There Goes The Other Reason eBay Bought Skype

from the two-strikes-and-you're-out dept

Back when eBay bought Skype for $2.6 billion (potentially $4.1 billion), the company tried to justify the decision with a variety of vague statements. However, two specific rationales stood out: (1) it would be easier for eBay buyers and sellers to talk to each other (2) Skype was huge in China, where eBay had very little presence. The China story didn't make much sense. First off, as had been announced before the acquisition even occurred, Chinese telcos were looking at ways to block Skype, a process that has continued to move forward. However, even without that, it was never clear why someone who used a free VoIP system would then turn around and start using an online auction, just because it was the same company. The first point, about eBay buyers and sellers talking, didn't make much sense either. As we noted at the time, it's extremely rare that a voice conversation is needed in an eBay transaction. Turns out that we weren't alone in feeling that way. The executive director of the Professional eBay Sellers Alliance, a group that apparently represents the top sellers on the site, says that most of the group's members have no interest in Skype, and prefer to discuss auction results via email as they've always done. So, we've now crossed off the two big reasons why the company was worth buying at all (neither of which explained the price tag, either). What else is there?

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  1. identicon
    DzNutz, 2 Dec 2005 @ 8:17pm

    Re: Paypal

    I cant hate eBay for seeing potential in this market. By Vonage Chairman & CEOs own account:"The average revenue per user is around $30 a month. So, 400,000 users, $30 per user, it's not hard to figure out our revenues." At least 130m/yr in cash coming in - a pretty good reason for eBay to want to get into the voip market.

    SkypeIn & SkypeOut transactions add to PayPals user base. eBay can always use that to leverage more companies into using PayPal to process payments.

    With the right marketing, they can get Skype into the business market. Then there would free VOIP contact with companies (on the consumer end), and thanks to PayPal, secure phone purchasing. Last I checked, QVC, HSN, and all the little As Seen On TV companies were still making a killing! More PayPal tranactions!

    There are plenty of reasons for eBay to have bought Skype - there is a lot of potential for profit there. Just none of them seem to be relevant to the reasons they said.

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