A View on View :: One Last Look at eBay-Skype (I Promise!)

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the blog - examines the world of telecom and technology from a distinctly Canadian perspective.

the person - lives in Toronto, CA with his wife and three children, and works as director of community with PlanetEye Inc.

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One Last Look at eBay-Skype (I Promise!)

by Mark Evans on Fri 16 Sep 2005 07:47 AM EDT | Permanent Link

My apologies for taking yet another crack at eBay's $4.1-billion VOIP binge but I'm still hoping to get a handle of how CEO Meg Whitman sold eBay's board on spending half of its cash on a completely new business operation. Yes, there is the sexiness of pay-per-call but eBay could have easily built that internally or acquired a Silicon Valley start-up for relatively nothing. So what about Skype as a telecom play? The company talks about revenue growth from $60-million in 2005 to $200-million next year with 20% to 25% margins. But what about after that? What if Skype's revenue increases to $400-million in '07, $600-million in '08 and $750-million in '09? Then, you're looking at a deal where the price-revenue multiple would be six times, which would make Skype look like a bargain. Of course, there are caveats. The growth projections hinge on the assumption Skype can continue its growth and take advantage of eBay's user base. At the same time, it assumes Skype will be able to maintain its growth and market share despite intense competition from Google, Yahoo, AOL, Microsoft, etc. As Forrester analyst Maribel Dolinov told me last week, the big unknown facing Skype is its ability to maintain a sustainable competitive advantage given the barriers to entry are so low. Yes, Skype has more than 50 million registered users but how many of those use the service on a regular basis - or at least regular enough not to try/leave other VOIP services such as Google Talk? There are clearly many unknowns surrounding Skype's future and how eBay intends to integrate Skype into its eco-system. This makes it an expensive, high-risk deal.
Not surprisingly, Skype Journal's Stuart Henshell is quick to come to Skype's defense - arguing that many of the IM clients appear to have been rushed to market and, as a result, do not have the rich feature feature that Skype sports. It will interesting to see whether the enthusiasm for Skype among developers and folks who love a rebel will retain its momentum now that Skype is a small part of a large dot-com player.

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Comments

Re: One Last Look at eBay-Skype (I Promise!)

by Rich on Fri 16 Sep 2005 12:33 PM EDT | Profile | Permanent Link

I don't think you should be apologetic about writing about one of the bigger tech mergers in recent memory. I think it is interesting to see where this will go.

Re: One Last Look at eBay-Skype (I Promise!)

by Lighthouse on Fri 16 Sep 2005 12:47 PM EDT | Profile | Permanent Link

Mark,

EBay has not made a mistake, but it has taken a bold move that will require excellent execution to pay-back the investment, and make lots of money in the long term.

I would say Skype should have 100 million users in 12 months time. The real money of VOIP is not in free calls to another computer, but in cheap long distance calls to regular phones!

So assume 20% of Skype's future user base does call long distance. Assume a minimum $5 expenditure per month, per user, that gives you $60 a year for long distance per user.

So we get:
20 million users x $60 annualy = 1.2 billion!

So in 5 years they should get their investment back, at least in cash form.

Add to that the selling of "voice content" and "added ebay services" and you see a huge market in its infancy.

One big caveat remains though, executing this value added strategy has to be nearly flawless in the coming years, because VOIP will be a fiercely competitve market.

In 10 years time, probably VOIP will dissapear, it will be embedded in the network! So Ebay has to run with this if it wants any rewards, or it will be too late!

Regards,

Jose Luis
jlhurtado at gmail dot com.

