Angie Durborow

eBay Set to Buy Skype Technologies. (Greg Sandoval) September 12, 2005. Business Week Online. http://www.businessweek.com/ap/financialnews/D8CJ2NV82.htm

eBay Opens a Whole New Channel. (Rob Hof) September 12, 2005. Business Week Online http://www.businessweek.com/technology/content/sep2005/tc20050912_4421_tc119.htm

eBay paying up to $4 billion for Skype. (Eric Auchard and Adam Pasick) September 12, 2005. Yahoo News.

http://news.yahoo.com/s/nm/20050912/bs_nm/skype_ebay_dc

eBay is buying the Internet phone provider Skype Technologies. Skype technologies basically give away software which allows people to talk for free over the Internet, using microphones and computers. They also offer a version that you have to pay for called Skype Out, which allows those calls to be connected to regular phones. eBay is going to pay them $1.3 billion in cash and $1.3 billion in stock. In addition to that payment, eBay will make another payout of up to $1.5 billion if certain financial targets are met.

This will affect their company in one huge way that I can think of. First of all, eBay is trying to reduce the amount of “Phishing” that takes place, where their customers get ripped off by following fraudulent emails they thought were from eBay. But if this technology is going to be theirs to use, it will make it much easier and personal for their customers (buyers and sellers) to communicate. So adding Web telephone calls to their site will be a huge step for them. And of course, if goods are sold, eBay will charge merchants a fee which will make money for them!

Not to mention the fact that Skype is the leader in Internet Phone Services. They attract 150,000 new users each day. By 2006, they are suspected to revenues of more than $200 million.

This is what eBay is trying to do. They are trying to create a solid network that is hard to abuse. They have their auction site, then you pay at pay pal (which they own now) and if and when you need to communicate, you use Skype (which they own).

I think it was interesting that when asked why they just didn’t invent their own system, CEO Meg Whitman talked about Pay pal. She said that originally eBay had its’ own site for payment, called Billpoint, but because Pay pal had the technology lead and had already built a foundation with many people, eBay found it was more profitable and a better buy to just buy Pay pal, than to try to compete with their own system. So I think that’s what they’re doing with Skype too. Instead of investing time and energy into building their own communication system, eBay is going to try to capitalize on someone else’s success.

Some of the strategies that eBay is using right now are a global sites choice where you can shop all over the world in an eBay atmosphere, there’s a feedback forum where you can talk about what you like and don’t like, you can buy gift certificates to eBay, and even apply for a job with ebay!