Okay, here’s another business decision I can’t figure … eBay’s purchase of Skype for $2.6 billion (plus another $1.5 billion if they hit certain targets!).
I can understand that new channels of communication will add value to eBay’s customers but couldn’t this be done through a partnership deal?
Perhaps the decision would make sense if Skype had a promising and profitable future but as far as I can see it hasn’t. Here’s why:
Until recently, global telecommunication firms (such as BT) have avoided promoting VOIP to protect their existing revenue streams. Now that VOIP is beginning to grow they’re wanting (and needing) to get in on the act.
BT has already announced its intention to enter – it even revealed plans to undercut Skype. Game Theory suggests that instigating a price war is folly … unless you’re sure you can win!
BT and the other global telecoms already provide the infrastructure i.e. the broadband connections. As competition hots up the VOIP facility will eventually become part of the general broadband package on offer. If you get it free with BT and others why bother with Skype?
I’m sure eBay and Skype are hoping their first mover advantage will keep them ahead of the game. Unfortunately I don’t think it will!
Any views? Can anybody see something I’m missing?
