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eBay and Skype?

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» Ebay from The Stalwart
Of all the internet giants, Ebay (NASD: EBAY) is the most poised to benefit from emerging web technology, such as RSS, tagging, and other innovations in social computing. For the others, we believe these services will be disruptive. We've discussed [Read More]

Tracked on Sep 8, 2005 10:18:04 AM

» SkypeBay from This is going to be BIG.
Link: A VC: eBay and Skype?. Fred asks why eBay would want to own Skype, because he doesn't see the synergy. That's because there isn't any. But that didn't stop eBay from buying PayPal. When eBay bought PayPal, the payments [Read More]

Tracked on Sep 8, 2005 12:02:29 PM

» What's eBay going to do with Skype? from Luis' Blog
Fred Wilson: eBay and Skype? No clue either.... [Read More]

Tracked on Sep 8, 2005 12:36:04 PM

» eBay + Skype = eBaype? from The Hitchhiker's Guide to 650
Now this is interesting. . . eBay in talks to buy Skype, report says from Reuters and Walls Street Journal. I wrote a while back on the applications for Skype in the e-commerce space - as a payment mechanism to support pay per call cl... [Read More]

Tracked on Sep 8, 2005 12:57:30 PM

» EBAY and Skype? from Business Lit
I'm sure most of you have heard about the rumour posted by WSJ that EBAY is in talks to acquire Skype. Fred Wilson asks why EBAY would want to own Skype? I've got two answers. Part IAt the end of [Read More]

Tracked on Sep 8, 2005 1:16:56 PM

» eBay and Skype from Kitmondo.com
A report on Silicon Beat suggests that eBay is talking with Skype about a takeover. It may be hot air - Skype and its investors have recently been quite vocal in denying it's available for sale (which, naturally, is a [Read More]

Tracked on Sep 8, 2005 2:39:16 PM

» Skype (PayPal) eBay from L'Ombre de l'Olivier
The rumours swirling about Skype being bought by eBay are interesting. The WSJ, Reuters and The Reg, not to mention bloggers like Jeff Jarvis and Fred Wilson, report it and report that people seem mystified about why eBay would want to diversify into... [Read More]

Tracked on Sep 8, 2005 4:22:06 PM

» Skype and eBay... from Usher Blogs
I think they're missing the point...I think it is eBay's way of tapping presence. With Skype, eBay buyers could see if eBay sellers were online and ask them questions right away, facilitating eBay's core model. With Skype's voice conferencing (and pe... [Read More]

Tracked on Sep 8, 2005 4:26:56 PM

» Ebay Wants to Buy Skype? Makes Sense. from Orange Hues blog
Two reasons: the growing stature of Google (it recently overtook Ebay as the biggest pure play internet business) and the VoIP oppurtunity. [Read More]

Tracked on Sep 8, 2005 5:01:13 PM

» eBay Pursuing Skype??? from Mark Evans
Way out from left field, the Wall St. Journal is reportin... [Read More]

Tracked on Sep 8, 2005 5:14:59 PM

» eBay Buying Skype? I'm Scratching My Head from Tech Beat
Another day, another report about the Internet voice startup Skype maybe getting bought for billions of dollars. But eBay? It sure seems a stretch to me, as it does to other folks, like Om Malik and McGraw-Hill's own Scott Kessler... [Read More]

Tracked on Sep 8, 2005 5:33:21 PM

» eBay and Skype? from Antimail
When I saw Fred's entry on eBay and Skype was "What? Skype is on sale on eBay?". Then, I quickly figured... [Read More]

Tracked on Sep 8, 2005 6:51:16 PM

» Analysis: eBay + Skype - Excess Valuation = Good Strategic Move from Digital Media Review
If the rumours are true, and eBay ends up buying Skype it will be an interesting yet far-fetched strategic move. Even assuming you believe in the strategic fit, the ridiculous $3Bn valuation is hard to swallow, specially considering eBay will be acqui... [Read More]

