At this point, I couldn’t really care less who eBay sells Skype to, whether it’s Google — as the current crop of rumours seems to indicate — or Microsoft, or even Dunkin Donuts for that matter (don’t laugh; I can see a business model there). As Fred notes, it has never made any sense as part of eBay, and certainly not $4-billion worth of sense, and it doesn’t make any sense now. Meg Whitman managed to sell that idea to a gullible board desperate for growth of any kind, and instead they got a bag of goodwill the size of Manhattan, which they eventually wrote off.
Skype could have a huge amount of value as part of Google. Maybe even as much as eBay offered in the beginning, but certainly a lot more than it has produced for the auction provider. Google has made it obvious that it wants to move into mobile with Android, it’s financing wireless initiatives — voice calling either on the PC or on a mobile makes sense as a place for Google to go, if only because it could integrate the app not just with Google Talk but with its core search business and its money-spinning keyword ad business. Let’s hope this one actually comes true.
Well, now it’s official: Skype turns out not to be worth the $4.1-billion that eBay seemed to think it was back in 2005. As Henry Blodget notes at Silicon Alley Insider, the $1.4-billion writedown that the online auction company just announced effectively recognizes what everyone else has known for some time: Skype may or may not have been a mistake (I would argue it was, although Ash Karbasfrooshan disagrees), but one thing is for sure — eBay paid way too much for it.
In true contrarian fashion, my friend Paul Kedrosky says that all the breast-beating about eBay overpaying for Skype is overdone:
“Ebay is still motoring along, and this is lots of reason to be optimistic about the auction company’s future.
Over-focusing on the lamentable (and long past) Skype deal strikes me as a mistake.”
As I said in a comment on Paul’s post, I disagree. eBay may very well be motoring along, but the purchase of Skype was an error in judgment, and a fairly expensive one at that. I realize that a $1.4-billion writedown is small beer for eBay, but the fact that the company made such a decision — without any compelling synergies or anything else to justify the price — speaks volumes about the leadership of the company as far as I’m concerned (as usual, John Paczkowski has the best headline).
It’s nice for Niklas Zennstrom and Janus Friis that they not only get a big chunk of that $530-million earnout, but they can now get on with their lives (and with Joost, which launched as a no-invite-required app today) and quit trying to force some kind of fit between Skype and eBay — a fit I’m willing to bet they never saw either, although Niklas defends the deal in an interview with Thomas Crampton (Janus writes about it here).
As for eBay? Henry thinks they should sell Skype to Yahoo or Microsoft or someone like that, and he might just be right. Jeff Nolan thinks the company should turn it into a backend service-type offering, a la Amazon’s EC2.
At the mesh meetup we had at the Charlotte Room tonight, I ran into Jim Courtney of Skype Journal and he said he had just finished posting something interesting about the new Skype beta — and he was right. It seems that not only is the client being improved, but eBay is finally starting to achieve some of the synergies that many observers were hoping for when it bought the VoIP service for $4-billion or so way back when.
According to knowledgeable people like Jim and Iotum co-founder Alec Saunders, who posted on it here, among the things that Skype has improved is the sound quality of the application. Now, the sound is apparently just as good with the regular mike and speakers you get with a PC as it is with a dedicated headset or other equipment, which will be a big boon for regular users.
Jim says he suspects that Skype is making use of new codec technology they acquired awhile ago. They’ve also made it possible to take a snapshot with your video cam to use as a profile picture, and you can import contacts from more mail clients than before.
But for me, the biggest move with this beta is the fact that you can now click and send money to contacts via PayPal — which was one of the no-brainer synergies that I expected would have happened a long time ago. Maybe there was some technical issue holding it up, I don’t know. But finally it’s possible.
I know that this has nothing whatsoever to do with Web 2.0 or anything like that — apart from possibly illustrating how a guy who used to help people download copyright-infringing music files can become a Hollywood-sized celebrity, complete with airborne scandal — but I couldn’t help noticing that Janus Friis of Skype and Joost fame was discovered recently trying to join the Mile-High Club with his paramour, Christina Knudsen, step-daughter of Bond actor Roger Moore. The ever-tactful and tasteful Nick Carr refers to this as Mr. Friis trying to start a new “peer-to-peer network” with Ms. Knudsen, a line I wish I had come up with. Blogger Pat Phelan, meanwhile, notes that the pair might have consummated their relationship but flight attendants stopped them Joost in time. (hat tip to Luca Filigheddu). Incidentally, the Great Dane’s real name appears to be Janus Friis Degnbol, at least according to the recent statement of settlement in the Kazaa lawsuit (pdf link).