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But ofcourse!

Posted on Thursday, Dec 8th 2005

Yahoo announces VoIP service a la Skype at 50% less (1c a minute) … and with their IM penetration, Carrier relationships, etc., sits in a much better strategic position to capitalize on the market opportunity than eBAY. Rajiv Dutta just made a bad career move out of the CFO job at eBAY, to take on the role of President of Skype, based in Luxembourg.

Yes, eBAY needed / needs a breakout strategy, but buying Skype just wasn’t it.

It is supremely important, however, for eBAY to figure out what that strategy is, ASAP.

Hint: I would look for data mining talents and see what kinds of data-related services the market has appetite for.

My readers, what ideas do you have??

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Hi Mitra,

ebay could start voice based online bidding real time with various reverse bids, last minute bids.

In short take the email or typing out of picture and put voice into action to speeden the deal.

2) Ebay could go skype’s voice based + IM based buy/sell bids for regional languages as it goes on to customize its site for various countires whic would help it land more business.

3) Yahoo’s users are a mass market, but ebay’s customers are people with a specific need in mind. Every buy sell item on ebay could have an introductory 2-3 minute voice message left by the buyer/seller which helps to get a personal touch

ebay must have done its homework right as it saw an opportunity when no one saw a need for ebay…same might be the case with skype..ebay was in skype an opportunity which no one saw.

I think even a dumb guy would no it was no point in competing with hotmail messenger and yahoo messenger just by buying skype and competing with them..it has to be more than that and must fit into their business model to deserve paying that much $$$ to buyout Skype

Madhu Friday, December 9, 2005 at 2:31 AM PT

You give eBay a lot more credit than I do, Madhu!

If you ask me, they’re after that mass market, because that’s the only market that can reasonably justify the price they paid. The Total Available Market (TAM) for the eBay buyer/seller market is not large enough to justify that price tag.

Sramana Mitra Friday, December 9, 2005 at 5:19 PM PT

Hi Mitra,

Skype is a killer app, but not a killer business model.

1)The acquisition is not based on ebay’s interest in the technology. Google showed that you can build it from scratch quickly. eBay wants the 50+ million subscribers. (Just like Gates wanted Hotmail for its subscribers). And more importantly, they want Skype’s european marketplace. (More than 50 million people use its software, but less than 4% pay to call regular phone numbers). Reportedly it is adding some 150,000 users a day. Skype has better market penetration in Europe (48%) and Asia (27%) than in North America (13%), which could be a boon to EBay in helping expand its presence outside the U.S.

2) eBay already owns PayPal, but micropayments is still a problem that no one has cracked. Put the two together, and you have a microbank that gives people a compelling incentive to pre-pay into their accounts to create a balance.

3) With FREE wifi/WiMAX on the horizon, everyone is going to have a PDA that has skype on it. This would eliminate the need for a cell phone. If everybody could talk to everyone via free wifi/WiMAx on their palm with skype then this would be a huge market. Ebay could critically destroy the cell phone market.

4) The real money will be in click-to-call, which eBay sees as an extension of the types of paid search ads you see on Google.The idea behind click-to-call is that when somebody sees an ad on the Internet, or is looking at an e-commerce Webpage, they can click on a button to call the merchant directly. Instead of annoying telemarketers calling a million people to find the one that wants to buy the product that is being flogged, this would be the reverse. That one-in-a-million interested customer would contact the call center. Skype’s tech promises to enable even individual auction sellers to offer the service. The more people that have Skype, the more that can be targeted by click-to-call ads.

5) Skype had $7 million in revenue in 2004 and anticipates $60 million in 2005, projecting more than $200 million in 2006. But paying ($ 4 billion) that price for future revenues and potential applications is something that needs to be watched out for.

THE LOGIC FOR ACQUIRING IS CLEAR, BUT THE PRICE PAID FOR THAT DEFIES MY LOGIC

PS:
Maybe, Afterall, doesn’t eBay see all Skype transaction occurring through Paypal?

Madhu Saturday, December 10, 2005 at 12:13 PM PT

I am not all excited to see as a seller in eBay that people will call me for each product I put out there on the ebay site. The best thing I found in ebay for selling the goods is it is offline. I can surely get all the queries on email and on the site and choose the questions I will respond to. And if eBay tells me that I will have to pay for a call center to respond the queries buyers put over voice using Skype and train the call center guys what would be the response I would rather go only for selling big things where my profit would justify that effort and spending. I would like the fact that I can give a skype id to customers for calling me in a predefined time and that to if that person quoted the highest. Also if a buyer wants to bid over voice instead of clicking a button after entering the amount, using the FREE skype I don’t have a problem as long as eBay gets that voice based auction and enter the said amount in a database so that I can search and I can sort etc. etc.

Integrating eBay with Skype doesn’t look very good for me as a seller for sure.

For a buyer hmmm… I am not sure too. I can surely go for audio based auction but the effort is too much it has to be a specific time of the day and I would need to find out whether that time is good for me or not. It becomes realtime which I hate because I would need to manage my time well to put that time in my calendar even if the voice call is free.

I like eBay because end of the day I can browse through different categories and items to pickup something which I like from a vast market place. I hate online realtime auction for small things. If I buy some costly item which has historic value and priceless (unlike Visa card) in some manner I may go for such online real time auction. But how many such things I buy regularly.

eBay need to have a completely new business plan around Skype which may be always integrating the existing eBay service.

Santanu Bhattacharya Saturday, December 10, 2005 at 1:40 PM PT