eBay to buy Skype for $2.6B

eBay Skype

A lot of us, especially those who live abroad, rely on Skype for cheap and convenient voice calls from anywhere in the world (with an internet connection). This VoIP (Voice over IP) market has been around for the longest time, but it was only through Skype that a universally compatible and simple way to make voice communication online existed (so easy that it’s so called “Click to Call”). Ever since then, every major internet player has tried to get a slice of thriving market with it’s huge business potential (e.g. GoogleTalk, GizmoProject, etc). With today’s news about one of the biggest Internet companies buying into Skype, eBay’s investment only adds affirmation that the VoIP market is going to grow even more. While eBay may use Skype for their e-commerce auctioning business, what does this mean to the rest of us Skype users?

While eBay plans to use Skype to enhance it’s customer buying experience, what in the world are they planning to do with the millions of users already on Skype? I certainly hope current Skype services remain working as usual, though it would be very out of eBay’s focus to maintain both a VoIP business alongside it’s online auctioning business. Well, for now it seems to be… Paypal, an eBay company, and Skype just started a deal where buying $10 worth of Skype minutes via Paypal gets you 120mins and free voicemail.

For now you can read what Marketing VOX published today:

eBay has agreed to buy internet telephony startup Skype and gain the ability to add free web-based telephone calls to its online auctions and so fuel international growth (which is outpacing domestic growth), reports Reuters. eBay will pay $1.3 billion in cash and $1.3 billion in stock and could pay up to an additional $1.5 billion by 2008 or 2009 if financial targets are met – for a potential deal value of up to $4.1 billion.

“Once we integrate communications into e-commerce, we think that (Skype) is going to remove considerable friction” from the buying and selling process, eBay Chief Financial Officer Rajiv Dutta said.

Skype has attracted 54 million members to its free internet-based voice service in the last two year and could double in size within a year. Nearly half its users live in Europe, and a quarter are in Asia. It expects revenues of $60 million this year and more than $200 million in 2006.

To bring eBay buyers and sellers closer together, eBay will encourage merchant sites to use Skype software to allow customers with sales questions to click to talk to a customer service agent. eBay and Skype executives said click-to-call services to convert shoppers into buyers is far more lucrative than advertising.

Skype also plans to add video calling and other features to its software. The telephony market is being targeted by the likes of Yahoo, Google and Microsoft.

2 thoughts on “eBay to buy Skype for $2.6B

  1. I don’t know. It doesn’t hurt ebay to keep Skype as business-as-usual for a while. After all, as a (mostly) p2p system, the expenses for keeping it up are pretty minimal. I suspect they will handle it the same way they have handled Paypal: it supports their business, and they simply let the positive external uses be…

  2. I guess you’re right. If it’s merely to milk a cash cow (Skype), then eBay’s on the right track. You know how pervasive Skype is when the Chinese government today deemed it illegal to use!

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