You’d think judging by this BusinessWeek article that Skype is a strategic albatross hanging around eBay’s neck.
Yes, Ebay overpaid for Skype. And it hasn’t panned out strategically if the goal was giving eBay sellers a new communications tool.
But Skype has seen tremendous growth with 335 million registered users and projected revenue this year of $500-million. Given Skype doesn’t market aggressive, its profit margins are probably pretty sweet.
The question facing eBay is what, if anything, does it do with Skype.
The first question is whether eBay needs to do anything at all. With eBay’s business struggling for growth, Skype gives it a high-growth business along with Paypal. So why sell Skype other than to heed the calls of investors who may not see it as a strategic fit?
The other part of the eBay-Skype is whether Skype can reach its full potential within the eBay empire. Can Skype innovate, market and generate more revenue from premium services as an eBay division as opposed to a standalone entity (e.g. an IPO) or as part of a telecom company (e.g. Verizon or AT&T)?
The reality is there should be no pressure for eBay to do anything with Skype until it gets the right opportunity. The key is giving Skype enough strategic latitude to thrive so that if eBay does want to unload it, the business could be more valuable.
Of course, it would be good if Skype had some management stability. But that says as much about eBay’s handling of Skype as anything else, which is probably why people are poking around at Skype’s future within eBay.
More: Om Malik did a one-on-one interview recently with Skype CEO Josh Silverman. When asked about Skype being on mobile devices, Silverman says “We hear you brother, We’re working on it”. When asked about Skype on the iPhone, Silverman shifts around in his seat and says “Stayed tuned”. Interesting.
2 Comments
Interesting post. I don’t use Skype myself, purely because of the super-peer issue.
BTW, is there a missing paragraph at the line which begins “Skype’s biggest challenge has been” and doesn’t continue?
The question really is “what is eBay”. Do they need all their units to work in symphony towards a common goal, or is it acceptable for them to diversify their portfolio. If Skype is a cash-cow (and with mobile support it’ll be even more of one) then there is really no good reason to let it go.
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[...] question for eBay is what to do with Skype. It’s a terrific, fast-growing business so there should be no pressure on eBay to do anything with it all unless a blow-you-away offer comes through the [...]