eBay out shopping, again!!

The world’s largest online marketplace, eBay, is out shopping again to expand its already swelling business area!! On a shopping spree in past year or so with acuisitions such as Shopping.com Inc. for $620 million hard cash, the real-estate firm Rent.com, Indian eBay clone Baazee.com, & the Dutch classifieds website Marktplaats.nl, eBay is now ready for another expansion in its shopping cart, this time its Skype which is gonna cost atleast $2.6 billion(cash & stock)!!!:whistle: (via Yahoo! News)

Surprised?? For those who don’t know, Skype is the most popular internet telephony service which allows you to make PC-to-PC calls for FREE while you need to pay small fees for making PC-to-Phone or Phone-to-PC calls. Skype, a child of the KaZaa makers, revolutionised the VoIP industry by providing FREE internet telephony services & unbelievably clear voice quality. As its popularity grew, many big players jumped into the VoIP sector.
Now, eBay has bought that revolutionary!!

In an announcement on Monday’s cash-&-stock purchase, eBay CEO Meg Whitman was quoted saying

Skype’s voice capabilities will speed communication between eBay’s buyers and sellers and increase the level of trust.

Many of the industry watchers & analysts however don’t see the advantage of this new purchase as they reason that eBay buyers & sellers already use eMail to communicate, with an estimated 5 million emails sent per day. Some of them even went as far as saying this deal as “far fetched”, saying that eBay could have very well developed its own VoIP solution for a much lesser cost. CEO Whitman happened to agree with the fact that they could have built a solution themselves a lot cheaper but she reasoned the purchase by giving the example of Paypal

We believe that when a company is out in front of the competition — and you have an opportunity to acquire such a company — it’s a great thing to do.
Before buying PayPal, eBay unsuccessfully tried to compete against it with Billpoint, its own payment company. We worked hard to build up Billpoint. In the end, PayPal had the technology lead, they had already built the ecosystem. Skype is in the same position. It has a global footprint and is already a well-known brand.

This is not it however!! The cost of this purchase can go up to $4.1 billion as well depending on whether Skype meets a series of performance targets over a period of next three years. Skype reported a revenue of $7 million in 2004 & is projected to earn $60 million this year!! If nothing else, this deal has proved to be a lottery for Skype’s venture-capital investors, including Draper Fisher Jurvetson, Index Ventures, Bessemer Venture Partners & Mangrove Capital Partners. And it also gives a bit of legitimacy to Skype co-founders Niklas Zennstrom(CEO) & Janus Friis whose offices in Estonia used to be secret due to the fear of the lawsuits over KaZaa from the music & movie industry!!

And who knows, eBay might pull out the free services of Skype or restrict them to the point where users have no choice but to pay for them!! Better start testing the new Yahoo! & MSN messengers as they too have significantly improved their VoIP stuff & its still free, as the last I heard!!