-to-Skype phone calls.

    Don't be too hasty. There are two avenues that open up huge potential for revenue:
    1. Corporate presence. I know several large companies that informally use Skype. For security purposes, they would probably be willing to pay for internally operated Skype networks and collaboration software add-ons. There's a huge potential there. The large company that I work for has black-listed Skype from our computers because Skype is very tight-lipped on the protocols and "phone home" cases that are used by the application. Opening up some of the "secrets" to potential customers and supporting intranet-only implementations of the software open up a revenue stream.
    2. Vonage replacement. With yet another loss in patent lawsuits for Vonage, the future is looking bleak for them. My cable company keeps sending me offers for VoIP, but frankly the thing that has kept me from switching is the much higher rate schedule for international calls. I need 5 cents per minute or less to Europe. Skype could either provide a hardware-based client to replace Vonage installations, or partner with cable companies to provide reasonable rates for long distance. Furthermore, they could start providing video conferencing capabilities.

    In short, there is a HUGE untapped market out there. If EBay would stop trying to milk their investment and would start investing more into it, they could really get some substantial returns.
    • Re: (Score:2, Insightful)

      by psydeshow (154300)

      Opening up some of the "secrets" to potential customers and supporting intranet-only implementations of the software open up a revenue stream.

      Bingo. As long as Skype remains closed, only eBay gets to play "for real".

      Somewhere between the lazy super-geeky hardware marketing done by Asterisk, and the ultra-mainstream consumerist approach taken by Skype, lies the whole freekin' revolution in voice communications that we've been waiting for since the late 90s.

      How much does an enterprise pay for a new phone system? What if the front-end to that phone system was Skype and backend was Asterisk? I'm not an operator, but I suspect that IT managers could

    • Re: (Score:3, Interesting)

      by MobyDisk (75490)
      Skype can be used for business as well as home. I am a contractor for a company that has employees in 5 different time zones. We all work together on a daily basis, and I would LOVE to use a professional, secure, videoconferencing system with a white board. There is DEFINITELY a market.

      The problem is that nothing has enough momentum for people to be willing to download it. It's like how everyone has 3 different instant-messaging applications. What we need are open standards.
      • Re: (Score:3, Informative)

        by zlogic (892404)

        What we need are open standards.
        Like SIP or Jingle?
        • Re: (Score:3, Insightful)

          by MobyDisk (75490)
          SIP [wikipedia.org] is not a videoconferencing/white board/instant messaging protocol. It's a glorified internet doorbell. Now Jingle [wikipedia.org] is something I've never heard of... researching... thank you!
  • The price for skye out call is just not competitive with other services - eg phone cards, thats why it doesnt sell.

    If you target a price consious market, you need to be competitive ;-}

    • by hughk (248126)
      t is very competitive when calling internationally. I often travel interntaionally for work and it has saved me a bundle.
  • SIP VoIP vs Skype (Score:5, Interesting)

    by bernywork (57298) * <`moc.liamg' `ta' `notelpatsb'> on Tuesday October 02, 2007 @11:41AM (#20823935) Journal
    I use SIP extensively, it's an open protocol, used by Asterisk and is implemented by a heap of companies, providing a range of services in a range of countries. Skype uses their own protocol, and has low call quality. This isn't what I want to be paying for when buying services such as Skype In or Skype out.

    SIP allows me to connect to networks without hassle and without problem. Half of Skype's problems that I see is the fact that they are using a closed protocol, again, the call quality is too low to be considered acceptable as well.

    If they managed to fix this, I would be a lot happier to move everything onto one provider. I currently have to subscribe to three different service providers to get what I want, this means three bills, three accounts (In different countries, so different currencies as well) to manage and three times the headaches.

    If they started offering a decent solution, and I would be one of the first to jump ship.

    Berny
    • by Fross (83754)
      Because if Skype started offering what you would consider a decent solution (open protocols, interoperability), then suddenly all other clients could/would support Skype, and nobody would use their client. This is the only piece they would control, and with fewer people using it means less control and less revenue.

