Wednesday, September 14, 2005

Why ebay bought skype!

I will come back to this...but just a quick note since there is so much drama out there about why they have done it.

I can't believe how many people out there "don't get" the ebay-skype deal.
What's there not to get?
Skype as a stand alone business (which Meg said will continue) alone is going to displace billions of dollars in voice revenue across the globe. That money now goes to VoIP providers like skype and skype is number 1 in the space.
Ok so all the money going to be displaced will not go to Skype. It will be diluted considerably and shared amongst VoIP providers.
But do the math. Vonage a big VoIP provider in the US uses a VoIP solution that was built by the telecoms industry - which translates to massive capital outlay especially as the network expands. Does Skype have to contend with this? No. Why? Cause they don't have to spend a cent as they grow bigger, and there is no limitation to how big the skype network will become and how much voice it can carry. So can it kill Vonage and all because it can provide the lost cost solution? Ofcourse!
Are there many features you have not yet seen from skype that will generate them cash. Yes there is so much they can do in this space and if you think of all the money Google has made from adsense, skype will be able to replicate that will pay per click.
That's the biggy! Skype is not restricted to eBay as Paypal is not restricted to eBay, or the other companies eBay owns.
Skype can integrate into any software solution that has network connectivity.
So from the Dell website for direct sales to support to integration for customers who use the saleforce platform to directly talk to their customers to any ecommerce site which wants to provide a voice solution on the cheap which will match a normal PSTN service.
And if they earn a few cents for each call, you are talking about another adsense, google scenario.
Plus they have the foundation for a portal to compete against Google and Yahoo! Which you all don't seem to understand are their major competitors.
I could go on about this forever!
Ebay has made a brilliant strategic move. Developing a solution to compete against Skype is easier said then done from a tech perspective. Then you have to win users. Take in the time to do that vs the time to integrate and then build a cost model including potentially massive amounts of lost dollars in transactions that could have occurred in the mean time from straight voice service through to transactions on ebay, etc


Alec Saunders said...

Couldn't agree more! Thanks for the comment on my blog.


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