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Article

Title: eBay and Skype

Author: Mohney, Doug Article Type: Product Analysis
Source: VON MAGAZINE, v3 n11 p16(2) Publication Date: Nov 2005
  ISSN: 1547-6251
URL of Publication: http://www.vonmag.com

eBay has purchased Skype, an IP Communications company. eBay will probably permit the company to run some operations, and Skype also will work directly with PayPal to bill customers. Skype also obtains access to expansion capital, and its founders and investors are rewarded without the difficulties of an IPO. Big winners are VC firms that have funded Skype with only $24 million as of October 2004. eBay gets the market leader in consumer IP voice communication and its over 54 million users globally, a number expected to double within one year. eBay also benefits substantially from Skype's international reach and its IP voice technology. Almost half of Skype users are in Europe, one quarter in Asia, and one eighth in North America. In Japan and Scandinavia, Skype is a venue for promotion of eBay and PayPal, and eBay should be able to improve buying and selling through real-time communications into eBay. Some analysts have indicated that eBay will use Skype as a way to build an all new business in advertising through the leveraging of Skypes established user base of 163 million downloaded clients, which will be converted to eBay visitors. However, eBay has paid a big price for Skype, considering that Skype only forecasts revenues in 2005 of $60 million and about $200 million in 2006. Another group of analysts say the losers will be cable companies, since Skype could in time become a complete replacement for such existing phone services as Vonage. Verso Technologies has announced a carrier-grade Skype filtering technology that can sense and disable Skype. The filter also offers a bandwidth optimization and content management tool for the carrier markets and can detect, manage, and control other peer-to-peer (P2P) traffic over a service provider's network.

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eBay Inc

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Mergers & Acquisitions

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