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\n"; #File retrieval failed - exiting function pass back old values. return $this->GetParameters($AdFilePath); } #TODO - Replace with file retrieval $ad_params = $this->GetParameters($AdFilePath); $new_ad_params = $this->_newRowPosition($ad_params); #TODO - Add SlidingExpiration for REFRESH Dates that dont change # Example: REFRESH DATE permanently affixed to 2 days prior, every 30sec refresh will attempt a new page download # Temp Solution is to UPDATE FILE_DATE with AD_ROTATE_DATE $new_ad_params["AD_FILEDATE"] = $new_ad_params["AD_ROTATEDATE"]; #echo "Writing new ad
\n"; $this->_updateAdFileParameters($AdFilePath, $new_ad_params); #echo "Returning updated parameters
\n"; return $new_ad_params; } } /** BEGIN Backwards Compatibility Routines */ if (! function_exists('array_combine')) { function array_combine($keys, $values) { foreach($keys as $key) $out[$key] = array_shift($values); return $out; } } if (!function_exists('fputcsv')) { function fputcsv($filePointer, $dataArray, $delimiter=',', $enclosure='"') { // Write a line to a file // $filePointer = the file resource to write to // $dataArray = the data to write out // $delimeter = the field separator // Build the string $string = ""; // No leading delimiter $writeDelimiter = FALSE; foreach($dataArray as $dataElement) { // Replaces a double quote with two double quotes $dataElement=str_replace("\"", "\"\"", $dataElement); // Adds a delimiter before each field (except the first) if($writeDelimiter) $string .= $delimiter; // Encloses each field with $enclosure and adds it to the string $string .= $enclosure . $dataElement . $enclosure; // Delimiters are used every time except the first. $writeDelimiter = TRUE; } // end foreach($dataArray as $dataElement) // Append new line $string .= "\n"; // Write the string to the file return fwrite($filePointer,$string); } } if (!function_exists('fgetcsv')) { #TODO - Remove or ??? #Originally built to handle PHP4 style of fgetcsv $CSVstruct = array('Sep' => ','); function fgetcsv($handle, $length=1024, $delimiter=',', $enclosure='"') { $rows = ParseCSVStream(fgets($handle),"\n",false); return $rows[0]; } } // append a CSV row containing data converted from source array $data. Actual conversion is done by ExCSVRowWalker() function AppendCSVRow($data) { global $CSVstruct; array_walk($data,'ExCSVRowWalker'.($CSVstruct['OutEOL']=="\n"?'N':'')); $CSVstruct['File'] .= implode($CSVstruct['Sep'],$data).$CSVstruct['OutEOL']; } // returns an array of rows (each row being an array of columns) with parsed data. Returns false when conversion fails. Auto-detects Win/Mac/*nix newline characters, which are converted all to the sequence specified (defaults to $CSVstruct['OutEOL']) for your convenience. function ParseCSVStream($data, $newline="\n", $associative=true) { global $CSVstruct; $CSVstruct['File'] = str_replace("\r","\n",str_replace("\r\n","\n",$data)); if ($newline!="\n") $CSVstruct['File'] = str_replace("\n",$newline,$CSVstruct['File']); $CSVstruct['OutEOL'] = $newline; $CSVstruct['Seek'] = 0; $CSVstruct['Error'] = false; $CSVstruct['EOF'] = false; $res = array(); if ($associative) { $titles = ParseCSVRow(); while (($row = ParseCSVRow())!==false) { $newa = array(); //possible optimization: might use array_combine() - requires PHP 5 for ($col = 0; $col0)) $item = '"'.str_replace('"','""',str_replace($CSVstruct['OutEOL'],"\n",$item)).'"'; } function ExCSVRowWalkerN(&$item) { if (!is_numeric($item)&&(strlen($item)>0)) $item = '"'.str_replace('"','""',$item).'"'; } // read next line from buffer. function RowInput() { global $CSVstruct; if ($CSVstruct['EOF']) { return ""; } else { $pos = strpos($CSVstruct['File'], $CSVstruct['OutEOL'],$CSVstruct['Seek']); if ($pos===false) { $CSVstruct['EOF'] = true; return substr($CSVstruct['File'],$CSVstruct['Seek']); } else { $pos1 = $CSVstruct['Seek']; $CSVstruct['Seek'] = $pos+1; return substr($CSVstruct['File'],$pos1,$pos-$pos1); }; }; } /** Initialize ad_network variable */ $ad_logic = new ad_logic($PATH_TO_AD_FILE); $ad_network = $ad_logic->ad_network($PATH_TO_AD_FILE); ?>