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eBay to Buy Skype...Why?
Online Super-Flea Market eBay is set to buy Voice Over Internet Protocol leader[[www.skype.com Skype]] for $2.6 to $4 billion. Niklas Zennström and Janus Friis, who also created KaZaa, are finally set to make a fortune (they got comparitively little for their embattled file-sharing/stealing program).
What the heck is eBay going to do with a VOIP company? The <link><label>press release </label>announcing the deal<url>http://investor.ebay.com/downloads/eBay_PressRelease.pdf</url></link> speaks vaguely about Skype making communication between buyers and sellers easier. As a private company, Skype’s profit margins are not publicly known, but considering its low rates it cannot be a cash cow, although in its Webcast announcing the deal eBay calls it ‘a great stand-alone business.’
Two things are certain: This investor and ‘dis-Skype-ile’ won’t get the Skype IPO he was waiting for, and Messrs. Zennstrom and Friis are about to get paid very well for their programming skills.
But what is eBay thinking? Are they thinking? Or is this a desperate move to diversify before Yahoo, Google, and Microsoft, among others, begin to eat into eBay’s PayPal and auction business? Is this acquisition going to help eBay?
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Makes sense to me by Rhodizzle
They are trying to do for online auctions what Ebay is doing for organizing information, and that is to make ebay.com a one-stop shop. With their recent aquisition of shopping.com, they can now offer a broader audience, and down the road with skype they will be able to offer un-paralleled up to the minute monitoring of auctions.
What is eBay thinking? by Anonymous
The eBay PowerPoint on the transaction explains their thinking:
1) Skype on its own is a growing business
2) eBay wants/needs a messaging solution allowing instantaneous communication between bidders and sellers. E-mail works, but there is a lag in communication, and most eBay bids are made in the last few hours of an auction. By allowing bidders to call the seller, interactive communication is made more workable. Their PowerPoint referred to eBay Motors and Industrial Equipment as two areas where Skype messaging would provide a major help to sales. (Disclaimer: I sold a car on eBay and spent hours checking for and responding to messages from bidders. Answering questions and posting the answers made a major difference in the final bid in the auction, compared to similar auctions where questions were not answered.)
As to why not use IM to address this problem, eBay would have to offer a separate chat room for each of their billions of auctions. Admittedly, the resource requirement would be minimal, but the organizational overhead (e.g., it only makes sense to have the chat room open if the seller is online, …) would be horrible. Skype allows bidders and sellers to remain hidden behind their nyms, just as the eBay message service does now.
Not a Buy by jmarkdavison
I usually look at human nature and emotion as much as financial data when buying stocks, but the numbers on eBay are too lousy to overlook. I like Skype and was salivating over a potential Skype IPO but even though it’s going to be part of eBay, eBay’s a lousy stock. They have achieved market saturation, and are virtually locked out of China so their room for growth is limited. While true that a lot of Skype users can becoame eBay users and vice-versa, there is too much competition on the horizon for eBay, PayPal, and yes—even Skype.
A look at the P/E (trailing and forward) for eBay coupled with my gloomy outlook on its future is enough to convince me not to touch the stock.
>down the road with skype they will be able to offer un-paralleled up to the minute monitoring of auctions.
While this may be true, and both posts refer to the new voice aspect making eBay easier to use, it won’t earn them enough new users to justify the $2.6b they spent on Skype. eBay’s trying to diversify to stay ahead of companies it doesn’t really compete with right now (Google, Microsoft), but they’re losing focus. The hedgehog knows one thing and does it well: eBay should remain a hedgehog, and not try to be a fox.
BEWARE of ebay and Paypal!!! by Anonymous
BEWARE of Paypal’s User Agreement!!!
PLEASE familiarize yourself with with the EXTREMELY deceitful User agreement! Read the red text here:
http://www.screw-paypal.com/tos_exposed_section/tos_expos
ed.html
PayPal User Agreement Exposed
ebay owns Paypal!
Does eBay really want communication? by Occams
Most of the sellers that I deal with on eBay are Asians who do not have a strong grip on written English. I am sure that they would be difficult to communicate with verbally, particularly over a Skype connection. I like the store-and-forward nature of e-mail and eBay web mail because it means that I don’t have to be there at any particular time, and it gives me a written record which could be vital in the event of a dispute. It also keeps emotions in check when things get heated.
I prefer to use a pay VOIP service provided through a SIP box and a normal telephone handset. This provides a transparent service that is a real alternative to the old carriers.
I do not like the recent changes on eBay that make it more difficult to identify and communicate with other buyers. I think that the reasons given for this are facile and conflicted.
The prime advantage of eBay is that it is almost a true free competitive market like the economists are always talking about. To introduce friction like this is totally regressive. It would be much better to provide encouragement for buyers to discuss items for sale among themselves. If that is intended by the Skype move, then I support it, but I have a nagging doubt that eBay will introduce it in such a way that buyers cannot communicate with each other about an item up for sale.