eBay Sale of Skype Is a Win-Win

01.09.2009
eBay's purchase of Skype in 2005 was perceived as one of the . eBay never figured out how to integrate Skype with its core business and has failed to find a way to monetize the potential of the Internet VoIP (voice over IP) service. The deal announced today, in which eBay has sold Skype for $1.9 billion while retaining a 35 percent stake in the company, is a win for both eBay and Skype.

eBay gets to unload an entity that has just . The original vision apparently involved leveraging Skype VoIP functionality for some sort of click-to-talk feature on the eBay auction site. That vision was never realized and Skype, while it did account for about $550 million in revenue last year, has not been able to reach its potential under eBay's direction.

The deal, valued at $1.9 billion for a 65 percent stake of Skype, also retains much of the original investment value- basically letting eBay get back most of what it paid for Skype so the experiment wasn't a complete waste of money.

So, eBay gets to dump a toxic asset that never quite meshed with eBay's business, but the bigger winner here is probably Skype. The popular Internet VoIP service is the largest carrier of international calls in the world, but it hasn't been able to thrive the way it should, and at a time when VoIP and unified communications are hot technologies, Skype has tremendous potential.

Skype, like other adolescent Internet companies such as Youtube and Twitter, has achieved a fair amount of success while having difficulty figuring out how to convert that success to income. Most of the Skype activity is made up of calls over the Internet between Skype users.

Aside from global calls made via Skype-to-Skype connections, Skype has also found a niche as the video simulcast medium of choice for networks like CNN and MSNBC. Skype video has made an army of 'iReporters' out of just about anyone with a webcam. I recently did an interview with a Canadian news show which we conducted via Skype rather than using a TV studio as well.