Skype’s Voices Revalued
At the time of the acquisition (Voices not Eyeballs: Ebay Buys Skype) I wrote that Skype’s purchase price was astonishing. This was, by the way, one of the reasons I drew the comparison between that 1990s metric of eyeballs and Skype’s voices.
Now that Skype is being written down, I imagine the naysayers will again attack Skype.
They ignore several realities:
1. Skype has a business model, and one that is independent of advertising.
2. Skype generates revenues. [Clients- please ask us for details on which consumers are paying for Skype's services.]
3. Skype’s cost base is designed to be uniquely low, due to its (largely) decentralised voice network that uses p2p technology.
4. Skype reports it has doubled its registered user base in the US in the last year.
5. Despite the write down, Skype’s paper value on eBay’s books remains enormous.
Bottom line:- While eBay overpaid, and the hoped for synergies with auctions and Paypal have not delivered upon the lofty expectations implicit in eBay’s purchase price, Skype may yet prove to be a profitable business in the long run.
Again, to draw that 1990s analogy, there are a number of successful Internet businesses alive and strong today, that struggled for a time in 2000-2002.
