Travel Technology - eBay to Buy Skype for $2.6bn

The WSJ (http://online.wsj.com/article/0,,SB112651960619337861,00.html) is reporting the eBay will by Skype for $2.6bn in cash & stock. I'm not sure what I think of this deal. I'll have to learn more...

Here is a non-subscription based link:

http://www.businessweek.com/ap/financialnews/D8CIMIK0B.htm?campaign_id=apn_tech_down&chan=tc

This was rumoured to be on the way last week, I'm very curious as to what Ebay plans to do with them... Very strange combination.

And once again the Kazaa guys walk away with the big money...

and TD and his boys more likely.

but, I do NOT see the value of this for ebay. I can imagine it, but don't see it happening. would have been a better deal for google, but then again they have so much $$ they can just replicate the technology and get the users just as fast, if not FASTER than skype. Skype has some issues still, marketing and selling in the US, I don't know how that is going to pan out for ebay. The CC this am sounded like more fluff than I have heard in a long time. I don't think I have heard meg spout that many buzz words, and empty statements ever.

(I'd be short ebay a few points now, look for an op again in the low 30's.)

and TD and his boys more likely.

but, I do NOT see the value of this for ebay. I can imagine it, but don't see it happening. would have been a better deal for google, but then again they have so much $$ they can just replicate the technology and get the users just as fast, if not FASTER than skype. Skype has some issues still, marketing and selling in the US, I don't know how that is going to pan out for ebay. The CC this am sounded like more fluff than I have heard in a long time. I don't think I have heard meg spout that many buzz words, and empty statements ever.

(I'd be short ebay a few points now, look for an op again in the low 30's.)

The only thing I see happening is the option for sellers and buyers to "call" each other through the ebay/skype system. But as an ebay seller I'll tell you that there is no way I'll sit behind my PC all day waiting for calls. The power of ebay was/is that you could do everything behind your screen; I don't see voice communications fitting in there very well.

Sounds like a massive amount of money for something fairly limited; I never became a Skype fan, and prefer to use my trusty old Vonage account.

Do you think eBay will use PayPal to close the transaction?

The only thing I see happening is the option for sellers and buyers to "call" each other through the ebay/skype system. But as an ebay seller I'll tell you that there is no way I'll sit behind my PC all day waiting for calls.

exactly!! I don't see anyone using it in the fashion, at least not millions, or 100k's of users. One, people are not going to sit at their computer, of course skype can skypeout to phones, so you could target another phone. But, I am not going to link up my phone to my ebay account to allow people to call me at will. Granted, their idea for this skype call connection is for high priced buyers and sellers, but I really don't think that group is going to care about the .01-.10 worldwide it might cost them to call a buyer of a 10K plus item.

If they talked more about alternative rev streams, or diversification with other technology products, utilizing their skill at global networking, etc., I might have bit on it a bit more.

with the ebay users,

i think they can generate a lot of money in the future.

and implementing a chat function with skype users on the ebay page and call implementation is a nice thing.

as you can in the new version of skype redirect calls to your mobile phone etc. you can for example set times people from ebay are allowed to call you.

i was missing this function often on ebay at least to chat directly with the seller and not to have to wait a long time.
so i think it makes sense.

as skype is winning new users everyday, the company is getting more and more expensive, i think in 2-3 years the company will double its value or triple it, so its a good investement too.

with the strategic partnership with mobile phone carriers etc. skype is good prepared for the future and i am a skype junkie from the beginning , and i tell you what i was using ebay since the beginning it become the biggest auctions site in the world.

skype will be the biggest voiceoverip provider in the world , so i am sure it will payoff for ebay.

dp

I figured it out; The key to the purchase is Paypal.

I expect Paypal to be the only payment method accepted on Skype. With the high Paypal fees I suppose Ebay calculated that they could earn their money back sooner than we expect.

...

If they talked more about alternative rev streams, or diversification with other technology products, utilizing their skill at global networking, etc., I might have bit on it a bit more.

I can see it as diversification but not an add-on to auctions. I can't fathom why someone would want to 'talk' via phone during an auction. Maybe eBay fears being marginalized by Google and the telco's as triple play via IPTV gains traction. This is just too weird of a combo.

I figured it out; The key to the purchase is Paypal.

I expect Paypal to be the only payment method accepted on Skype. With the high Paypal fees I suppose Ebay calculated that they could earn their money back sooner than we expect.

paypal collects fees from the recipient of the payment...if the recipient is skype, where does ebay make money? unless they charge a fee to the sender too...

I've never used skype myself, but aren't there plenty of similar products out there, e.g. googletalk? I never would have valued skype at $1b, let alone $2.6b...am I missing out on the greatness of skype?

paypal collects fees from the recipient of the payment...if the recipient is skype, where does ebay make money? unless they charge a fee to the sender too...

paypal only charges or receives a fee from some recipients, personal accounts are/can still be free, with no fees whatsoever.

With over 100K in sales on ebay, i've never paid a fee.

paypal only charges or receives a fee from some recipients, personal accounts are/can still be free, with no fees whatsoever.

With over 100K in sales on ebay, i've never paid a fee.

Paypal takes a cut on all CC purchases, and I'm sure they make quite a bit back on that. On my sales last month, around 5% went to Paypal in CC fees from people that paid with their card. Wells Fargo is the processor for Paypal, and I'm sure that on 5 billion they don't charge them 5%...

They also make a lot by getting people to signup for their own creditcard.

Paypal is a very profitable business...

