First blog post in a really long time. It seems that every blogger in the free world has already weighed in on the Skype-eBay deal, so I figured I might as well pitch in my two cents as well. I am more “for” than “against” this merger. Just a few thoughts:
eBay is not really about auctions anymore. Perhaps eBay was all about auctions a long time ago. I don’t believe that is what their business is about anymore. Today it appears (to me, at least) that eBay’s business is all about small business enablement. Micropayments, “Buy it Now” pricing schemes, tools for power sellers, and a host of other things make me believe that eBay is much more interested in being the leading enabler for online small merchants than it is about dominating auctions.
eBay is one of the most reactive companies in Silicon Valley. I don’t mean that in a bad way. More than just about any other company I have seen, eBay really listens to what its users want and tries to give them that set of tools. Two examples (one dated and one recent) come to mind. eBay had Billpoint and they bought PayPal anyway. Why? Because they were smart enough to realize that PayPal was the winning platform and they couldn’t force Billpoint on their users just because they owned the technology. Also, eBay found a way to offer its users some carrots when they complained about the impact of fee increases a few months back.
When I add the previous two comments up, I have to believe that the decision (not necessarily the price) was driven by some feedback or input from the seller community and eBay is just trying to provide its customers (the sellers) with the tools that they feel they need to do business effectively.
“VoIP is a money-losing commodity business. If eBay wanted a VoIP service, they could have just bought any old provider or done it themselves.” I don’t think this is true. Yes, VoIP is becoming a commodity. I don’t know any other VoIP service offering (aside from IM clients) with 54 million users around the world. I have no idea what it would cost for eBay to acquire that many users around the world. I bet it would cost more than $2-3 billion, or about $40 per user. By the way, the only person for whom I believe that argument is true is Microsoft, which explains why they bought Teleo. Hey, if you have essentially free distribution, you can buy whatever component technologies strike your fancy.
“Why would eBay pay so much for a company that Yahoo! and Google decided not to acquire?” I don’t find this so hard to swallow. Google was working on Google Talk and is not really much of a player in small business e-commerce enablement (yet). They don’t need Skype to enhance their current advertising offerings and there is nothing stopping them from rolling out some clever AdWords-powered pay-per-call offering. The acquisition might have made sense for Yahoo! as they have a much bigger presence in online commerce with their stores and such. For whatever reason, Yahoo! chose to pass. I don’t see that as an indictment of Skype.
Keep in mind that eBay had neither a communications offering (aside from email) nor a really good advertising or lead generation vehicle. Skype could potentially provide them with both. VoIP might be a low-margin business, but lead generation is certainly a pretty good business to be in if Google’s financial results are any indicator (and I believe they are).
I don’t think this is a terrible merger. What does a small online merchant struggling for respect and visibility really want and need? Probably the same thing that his/her larger counterparts have – the ability to accept payments (PayPal), a web presence (provided by eBay), and the ability to handle customer service and interact with its customers using the same channels that lots of other retailers do (the phone). I don’t believe that the Skype acquisition is really about enabling online chatting to close auctions. Have you ever been in an eBay auction? Unless it is a “Buy it Now”, most of the action happens in the last 10 minutes. What good is Skyping in that case? I would argue that Skype is most useful for those merchants who really do meaningful volume on eBay and want to be able to provide customer support or buy pay-per call advertising. Ditto on international customers who are never going to pick up a traditional landline to make an international call to close a sale or ask a question.
I won’t even speculate on price. It is silly to do so. We won’t know whether it was a good deal or a terrible deal until after we see what eBay does with Skype. Also, so many people seem convinced that there is no strategic logic to this merger that the question of “what price would have been fair” doesn’t seem to register.