Tracked on Sep 9, 2005 1:31:48 AM

» eBay in talks to buy Skype: why? from Future Moocher
Lots of rumours about and a rich price tag for a company with $70M in revenue. Most people don't get it, hence a dip in eBay's stock. Why? This would be a fascinating development in the context of my last post on Google Talk and pay per call. ... [Read More]

Tracked on Sep 9, 2005 2:14:05 AM

» eBay e Skype from SKY TG24 Pianeta Internet
Qui un buon post di speculazioni su perché ebay dovrebbe comprare Skype: A VC: eBay and Skype?.Qui risultati su Icerocket. In italiano, qui il post su Jugo, qui risultati su Technorati in italiano. La mia opinione a proposito è molto [Read More]

Tracked on Sep 9, 2005 5:07:08 AM

» eBay Buying Skype? I'm Scratching My Head from Tech Beat
Another day, another report about the Internet voice startup Skype maybe getting bought for billions of dollars. But eBay? It sure seems a stretch to me, as it does to other folks, like Om Malik and McGraw-Hill's own Scott Kessler... [Read More]

Tracked on Sep 9, 2005 9:19:10 AM

» eBay and Skype: Buy Me Now? from Independent Sources
eBay and Skype for $2-3 billion?? Okay, there are rumors abound on this one and I just cant make sense of any of them. I can see how eBay is starting to feel a little small and one-dimensional compared to Google and now News Corp., but I just ... [Read More]

Tracked on Sep 11, 2005 1:50:32 AM

» phones and A VC: eBay and Skype? from
EBay and phones? Analysts skeptical - San francisco - shares of ebay inc. fell 3.8 percent thursday after published reports said the web auction leader was in talks to buy internet telephony phenomenon skype technologies sa, a prospect some analysts fo... [Read More]

Tracked on Sep 11, 2005 4:33:51 PM

» eBay To Buy Skype? from Simon's Blog
Not everyone shares my opinion (including one VC) but I think this could just possibly be a good deal for both eBay and Skype. eBay is currently overvalued (unless you believe its 50% year on year earnings growth is going to continue without innovatio... [Read More]

Tracked on Sep 11, 2005 4:39:00 PM

» Ahhhnow *that* makes sense from
Ever since eBay purchased skype for an amazing $2.6 billion (good job Skype team), the question has been flying around the blogosphere: What the hell was eBay thinking? Its a good question. Espeically considering ive seen it debated on ... [Read More]

Tracked on Sep 23, 2005 8:19:54 AM

Posted September 8, 2005 in Venture Capital and Technology

Comments

I'm pulling this out of my butt, but could it facilitate communication among sellers? That didn't convince me either.

Posted by: Abby | Sep 8, 2005 7:02:08 AM

Fred -- think of eBay as the 'Yellow Pages'. Then this starts making sense.

Posted by: billg | Sep 8, 2005 7:32:10 AM

On the surface the deal makes no sense - its an admission by EBAY mgmt that their core biz (auctions) is under major competitive threat and that they dont believe the moodel is sustainable on its own going forward. its kind of like ORCL to me - ORCL said they dont see organic growth continuing, so they took all their cash and bought a bunch of different co's in similar space and now trying to bunch it. EBAY/Skype isnt as clean as ORCL, and EBAY stock should get hit near term, but it sounds like this is just beginning of move for EBAY to start using their cash to make acquisitions so that in 3-5-7yrs EBAY will be a different company with multiple business lines. Also, Skype is a service, not a business. So I think this is just the start for EBAY - welcome to the M+A game.

Posted by: oliver | Sep 8, 2005 8:26:02 AM

If Oliver is right - and he may be - then it's a silly move for ebay. Let's see... we don't expect to perform well in the business we know how to run, so let's buy some businesses we don't know how to run...

Posted by: Andrew | Sep 8, 2005 9:07:57 AM

I think its a smart move for ebay (devil's advocate). Ebay has made itsself a leader in peer to peer sales. What on earth would a peer to peer seller want a telephone for? How about the offering of services rather than products? I could see it happening. Especially with a name like Ebay that already has the audience of people who would like nothing more than to be able to do everything via ebay (my mom).

