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eBay Scoops Skype

Cross-posted from my work blog.

I’ve read this morning that eBay has agreed to buy Skype, the fastest-growing provider of VoIP services, for anywhere from $2.6 to $4.1 billion dollars. Now Skype is cool, don’t get me wrong, but something doesn’t sound right about the angle the press is taking on the deal.

I’m of course no business maverick, but the whole thing smacks of a lot of hype and not much substance. Skype in its first year had revenues of only $7 million dollars and although that is expected to rise dramatically, I don’t see the potential to make back the investment in the near term.

The other thing that strikes me as odd about this is that eBay says Skype would be used for “greasing the wheels of its online marketplace by making it easier for buyers and sellers to communicate” (link). Another article interprets this as “one-click calling between sellers and buyers” (link).

I once worked part-time for a place (now long since dried up) that provided integration of file sharing and instant messaging and part-time for another place that provided online “malls” to encourage local patronage of small businesses via the internet. One of the ideas at Place A that didn’t fare so well was selling instant messaging services to Place B.

The fact remained that the customers wanted asynchronous communication and didn’t want instant access to each other. I suspect that eBay buyers and sellers would feel the same way. I’ll bet that many successful “store” owners excel because of a combination of volume and efficiency — something to which voice chatting is not conducive. Besides, do you really want to talk to the person you’re buying that vintage ALF t-shirt from? (Full disclosure: I may or may not have purchased an ALF t-shirt on eBay.)

If you look from another angle, though, the partnership could work, but not in the way that you’d first think. eBay also owns PayPal, who just last week introduced micropayments. Combine PayPal micropayments and Skype and you eliminate the current need to set up a debit account of “SkypeOut” units to make real telephone calls using the service.

Bottom line? My hunch is that asynchronous processing of financial transactions is much less attractive than asynchronous communication. As more and more services offer you the ability to spend small amounts of money at a time, I think the option of micropayments in real time instead of debit accounts is much more desirable — there’d be no interruptions when your debit accounts run out.

Sure, eBay and PayPal probably already realize this, and bringing Skype into the fold is likely beneficial to both sides. I’m just not sure it’s worth billions of dollars.

Update: ArsTechnica weighs in:

Do bidders need to be able to ask questions of sellers over their PCs during the last five minutes of an auction for a Precious Moments figurine? eBay is betting US$2.6 billion that the answer is a resounding “yes.”