Insane price paid for Skype, says IP expert

eBay's announcement that it will acquire Skype Technologies for $2.6 billion in cash and stock, with further amounts depending on performance, has left a lot of people standing about scratching their heads and trying to work out why.



Skype software allows PC owners to make free voice calls to each other over the Internet and low-cost calls to ordinary telephones. The software has been downloaded 170 million times since 2003.



But what does online auction giant eBay want from a telephony company? Even at its chic sixties-height it is doubtful that Christie's auction house in London ever contemplated purchasing the GPO – the forerunner of BT – even if it did want to improve its handling of telephone bids.



Is this a mismatch of core businesses? Has eBay lost its marbles?



Analyst firm Gartner believes the acquisition is all about integrating channels of communication among eBay users. "The deal appears to benefit eBay's business, because it will enhance the ways that online buyers and sellers can interact. One example would be the offer of pay-per-call services to place auction bids."



But like Christie's didn't have to buy the GPO to offer telephone bids, eBay didn't need to buy Skype to achieve communication between its users. It smells of a company with too much money and no direction; a company, perhaps, that hasn't heeded the warnings of the dot com crash, and is subject to the crazed bidding wars it's doubtless happy to see in its addicted users.



Nadahl Shocair, VoIP expert and CEO of telecoms equipment manufacturer DeTeWe, says, "For eBay to bid $2.6 billion for Skype is just insane. eBay could have used any chat programme to deliver exactly the same service to customers. Sure, there may be some incremental value to current eBay customers, but eBay is not going to become the next big VoIP player."



And Gartner agree it is not necessarily going to work out. "Internet telephony is a new area for eBay. Skype users shouldn't assume that eBay can repeat the success of its online auction business and PayPal payment scheme."



Gartner has long been sceptical of Skype for business use, and still dissuades businesses from taking the plunge: "Don't use voice services based on proprietary protocols like Skype while on corporate networks, because of network security issues," advises the analyst.



But business is not really driving Skype's growth, it is the 170 million downloads from individual consumers, and the consumer is something that eBay knows a great deal about. eBay has itself 157 million registered users worldwide, there are 82 million international users and 75 million U.S. users. It is the world's largest ever auction house and has even sold Ronan Keating's leather trousers for £5,000 and Lady Thatcher's handbag for £103,000



So if eBay users get a new, funky way of bidding, what do Skype users get from the deal? The shareholders will get enough money to buy a small country, and the founders – as well as the obscene payout – a new job with eBay. But the users get… wait for it… nothing. At least not initially. And so what? Most of them use the software for free.



Sure, Gartner thinks ownership by eBay will push Skype to release more enterprise-friendly products, but the outlook for Skype users is uncertain.



There might be a more cynical reason for the purchase, however. Given the free nature of Skype, and eBay's increasing dominance of the online retailing world, maybe eBay is thinking of direct marketing by linking Skype's presence indicators – system tray apps that notify others when you are online – to sellers.



Skype users working late should look out for a new type of message: "People online at midnight buy Nescafe from eBay!" Knowing when 170 million people are sitting in front of a PC and ready to receive advertising has got to be worth something more than just a new way to purchase the world's discarded Christmas presents.





William Knight