Posted by: Justin Lilly | Sep 8, 2005 9:22:41 AM

I think Oliver, Abby, and billg are the right track. My guess is that eBay is taking a page out of the Jack Welch playbook and redefining their market to fuel growth. Combine Skype, PayPal, and eBay, and now you have a way to drive auctions and other transactions. The Skype UI is plain right now, but it's easy to envision it looking more like a Yahoo Messenger window, with eBay auction alerts popping up, a PayPal button to buy Skype minutes and ring tones, etc., etc. Now you can offer buyers and sellers to talk for free after an auction is completed.

Some people won't like a cluttered Skype window. But if they do it right, it can be a good conduit for all sorts of content flow to eBay/Skype/PayPal customers..."Yellow Pages" is a good example of this.

Posted by: Carlos N Velez | Sep 8, 2005 9:31:09 AM

Taking the 'Yellow Pages' concept one step farther:

Combine eBay's concept of 'trusted referrals' (buyers reviewing sellers) with Skype's 'buddy list'. With this in place, its possible for me to link purchases I'm contemplating with people I know. That's a powerful concept.

Posted by: billg | Sep 8, 2005 9:47:05 AM

eBay can use Skype to get into the pay-per-call biz for their community of buyers and sellers.

Posted by: Robert Young | Sep 8, 2005 9:48:22 AM

Actually, the other thing to mention about Skype is their potential P2P payment system. Sype Pay ( http://www.connectotel.com/skype/skypepaymentapi.pdf ) is a potentially powerful application when combined with PayPal.

Additionally, eBay's community focus - seen not just in their core product, but even in their choice of comparison shopping engine (which brought them ePinions), does seem to lend some credence to the eBay-Skype rumor.

All that being said, I'm still not sure I understand the deal enough to believe the talk is serious.

Posted by: Arul Sundaram | Sep 8, 2005 10:19:53 AM

I think ebay will use Skype to enable distributed commerce, the way www.jittery.com is using Blogpoint.

Posted by: Rob | Sep 8, 2005 11:45:12 AM

simple:

- ebay is a P2P transaction platform - not in the technical sense, but in the "P2P production" sense.

- skype is a P2P collaboration platform that is working towards becoming a global P2P payment gateway

- the marriage allows ebay to move transactions off their infrastructure and onto a free infrastructure

- the functionality takes the conversation in the marketplace off text and into the real-time voice realm

Looks like a home-run to me ...

Posted by: David Gibbons | Sep 8, 2005 11:58:03 AM

FYI - here's a proposal that illustrates how easily skype will move into the P2P payment space ...

http://www.connectotel.com/skype/skypepaymentapi.pdf

Posted by: David Gibbons | Sep 8, 2005 12:05:26 PM

Online, real-time auctions? I know some horse auctions allow people to watch and bid online. I guess you could do the same with cars, artwork, or other properties.

Posted by: nash | Sep 8, 2005 12:17:47 PM

Its actually quite simple folks. The big players on the web are GOOG, YHOO and EBAY. GOOG and YHOO have voip services. Instead of building voip users organically, EBAY (in its own tradition) will acquire good technology and a very large user base (Skype).

It actually makes perfect sense to me.

Remember, its got a lot to do with eyeballs and traffic folks. Was it a logical extention of thought for EBAY to acquire Shopping.com? Not at first. But when you think about eyeballs and traffic, it does. AND, that Shopping.com has/had one of the best keyword/ad optimizing technology around.

This will happen folks. Mark my words.

Posted by: Isaac Garcia | Sep 8, 2005 12:42:34 PM

Ebay could use some sort of always on customer facing application other than the browser. Instant alerts about new auction bids, the opportunity to hear someone talk in audio about what they are selling, the opportunity to cheaply distribute video about what they are selling, could all be useful. What are the criteria for such a consumer facing application? It would be beneficial for it to have viral growth, and network effects, not just on the PC but on future versions of cell phones. You could easily imagine someone creating a P2P version of ebay, rather than being limited to just the website interface. Perhaps ebay wants to build that first, and realized cash is relatively cheap versus buying an established network. If there is one thing ebay should be in a position to respect, it must be a rapidly growing network with network effects.

