Skype hype

Anyway, VoIP is a growth market. That's why there are so many competitors. Probably, this market is bigger than online auction someday.

Fact
1) revenues will rise from $50 Million in 2005 to 200 million in 2006 a 400% increase..not bad IMHO

2) pundits cried ebay paid too much for paypal. Paypal the fastest growing part of the business will generate 25% of Ebay's business in 2006.

Conclusion: Patience

Voip is definately a growth market. Though, new technology on the horizon (which has finished the trial phase) will lead to electricity companies muscling in on telco/internet companies territories in the long run.

http://tinyurl.com/st788
(this link will launch a clip in your windows media player)

The important thing is not to put Skype buttons on eBay (as you say, they could have done that anyway), but to drive Skype as a general and worldwide (and possibly worldleading) VoIP provider. Seen from that perspective, Skype will be one among many providers fighting for the market, but the market is big.

A problem Skype will be facing sooner or later is that its system is proprietary (intentionally) and can't work well with other VoIP solutions. It must be able to do that pretty soon. They could easily provide a general gateway that would link Skype to primarily SIP, but I don't know if they've actually done that, and if they even want to do that.

http://www.webpronews.com/topnews/topnews/wpn-60-20061114SkypeDialedIntoGooglePack.html

Google's assortment of software for computer users now includes Skype, eBay's multi-billion dollar VoIP acquisition, as an option alongside Google Talk.


Plenty of Google and non-Google software can be found in the Google Pack, and the company has recently slipped Skype into the optional software section.

Google has been portrayed as a potential eBay/PayPal competitor. The company added Google Base, a database where users can add virtually anything, including items they wish to sell, and Google Checkout, a payment processing system, over the course of 2006.

Skype does offer some functionality beyond Google Talk, Google's IM and voice chat client. Google Talk only connects with other users of the software, while Skype can connect to and receive calls from landline phones.

The addition of Skype to Google Pack likely occurred as a result of the deal between eBay and Google in August. Google will provide click to call advertising in Skype and Google Talk, so it makes sense for Google to promote Skype to Google users.

Couple that with recent chatter from Google's CEO Eric Schmidt about providing free mobile phones to people and having advertising support the service. Make those phones Skype-capable, equip them with WiFi, and people can use them anyplace they find a wireless access point.

Of course, speculation about Google's future would not be complete without an obligatory suggestion that with all the dark fiber Google has purchased, they could be approaching a point where they could offer VoIP through a wireless network they control.

A few hundred mobile datacenters dropped at peering points across the US would give Google's free VoIP phone-using customers plenty of latency-free connections to make their calls and view local ads on their handsets.

It's a matter of when, not if.

Larry gave these 'facts':

1) revenues will rise from $50 Million in 2005 to 200 million in 2006 a 400% increase..not bad IMHO

I'm a believer that "turnover is for vanity and profit is for sanity". What is the profit margin in this revenue? Has any contribution been made to the multi billion dollar investment yet?

2) pundits cried ebay paid too much for paypal. Paypal the fastest growing part of the business will generate 25% of Ebay's business in 2006.

Totally agree. Take Paypal and tax breaks out of eBays Q3 performance and it looks a little sobering for eBay. That said Paypal isn't Skype so best we stay on topic.

Patience the answer? Oh yes. Lots of it.

Helen and Larry:

The problem I see with the PayPal comparison is eBay paid $1.6 Billion for PayPal because PayPal was already being used by 60% of eBay's users and eBay’s own payment service was getting blown out of the water. PayPal was already making money and there was no real competition. PayPal turned out to be a fantastic deal.

Skype, on the other hand has to be sold/marketed as a new tool to the eBay community and a year later still isn't even being used by eBay users. Revenue is miniscule and there is a lot of competition.

As a former seller, I can tell you there would have been zero benefit to me other than to up-sell other product outside of eBay's system therefore depriving eBay of that FVF revenue.

But, in my view the market has already priced in the Skype debacle so it can only get better from here. Though I think they will sell it (at a loss) in the next 2 years.