      Skype doesn't open everything up because they have MUCH more to lose than to gain. They have the userbase, and they have the lock-in, all they have to work out is how to "monetize" that (ugh, ha
    • Re: (Score:2, Informative)

      by Anonymous Coward

      In my experience, the voice quality of Skype has been pretty high. Better than a cell phone, not as good as a land line. What sold me, though, was the incredibly cheap rate. For unlimited Skype-in and Skype-out in the US and Canada, the price is $30/year. That comes out to $2.50/month for unlimited calls, which is an INCREDIBLE deal.

      I spent time searching for a cheap SIP plan, but there's nothing even remotely that cheap. About the cheapest rates you can find are 1.2 cents/minute for the 48 continguous

    • Re: (Score:3, Informative)

      by Aladrin (926209)
      I have a feeling I'm about to eat crow. Someone just the other day said 'Skype is proprietary, don't buy a skype phone' and I laughed. (Thankfully, I didn't buy a phone yet.) Now, it looks like EBay is looking for a way out of Skype.

      As you use SIP, I was wondering if you had any advice towards getting a decent wireless SIP phone and a good provider. I don't want to run a PC with Asterisk on it at home if I don't have to, but there -is- one that's always on that I could use, if necessary. (I'd kind of l
      • Re: (Score:3, Insightful)

        by amorsen (7485)
        I was wondering if you had any advice towards getting a decent wireless SIP phone

        Wait a year. Or go with whatever the US equivalent of a DECT base with SIP is, like the Siemens Gigaset 450. Don't be fooled into getting a WiFi phone -- the hardware is crap in most cases, and in the rest of the cases the software is crap.
      • by apankrat (314147)
        > but then I found http://gigaom.com/2005/07/04/gizmo-project-not-that-open-after-all/ [gigaom.com] ...

        "Some dude said that some dude said that someone heard .."
      • Re: (Score:3, Informative)

        by jma05 (897351)
        I have not gotten Skype-In (or kept rather) for precisely that reason (proprietary). I currently use Gizmo. But I am not very happy with it. I had a few problems too. They had been slow to respond to my problems by email. But when they did, they gave a fair compensation. I am not happy with the call quality at times. But it has likely to do with the carriers handling my calls than Gizmo itself. I talked my neighbor into getting Gizmo as well and he is quite happy about it. So your mileage may vary.

        As for Gi
    • Re: (Score:3, Informative)

      by Dekortage (697532)

      I use SIP extensively, it's an open protocol, used by Asterisk and is implemented by a heap of companies, providing a range of services in a range of countries. Skype uses their own protocol, and has low call quality. This isn't what I want to be paying for when buying services such as Skype In or Skype out.

      We use Skype a lot where I work. We've also experimented with Asterisk. The call quality with SIP is significantly lower than Skype, at least over low-bandwidth Internet connections (which we deal wit

      • by bernywork (57298) *
        I codec I use is 64K uncompressed, so yes, my call quality is equivalent to a land line.
      • Re: (Score:3, Insightful)

        by a.ameri (665846)
        How can SIP have a lower call quality than Skype when SIP is only a signalling protocol and doesn't even carry the data streams? (RTP does). Seriously, your sound quality depends on many factors (cheap Grandstream handsets/headsets or ATAs using ultra compressed G.729a codec running on a cheap ADSL connection with high contention ratio and no QoS don't help, you know) but SIP itself, the signalling protocol, isn't one of them.

        Any decent VoIP provider will offer you a quality which can never be matched by PS
    • Re: (Score:2, Interesting)

      by xTantrum (919048)
      i'm a little confused as to what you want. you want better call quality or you want skype to use an open signalling protocol? i'm not really sure why it was modded up us interesting but perhaps i'm missing something.

      i'm currently implementing my own voip service - including writing the RTP and SIP libraries for my voip client - and i can tell you voice quality and signalling are mutally exclusive. the former is contigent on the number of channels * sample rate * resolution (how many bits you use to encode

  • They don't seem to mention the potential users who would have paid Skype for outbound calls, but are unwilling to do so because they consider the parent company even more evil than the phone company.

