Tuesday, September 13, 2005

Is eBay Buying Skype, Or Hype?

From Forbes.com The next Internet gold rush?

I think not. A gold rush implies a limited amount of a valuable commodity. Broadband services are hardly limited and service providers are finding out that voice is definitely not valuable any more.

When online auction giant eBay said on Monday that it was purchasing Internet telephone provider Skype Technologies for $2.6 billion, reactions fell largely into two camps: Those who saw the deal as recognition of the money-making potential and transformative power of Internet telephony; and those who questioned the wisdom of paying billions for a company whose sales hover in the tens of millions.

I am in the latter camp.

"The barriers of entry in the phone business used to be prohibitively high, and the phone companies were in effect monopolies," says Synergy Research Group President Jeremy Duke.

"VoIP technology brings down the barriers to entry and levels the playing field. You and I could start up a VoIP phone company tomorrow, and the product we would offer would not be any different than Skype's or Vonage's."

A space that has low barriers to entry and sells a commodity. Those are two things that when combined are never good for a startup business.

Maybe eBay thinks they need to buy Skype because they fear Skype is the next Google and don't want to be in Microsoft's shoes. (MSFT was int'd in buying Google for $12b the summer before they went public).

Here's what I think could be a winner.

Let's say there's some tech guy out there that is software/VOIP saavy. He writes a program that makes ANY PC VOIP-able. He then markets this product for $100.00 to any person with a broadband connection. Could this be done? Could someone write a program that allows this?

Adcalls offers free long-distance through your PC is you just look at their ads while you call. So I know this low cost, one-time software idea could work.

By signing up for a Skype or Vonage aren't you in a sense paying TWICE to use your broadband? All you're doing is using your ISP for another application aren't you?

Would you pay an extra fee to your ISP for email or IM? So why should you have to pay twice for VOIP?

I also see Google Talk introducing a VOIP service that combines advertising, VOIP, IM, search and mobile all in one. That's when I think Meg's purchase won't make any sense.

Another thing to consider. What happens when cell phones can switch seamlessly between cell towers and Wi-Fi? Just another point to ponder.

Would love comments on this one. Can this software idea work?


Dustin said...

Have you used Skype?

I think you're missing out on the fact that it is free to call another Skype member... Why would I pay $100 for a piece of software that did the same thing that Skype is offering for free? And not only that, but it works on PCs, Macs and Linux.

Granted, Skype charges you to connect to the phone grid and talk to someone on a landline/cell phone, but your solution does not solve this issue.

Scott Shaffer said...

I haven't used Skype, but why would I use a service where I can only reach members in a closed network?

I thought that was the lesson everyone learned from AOL.

Can a Skype person talk to a Vonage user, and vice versa?

If I used Skype could I call my Aunt Maggie in Utah who doesn't even have a PC?

Isn't the point of VOIP is to be able to call ANYONE without incurring long distance charges?

Would you pay $100 for a software package that let you make long distance calls to ANYONE?

Oliver Starr "stitch said...

There's a lot more to the transaction than first meets the eye. Not to mention that there are probably at least a hundred different versions of Voice Over IP software available from free/open source to hosted Voice over IP PBX.

I didn't want to write a book as a comment on your blog, however, I have written extensive answers to the questions you posed at http://www.mobile-weblog.com.

And yes, you can call anyone on Skype if you use their Skype-Out Services, just as anyone can dial in to you if you subscribe to their Skype inh service.

Scott Shaffer said...

A simple question from a guy that is not hardware saavy.

Could a sftwr guy design a program that would allow me to call anyone, using any service, or any phone number through the Internet?

Is it legal and is it doable?

Is this possible?

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Hosted PBX said...

This is just a hype in my opinion even though eBay has the wealth to purchase Skype company.