EBay (Nasdaq:EBAY - news) said on Monday it will pay $1.3 billion in cash and $1.3 billion in stock for the online communications company, which will allow it to add free Web telephone calls to its online auctions. It will make a further payout of up to $1.5 billion if certain financial targets are met.

http://news.yahoo.com/s/nm/20050912/bs_nm/skype_ebay_dc

WOW! I wonder if those Skype/KaZaa guys will come out of hiding now.

Paypal takes a cut on all CC purchases, and I'm sure they make quite a bit back on that. On my sales last month, around 5% went to Paypal in CC fees from people that paid with their card. Wells Fargo is the processor for Paypal, and I'm sure that on 5 billion they don't charge them 5%...

They also make a lot by getting people to signup for their own creditcard.

Paypal is a very profitable business...


don't misunderstand me, paypal is a very profitable business,

sounds like they make more from your customers though, than from any others

maximum fees are .30$ per transaction and 1.9-2.9% for any tranaction to a premier account, or the use of credit card, they are the same.

use of personal accounts, of course continues to remain free. I always detail the use of a "funded" personal account, so there are no fees whatsoever.

Are you upcharing your customers the 5% or something? :-)

I wonder what the percentage of free transactions is, personal accounts, vs. premier accounts or credit card payments

remember though, the credit card fee, a chunk of it is going to the, well, credit card company and not to paypal. I doubt they get a rate less than 1-1.5%, so .04-1.4% to paypal possibly.

But, for the most part all my transactions in the past five years have been no fee for me, nor the seller/ buyer

I think that they'll use it for audio auctions. Still, even if they use it for that and buyer-seller communication, I still don't see the value.

Where exactly is the advantage for using voip for any auction important enough to warrant voice?

The HawkinsD (267367) (http://slashdot.org/comments.pl?sid=161937&cid=13537028) post on slashdot today sums it up nicely:


Live auctions? Over the phone? And not just over the phone, but over a cheese-laden peer-to-peer VOIP lash-up?
For things worth actual money?

I bid grgle-snrt I bid zzzzffff No, I bid kkkppp No first f-f-f-f-first! twenty eeeehooonnnggg but wait a wawawa twenty-eight pork

Great idea, boys.

I figured it out; The key to the purchase is Paypal.

I expect Paypal to be the only payment method accepted on Skype. With the high Paypal fees I suppose Ebay calculated that they could earn their money back sooner than we expect.

I think you are right. "Growing" Paypal was the first thing I thought of too when I heard about this "deal".

http://news.yahoo.com/s/nm/20050912/bs_nm/skype_ebay_dc

WOW! I wonder if those Skype/KaZaa guys will come out of hiding now.
Yeah and have the RIAA sue to take it all away?

Here's El Reg's take on this deal Meg Whitman's $2.6bn spam goof? (http://www.theregister.com/2005/09/13/ebay_skype_spam/). Spam calls anyone?

I have to say I'm similarly cynical. it's a p2p messaging app, can it really be worth $4b...it seems like all ebay really bought was a user base. they should have picked up alibaba.com before yahoo did. or maybe merge with amazon? :eek:

I have to say I'm similarly cynical. it's a p2p messaging app, can it really be worth $4b...it seems like all ebay really bought was a user base. they should have picked up alibaba.com before yahoo did. or maybe merge with amazon? :eek:

That does bring in the topic of just ... Skype got so popular.

I've played with it since day one; and never found myself impressed. Products like this had been around for ages. Their sound quality isn't amazing, their features are still fairly limited, but for some reason Skype is seen as the best thing since sliced bread.

Millions of users that bring in zero revenue being worth 4 billion brings back memories of the good old dotcom days. You'd think that a company like Vonage with 1 million PAYING customers would be far more interesting...

domestically, USA, there is nowhere near as much use as internationally. Internationally, phone communictions are much more expensive, so many more people use net based phone calling to save money, and my experience in eastern europe and south america is that the quality is quite good. Of course paying .03$ cpm compared to a telco .35, or .60, or 1.45$ or MORE is nice.

I have to say I'm similarly cynical. it's a p2p messaging app, can it really be worth $4b...it seems like all ebay really bought was a user base. they should have picked up alibaba.com before yahoo did. or maybe merge with amazon? :eek:

Purchases largely in the currency of stock I don't value at face value. (If anything, I would try to use it to reverse engineer my way to what Ebay execs see as the true value of their shares over the longer term.)

I've been involved in deals where the target was valued at $XYZ million, the acquirer valued at $X billion, and yet I'd never value the combined entity for more than a fraction of either "valuation" if it was my own cash. OPM and "irrational exuberance" still at work?

I think irrational exuberance is alive and well (baidu.com anyone?), and always has been and always will be - it arguably is one of the largest drivers of the market's movements. I think the dot-com era was just the normal irrational exuberance pumped up a bit.

maybe it's the programmer in me, but I still feel like a skype clone could be built cheaply, and if you don't have anything particularly tricky and or proprietary to your name, multi-billion $$ valuations are silly at the least.

then again, maybe it's the unaccomplished entrepreneur in me letting it's cynical side vent ;)

I think irrational exuberance is alive and well (baidu.com anyone?), and always has been and always will be - it arguably is one of the largest drivers of the market's movements. I think the dot-com era was just the normal irrational exuberance pumped up a bit.

maybe it's the programmer in me, but I still feel like a skype clone could be built cheaply, and if you don't have anything particularly tricky and or proprietary to your name, multi-billion $$ valuations are silly at the least.

then again, maybe it's the unaccomplished entrepreneur in me letting it's cynical side vent ;)


exactly, as soon as google buys up more fiber and decides to offer the whole lot for FREE, skype is dead.