    And they don't mention whatever benefit they manage to gain by stealing users passwords and other data, as referenced here: http://yro.slashdot.org/article.pl?sid=07/08/26/1312256 [slashdot.org]

  • by G4from128k (686170) on Tuesday October 02, 2007 @11:44AM (#20823969)
    This just demonstrates that owning a connection or bit of network infrastructure isn't worth much because it's too easy to find an alternative connection. The same "route around damage" ethos of the internet makes it a "route around cost" mechanism too. Skype users, like all good internet routers, only pick the Skype connection when it's free. This is why we see such battles with the telcos trying to change the playing field (e.g., lobbying hard to prevent net neutrality and open access regs) so that they can charge more than the marginal price (which is near zero per added user) for use of their infrastructure (which costs millions or billions to build).
  • The only reason I use Skype is because it's free. And if they ever start using it as a platform to push ads I'll be dropping it. I'll use Ventrilo or something similar, or go back to AIM since most of my communications using Skype are just normal text IMs.

    Also, the Skype linux client SUCKS, they're really letting it lag behind the Windows version.
  • bubbles and such (Score:5, Insightful)

    by phantomfive (622387) on Tuesday October 02, 2007 @11:45AM (#20823989) Journal
    And I'll tell you another company that is waaay overvalued.....facebook. $10 billion? Even $1 billion is too much. There will always be hype and over priced companies in the technology industry......mainly because every once in a while a technology comes along that really is worth it. The question is how do you know?

    Business people have trouble with this kind of thing because they don't understand the technology. As in this case, they thought 'skype will be super-popular' which may be true, but they didn't see that once everyone has Skype no one will need Skype out.

    Tech people and engineers tend to have trouble with it because they tend not to understand marketing, business prospects, or what people want. They say things like, "Less space than a nomad, no wifi. Lame" or "This is the year of linux on the desktop" and don't understand why most people aren't interested in open-moko or the gimp.

    If you DO happen to understand both of them, it will be a competitive advantage that can make you a killing in the stock market. As anyone who invested in nintendo a year ago knows.
  • by bogaboga (793279) on Tuesday October 02, 2007 @11:48AM (#20824041)
    Who cares about Skype when we have iCall http://www.icall.com/ [icall.com] where one can make free (and I mean free) phone calls throughout the US and Canada, without dolling out dollars to Ebay? Skype executives should wake up and smell the coffee.
    • by bhima (46039)
      How about the 523,218,000 people that use the internet and do not live in the United States or Canada?
    • by Aladrin (926209)
      That sounds neat, but does it work with SIP phones? One of the best features (IMHO) of Skype is tha ability to use a wireless 'phone' with it. SIP phones are obviously the same deal. Being tied to my computer with a crappy headset is not ideal.

      In fact, I'd settle for having an n800 client, like Skype and GizmoProject do.
  • by PhillC (84728) on Tuesday October 02, 2007 @11:48AM (#20824043) Homepage Journal
    I am obviously in the minority of users who pay for Skype services. I live in the UK and my family is in Australia. Using Skype-Out at a rate of around £0.1/minute is significantly cheaper than any comparable Telecom or other "cheap calls" organisation. I know quite a few other people who use Skype in the same manner. I spend around £5 per month on Skype.

    Now in comparison, I spend somewhere between £50-£90 per month on my mobile phone. The amount largely depends on whether I've traveled out of the UK that month. With wider adoption of VoIP services on mobile devices, for sure my cell phone bill would drop and a portion of the money would siphon across to my Skype account.

    The final thing holding me back from spending more on Skype is the expense and poor quality of the "phone" devices available. I spent £100 about a year ago on a Skype Wi-Fi phone. No need to have anything connected to my computer, the phone's base unit was supposed to connect directly to my wireless router and behold, I have Skype calls very easily. Unfortunately, after waiting almost a month for my order to be fulfilled, within 3 weeks the phone unit died. I gave up trying to get a refund from Skype and trashed the thing. So far I've been reluctant to spend a similar amount on a device that may die again quickly and have to deal with Skype customer service.
    • by xiox (66483)

      I am obviously in the minority of users who pay for Skype services. I live in the UK and my family is in Australia. Using Skype-Out at a rate of around £0.1/minute is significantly cheaper than any comparable Telecom or other "cheap calls" organisation. I know quite a few other people who use Skype in the same manner. I spend around £5 per month on Skype.