Posted by: Ranjit Mathoda | Sep 8, 2005 12:57:59 PM

Coming back to this - I think eBay is buying Paypal's biggest potential competitor.

Isaac: eardrums <> eyeballs

Posted by: David Gibbons | Sep 8, 2005 2:09:15 PM

All the points are decent except for the rationale that Skype is the way to get in. Why not go SIPPhone for essentially $0.00? Skype, with it's closed and central architecture has clearly peaked and isn't worth remotely multi-billions.

Posted by: JD | Sep 8, 2005 6:41:01 PM

In my opinion, this borders on "style drift." I see the possible benefits, but it seems like a long-shot.

Posted by: Raj Bala | Sep 8, 2005 6:58:59 PM

skype = sky high + hype?

Posted by: steve | Sep 8, 2005 8:47:05 PM

Given a different lense and way of looking at things, I think this would be a brilliant move by eBay. At its core, eBay is a person to person platform for:

- eCommerce (eBay)
- local commerce (craigslist / kijiji)
- payments (PayPal)

and in the future

- communications (Skype)
- services

it also gets them into new markets where communication is absolutely essential. Think pay-per-call vs. pay-per-click.

Skype has a brand, network effects, and is the leader. This is the single best strategic move eBay could have made. Brilliant but also extremely gutsy!

Mike

Posted by: Mike | Sep 8, 2005 8:47:20 PM

It would be a mistake for Skype to sell out to ebay at this price - they definitely have better options. They have a revenue model ppl understand. they will go for an IPO.

Posted by: TP | Sep 8, 2005 9:36:45 PM

I agree with TP. Skype has huge potential - especially when you think about skypepaymentapi that David Gibbons mentioned. Their earnings could be huge.

This makes me agree with Ranjit Mathoda. Ebay is buying paypal's biggest competitor.

However, I don't think Ebay is buying them simply to kill skype. They will incorporate paypal with Skype, as well as many other features to making the auctioning experience all the much better, more exciting, and more convenient.

However 2, I don't see Ebay pursuing the voip telephone service in terms of calls to other phones. I think they would turn it into a predominantly internal tool for their auctions. Competitors like Voip Buster are going to take the lead on calls to telephones.

Posted by: Scott | Sep 8, 2005 10:44:02 PM

I dunno. Synergy in this case has to be driven by revenue increases to eBay or Skype. This doesn't look like a cost reduction play. I'm not sure how phone calls drive peer-to-peer sales of products. Surely supports the model, but seems like a low leverage point. As for peer-to-peer sales driving phone calls, that is probably a limited synergy too for the few million heads that Skype has. As for eBay getting some synergy with services markets and having the Skype market support that, that could be, but then eBay doesn't need Skype to get into the services market. I suppose synergy could be viewed slightly differently that the Skype becomes part of the fabric for a commerce and communication platform and that worse case is that you have two good companies with no real synergies. So long as one doesn't pay too much, that could be the play.

Posted by: Steve Shu | Sep 8, 2005 11:08:42 PM

Well, in itself, it's not such a bad idea to buy skype, if it can be executed well. eBay's problem is that it's been marginalized by google and yahoo in terms of traffic, so it has to spend a lot of money on search engines to drive traffic, and it just gets more expensive going forward. having something like Skype to drive traffic is not bad, if the price is not too high. Internet is evolving still, so nobody can tell how significant VOIP will become in the future, speding 4-5% of market cap to hedge the risk is not too bad.

that being said, I think it's a lousy move by eBay. buying Skype will be a big divertion of management attention from the battle they have to win: China. I don't have data of Skype user base in China to tell whether it will help eBay win China market. I think eBay could benefit more by buying Tencent, which has a dominant IM application in China. It is a lot cheaper to buy as well.

Posted by: Sean | Sep 8, 2005 11:15:41 PM

A growing area for eBay is store fronts. I think Skype might offer a really nice way for buyers and sellers to communicate quickly about products thus allowing for more sales.

Posted by: Rick Stratton | Sep 8, 2005 11:16:51 PM

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