Friday, September 16, 2005

$2.6 Billion “Snipe” for Skype?

Ebay has agreed to pay a stunning $2.6 billion for Skype Technologies. Ebay will pay half of the amount in cash and the other half in stock. The goal of the purchase--according to Ebay, anyway--is to "create an unparalleled e-commerce and communications engine." My reaction is similar to many in the industry: we'll see.

Skype is a VoIP company from Europe. Their software lets PC users talk to each other for free and make cut-price calls to mobile phones and landlines (VoIP = voice over IP). Skype grew to its present size under the direction of the two principals behind the KaZaA file-sharing network. Founders Zennstrom and Friis call Skype a third-generation peer-to-peer network. I'm not exactly sure what that means, but it must have sounded pretty good to Ebay.

Ebay’s vision for the merger is to have its customer talk directly to each other via the computer to speed up the transactions. In other words, if you're a bidder, you can "dial up" the seller and ask questions about the item being auctioned (in my case, it might be something like "whjy is your price so high?!"

If Ebay customers like the idea, then acquisitions like Skype and PayPal will keep the competition at bay.


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