In the week in which Oracle acquired Siebel for $5.8 billion, the announcement that eBay is to splash-out $2.6 billion for the disruptive Internet telephony company Skype Technologies looks set to be the more important deal of the two. For a start, eBay’s involvement is likely to fuel the growth of the nascent Internet telephony sector.
eBay has spent $2.6 billion to acquire Internet telephony provider Skype.
Having already disrupted the music industry with their infamous peer-to-peer (P2P) file-sharing software KaZaA, Niklas Zennstrom and Janus Friis set out in 2002 to do the same to the telecommunications industry. Skype has acquired over 50 million registered users since it appeared on the scene in 2002, and, with over three million users online at any given time, Skype is fast becoming the intercom of the Internet.
Available in 27 languages on Windows, Mac OS X, Linux, and Pocket PC operating systems, Skype is an easily installed and easy-to-use Internet telephony application that allows its users to communicate across the Internet for free. Skype’s value-added services – SkypeOut, SkypeIn, and Skype Voicemail – provide the company with a small but growing revenue stream, and enable users of the software to call regular fixed-line and mobile phones at discounted rates.
While the acquisition of PayPal by eBay back in 2002 was seen by many as a ‘match made in heaven’, this deal has surprised many industry commentators. However, with Skype CEO and co-founder Niklas Zennstrom wanting to build the world’s largest communications business, the deal with eBay should provide him with an excellent vehicle to achieve his ambition.
In these days of standards and interoperability it is interesting to note that Skype favors its own protocols above established standards, such as session initiation protocol (SIP) and extensible messaging and presence protocol (XMPP), and so we might see the likes of Google, MSN, AOL, and Yahoo! having to re-engineer their own communication tools to interoperate with the growing Skype user-base.
Internet telephony may still be in its infancy, but the acquisition of Skype by eBay will now fuel its growth as the network effect takes hold. The acquisition will also enable eBay and Skype to pursue entirely new lines of business, so interesting times undoubtedly lie ahead.
Source: OpinionWire by Butler Group (www.butlergroup.com)