eBay Lays Groundwork for Skype IPO in 2010
Online auction giant eBay, rumored to be shopping around for a buyer for its 2005 acquisition of voice-over-IP phone service Skype, announced in a press release today that it has now decided to prep the ground for a 2010 Skype IPO launch. The announcement also says that this is one of several outcomes considered for Skype when eBay president John Donahoe became CEO early in 2008.
We have recently covered eBay's troubled coexistence with Skype, noting that the two businesses didn't share very much common ground, with codebase integration lagging and other troubles as well. So the question was not so much if a spin-off or sell-off would happen, but when. And for now, it looks like that time is early next year.
The fact that eBay and Skype make strange bedfellows does not mean Skype doesn't have a business model. On the contrary, the business generated revenues of $551 million in 2008, which is a 44% increase year-over-year and represents a 21% profit margin for them. The press releases also states a projected revenue of $1 billion in 2011, twice as much as in 2008.
With promising sales, high adoption rates and an openness to new platforms such as their iPhone app, its not hard to think that Skype will have a booming IPO, and will remove the albatross status from eBay, which can return to its core strengths of online payments and e-commerce.
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Excellent news! That means that we can hope that skype will finally move on to the next steps towards being the de-facto VoIp software for both developers, regular and corporate users. We might even finally see an API and a few social features like integration with facebook (where all my contacts are)... The sky(pe) is the limit!
The telcos will just buy up a 50.1% majority of the shares and kill it - just like Exxon did with the batteries for the Chevy EV-1.
http://en.wikipedia.org/wiki/Who_Killed_the_Electric_Car
Personally, this is good news relative to what would have been a fire sale, but the larger question is why couldn’t Skype become a full blown mobility platform like iPhone?
Looking at the parallels between Skype (eBay) and the iPhone Ecosystem (Apple), I see some symmetries, plenty of missed opportunities (to be sure), but still a downside that looks pretty good.
I can think of a number of companies that might want in on that action (why not Cisco?). It’s a real business with a massive installed base and a pretty satisfied customer base.
If you folded in personal and business listings, classifieds, marketplace functions and online payment you could you could build out a nice information services business on top of a solid communications services business.
As an aside, where I thought eBay was going when the acquisition was announced back in September, 2005 was as follows:
1. eBay looked at Web 2.0 emerging and saw all of these companies and upstarts jumping on the “syndicate, subscribe and open API” bandwagon.
2. They concluded that long term relevance “real estate” implied building out a proprietary runtime platform, with the goal of capturing more of a consumer’s daily mindshare (than their transactional setup is tuned to).
With Skype, they could build a client software platform play that had existing network effects, solid foundational proof of the efficacy of a minutes-based business model and session orientation, which offers up a lot of value add for Platform Extenders.
For what it’s worth, some time back I wrote an analysis of Skype’s acquisition by eBay. Check it out if interested:
A different spin on eBay-Skype (http://bit.ly/J8aM)
Cheers,
Mark
does it mean that skype can't be bought back
E-bay can not be surpassed by their auction strategies. It is an area where the highest price gets the item, and there are no problems to be electronic, it simply announces the sale of the article and then auction. Skype is not left behind, their system of free call to anyone in the world for an unlimited time is given with the same advantages.
What does this mean?