eBay Got Suckered on Skype
December 5th, 2005 Posted in M&A, VOIP Services, Competition/Skype
After reading some of Andy Abramson's recent posts
on Skype, as well as my own views on Skype's sudden loss of mojo, I've
come to the conclusion eBay got suckered badly on the deal by Tim
Draper and Niklas Zennstrom. No matter how you want to slice and
dice Skype's strategic value to eBay or Skype's value as a disruptive,
stand-alone telecom player, there is simply no way it was worth
$2.6-billion or $4.1-billion. Even more troubling is Skype's apparent
inertia as gradually morphs into an eBay subsidiary. Unlike Paypal,
which was a solid technology and business play, a big part of Skype's
“value” was its James Dean-like rebellious approach to the telecom
market that resonated with geeks and, increasingly, non-geeks. I don't
think this attitude works within a multi-billion dollar company such as
eBay. It is becoming obvious eBay faces a huge challenge
capitalizing on Skype's technology and user-base. If eBay
fails to execute properly, the Skype deal could easily blow
up as an expensive strategic blundedr. That said, even if eBay
does execute, Skype is still going to go down as an vastly over-priced
deal where the only winners are Zennstrom, Draper and Skype's other
investors.
on Skype, as well as my own views on Skype's sudden loss of mojo, I've
come to the conclusion eBay got suckered badly on the deal by Tim
Draper and Niklas Zennstrom. No matter how you want to slice and
dice Skype's strategic value to eBay or Skype's value as a disruptive,
stand-alone telecom player, there is simply no way it was worth
$2.6-billion or $4.1-billion. Even more troubling is Skype's apparent
inertia as gradually morphs into an eBay subsidiary. Unlike Paypal,
which was a solid technology and business play, a big part of Skype's
“value” was its James Dean-like rebellious approach to the telecom
market that resonated with geeks and, increasingly, non-geeks. I don't
think this attitude works within a multi-billion dollar company such as
eBay. It is becoming obvious eBay faces a huge challenge
capitalizing on Skype's technology and user-base. If eBay
fails to execute properly, the Skype deal could easily blow
up as an expensive strategic blundedr. That said, even if eBay
does execute, Skype is still going to go down as an vastly over-priced
deal where the only winners are Zennstrom, Draper and Skype's other
investors.
December 5th, 2005 at 3:03 pm
I agree, Mark. I think the news (as reported by TheStreet.com) that eBay power sellers don't really want to use Skype — which I blogged about here, is also potentially a big blow to the value of the deal.
October 1st, 2007 at 7:02 pm
[…] I was one of those people who never got eBay’s decision to buy Skype. It didn’t make sense strategically despite eBay’s loud assertions it was a great fit. In fact, I opined - along with lots of other people such as Andy Abramson - that eBay got suckered. […]