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Published on: 10/12/2007
Last Visited: 11/14/2007
David Willis, an analyst at Gartner, said eBay will need to find more creative ways to monetize Skype's technology if it's ever going to recoup some of its investment, adding that eBay's struggles with Skype are "not due to issues with vision but with that of execution."
"eBay's September 2005 acquisition of telephony vendor Skype was overpriced by any direct measure: technology value, user base and revenue," Willis wrote in a research report released Tuesday."Skype now generates only $1.60 per subscriber per year.However, eBay was correct in its vision of interconnecting the worlds of business applications and communication capabilities."
Willis said Skype's basic technology could have been purchased elsewhere for about one hundredth of the price, and chastised eBay for expecting too much, too soon.
"Internet telephony users do not carry the same valuation as other users such as ISP subscribers," he wrote."The market was not ready to adopt Skype as a means to integrate with commerce.Users see its services as an inexpensive or free calling option, not a means of accelerating their business as an eBay buyer or seller."
While Skype has more than 220 million registered users, Willis said the barriers to competition are low and alternative offerings from the likes of Yahoo, Google, Microsoft and AOL have emerged, putting even more pressure on eBay to monetize the Skype platform.
Along with simplifying its developer tools, Skype plans to incorporate more payment options for users who want to play games or buy widgets and applications developed on the Skype platform.Skype claims it now has more than 6,000 community developers working with its platform and that its 130-plus integrated applications have garnered more than 32 million downloads in the past nine months.
Willis said that eBay could build upon a number of Skype strengths to build out future revenue streams.Those include the power of the Skype brand, which he said has become synonymous with PC-based Internet calling, and users' proclivity for communications integrating instant messaging, conferencing and other productivity applications.
"Many are interpreting eBay's statements as if it is backing away from Skype," he wrote.