      Why not check out http://www.telesave.co.uk/ [telesave.co.uk] who offer 2.5 pence/minute for Australia. I've used them for ages - cheap as skype but more convenient.

  • ... such as business users. I have hundreds of Skype Out contacts, and so do all of those people in my contacts list. However, due to Skype's expensive per-call surcharge and the recent outage, most are now looking for alternatives. I still use Skype for Skype-to-Skype, but otherwise I use one of the Betamax voip services for calling regular phones.
  • Didn't take a brain surgeon to see they vastly overpaid...the day of the announcement. Cheers to the guys who got ebay to pay them that much cash for a free service.
  • since they didn't do a reality check before. Expectations were far too high and it's the expectations that were faulty not the business model.

    Of course Zennström & co wanted to push up the price, but in the end the buyer is at fault by doing an insufficient market analysis.

  • I have used SkypeOut extensively, and SkypeIn to a lesser extent. Dealing with a cumbersome network of local telephone service providers, Skype has never been able to get these services working reliably. SkypeOut is good enough for personal use, but not reliable enough for business, and forget about conference calls - the connection would never stay up long enough for that. SkypeIn was much worse - I think most users had about a 50% success rate, assuming it was available in one of the regions that you coul
  • Maybe I'm missing something, but if Skype is making $90 million a quarter and rising, that's $360 million a year, or almost 14% ROI. Most companies would kill to make that much.
    • Re: (Score:3, Informative)

      by TheSunborn (68004)
      Read the quote again:
      "division also recorded its second quarterly profit in a row on July 18 on revenue of $90 million."

      The $90 million is revenue, not profit. There is no indication of what the profis is.

  • It's been stated many times but it bears repeating. Just because you have a product that is A+, doesn't necessarily mean that it will be successful. What makes a product successful is the business behind it. Look at McDonalds! Crappy product but good business!

    Of course, in Murders and Executions, it is up to the buying company to decide before getting heavily invested. They might have an excellent product but ass for business processes. Companies are not only buying-out shareholders but they're also payin
  • They wanted to be the first to own the new phone with flashy interface and Internet abilities, right?

    They got what they bought. They have nothing to complain. If they paid the price, then they clearly thought it was worth it. There's no point now in releasing sad, sad statements in the public that they feel cheated or were wrong.

    Wait, I forgot what we're talking about..
  • Is the fact that if you don't use any of your Skype-out credit in a 6-month period, they'll hoover up the balance of your account. I know it's in the TOS, but it's still a nasty shock when they clean you out.
  • I think Skype could take over the world and be worth a fortune, but Ebay's implementation has so far been lacking the key element to my plan, which I'd assumed was also their plan. They need a cheap (like, $10) home-PBX to ethernet interface box. Like Vonage sends you. In fact, they should offer a service exactly like Vonage, but with no monthly fee. A small fee for a call-in number from regular phones and a small fee for calling out to regular phones, and no charge for contacting Skype other users, just li
  • by MarsDefenseMinister (738128) <dallapieta80@gmail.com> on Tuesday October 02, 2007 @01:06PM (#20825309) Homepage Journal
    Skype only really works for me to call other Skype users. I tried to use Skype as a regular phone, but dropped the account when it failed miserably. I had two problems:

    I can't call the IBM pukes that I have working for me. That's because Skype doesn't allow Skype-out service to some area codes, and that includes the IBM conference calling center in Missouri.

    And, the Skype client doesn't support DTMF tones properly. That pretty much eliminates Skype for everything except calling your mistress on her home phone. You can't get through any kind of voicemail or call answering touch tone menu without DTMF support.

  • After all, it is not impossible for ebay to use skype effectively even if skype is not profitable independently. Just imagine,

    1) assign a free skype account for each buyer or seller (match skype id to ebay id?)

    2) add a voice message feature to My Ebay (maybe, record conversations as well?)

    3) associate voice messages/conversations to transactions

    4) resolve disputes with voice messages/conversations

    5) how about a little fee for such a convenient service in order to safe-guard the interests of both

  • That is the sound of the internet bubble version 2.1.5-rc-5 bursting.

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