EBay buys Skype for $2.6bn

Auction powerhouse eBay has agreed to buy Luxembourg-based Skype Technologies in a $2.6bn cash and stock deal. 

Rumours about the deal started emerging last week. Back then the possible combination of the e-commerce website with the internet telephony application raised some eyebrows for a perceived lack of synergy between the two.

"Communications is at the heart of e-commerce and community," said eBay chief executive Meg Whitman.

"By combining the two leading e-commerce franchises we will create an extraordinarily powerful environment for business on the internet."

EBay plans to integrate Skype with its auction website to make for a smoother sales process in categories that require "more involved" communications, such as used cars, high end collectibles and business and industrial equipment.

Internet voice calling could also open up new markets in countries including India, China and Russia, where eBay hopes that the technology will provide a " more personal way of communicating online".

In addition to making for a smoother sales process, eBay said that it plans to use Skype to expand into the new business of pay-per-call e-commerce communications though the VoIP technology.

EBay also said that it is considering linking its PayPal online payment service to pay for Skype's premium services.

The addition of voice communication to Ebay's services allows it to maintain its lead over competing auctioning websites and possible new entrants into the market such as Google. But it should merely be considered a "bell or whistle", said IDC's research manager for consumer VoIP William Stofega.

"They'd be foolish to say: 'This is going to be it,'" he said about the link between the VoIP technology and the action service.

To justify the $2.8 bn sale price, Ebay must continue developing the Skype software, Stofega argued.

"[Ebay is] buying an authentication server with a bunch of accounts sitting on that. When you pay in the billions, you expect an ocean liner. But if Skype is the way of the future, the de facto standard, then the pricing takes on another dimension. […] Skype has the potential to become the clear market leader in peer to peer telephony."

Skype develops an internet telephony and messaging application that allows users to place phone calls over the internet free of charge and call regular telephone numbers at a discounted rate.

Since its founding in 2002 and launch in August 2003, Skype has amassed 54 million users, making it the largest provider of consumer VoIP technology.

The company was co-founded by Niklas Zennström, who previously headed up the Kazaa file sharing service.

See also:

Skype gets first mobile users

VoIP firm signs up German 3G operator E-Plus  05 Sep 2005

Skype/Boingo offer hotspot VoIP

Skype Zones located at 18,000 Boingo sites  13 Jul 2005

Skype claims VoIP lead

Almost half of all internet telephony goes to the London-based startup  20 Jun 2005

Skype users plug into videoconferencing

Beta release offers video, voice and data sharing  15 Jun 2005

Skype takes voicemail live

New version of VoIP client adds Outlook integration  14 Jun 2005

Voice over IP

Voice over Internet Protocol can deliver significant cost savings and management efficiencies. Yet businesses have so far been reluctant to adopt the technology.  14 Jun 2004

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