It's Official: eBay Has Too Much Money (Some Of Which Is Now Skype's)

from the defend-that-valuation dept

This evening the rumors increased, and as of a few minutes ago, it's now official that eBay is vastly overpaying for Skype. It's a great deal for Skype, and a ridiculous one for eBay. They're paying $1.3 billion in cash, $1.3 billion in stock and apparently there's another $1.5 billion on the line in incentive payouts based on various performance metrics over the next three years. I understand that Skype has a great product (I use it all the time) and I understand that they've built up a nice community. However, the community wasn't that large and very few of the users were paying (and even those who were paying weren't paying very much). In the meantime, Yahoo, Google and Microsoft are all getting into the same market with much bigger war chests and much bigger user-bases. Are there ways that eBay can integrate Skype into their current offering? Yes, somewhat. However, the buzz going around that this will let buyers and sellers talk to each other is ridiculous. I've bought and sold plenty of stuff on eBay, and not once have I ever wanted to speak to the person I was dealing with. The talk about synergies with Paypal seem even more tenuous. There seems to be very little in the way of real synergies between the two companies at all. About the only thing this suggests is that eBay is worried that it's existing business is in trouble and it needs help fast -- and apparently the best way to do that is to significantly overpay for a VoIP offering with too much hype.

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  1. identicon
    Avi Flombaum, 19 Sep 2005 @ 1:41pm

    P2P Marketplace Possibility

    I think you all missed the boat on the skype purchase. I've been scratching my head trying to figure it out also and the best I can come up with is the following. Right now eBay's biggest cost is content delivery. They sell information, the information of what you are selling. For every new ebay user, eBay must expand its delivery to support that user. The bandwidth costs alone to eBay must be staggering, not to mention the cost of development and security. But what if eBay was to implement some sort of P2P version of ebay? Like imagine if you download Skype, a p2p program, and post your auctions to skype, or share them like you would on KaZaa. Now ebay does not have to support your information, rather, every use supports itself in the client/server synergy of p2p. More so, no economic model is built to actually deal with the fact that eBay now has invented an infinetly scalable marketplace based on p2p. The possibilities are endless. I think it was a great move and in 2 years when eBay is the only marketplace online, you will all agree.

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