Skype Shuffle: Is It a Stumble (Upon) or a New Paradigm for eBay?

Changes show that uses of VoIP aren't always obvious.

Owen Linderholm on October 4, 2007

This week's news about eBay and Skype seemed pretty bad at first. Ebay is taking a $1.4 billion charge against its Q3 earnings to pay off Skype's shareholders early as part of its original deal to buy the VoIP upstart. Meanwhile, the remaining founder of Skype is stepping down as CEO. Most press coverage summed the news up as a sign that eBay paid far too much for Skype in the first place and is only now accepting that reality. Very little thought or attention was paid to the underlying questions of what eBay is going to do with Skype.

Some observers seem to even be questioning Skype's long-term viability as a part of eBay. This, despite the fact that there are never fewer than 6 million users online at one time and often more than 9 million — both numbers higher than they were pre-acquisition. For comparison, the current "site that can do no wrong," Facebook, has 40 million "active" users — or 40 million users who log in around once per month. One could assume that would translate into comparable numbers of users online at any one time, so it is hard to see Skype as a failure under eBay. Maybe it just hasn't been enough of a success.

One speculation is that eBay is readying Skype for a rollout as its own independent company or at least tracking stock, but that makes little sense unless eBay really just wants out of the deal altogether. Another common speculation is that there is intense developer activity going on behind the scenes at eBay and Skype, and eventually, some surprising technology will result.

But regardless of the truth behind the rumors, it is very clear that there is some level of disappointment in what has happened with regard to eBay's acquisition. VoIP and Skype boosters expected clever integration into eBay, while others expected a big jump in Skype's user base. But at the time, most financial analysts thought that the acquisition was a strange move at best.

Instead, the usage of Internet calling seems to have leveled off. But from eBay and Skype's point of view, that isn't all bad news, since the growth that there has been has been in the area of paid minutes — in other words, real revenue.

But all of this analysis misses a huge point: the reason for Internet calling's stagnating growth. This has very little to do with the acceptance and usage of VoIP per se and much to do with an overall pause in the usage of all forms of voice communications while the world waits for the other shoe to drop. Actually, the other pair of shoes: the Voice 2.0 shoe and the mobile communications shoe. Jeff Pulver has a straightforward view of one solution, and he thinks that it is way too early to give up.

Right now, most consumers are hesitant to invest in any communications device, because they are waiting for the end of the wired telephone. The mobile communications device isn't quite there yet, and costs are much too high. For all its glitz and glamour, Apple's iPhone is still only a stopgap. People want a phone that costs less than $50 and lets them call anywhere for less than $30 per month, and they know that it is coming.

The more VoIP-savvy consumers also know that VoIP will be part of the solution. For example, Truphone allows you to make a local call with a mobile phone and have a service connect you to any kind of phone anywhere in the world for significantly less than standard rates. And Mobivox even lets you do this with a Skype user — not just a SkypeIn telephone number, but any ordinary Skype user with a name rather than a number.

Consumers also know that the confluence of voice, IM (instant messaging), text messaging, email, Web browsing and video calling is simultaneously enriching and confusing communications. Until one system and one device can handle all forms of communication, there isn't a complete solution. And until all those forms of communication are properly aware of one another and able to interact with applications, the solution isn't complete.

There are services — such as BV Free Conferencing — that let you set up free conference calls, record them and manage them over a Web interface so that you can selectively mute and unmute attendees, for example. Skype itself has the ability to host huge online conference calls known as Skypecasts. There are innumerable services that let you enter two phone numbers and connect the two via VoIP. There are now (finally) cell phone/wifi hybrids that can hand off a call from one type of device to the other as you move between areas. And there is a phone that is really a better Web browser than it is a phone.Slowly, the pieces are all coming together.

And fair is fair. Skype has more features — voice, video, IM, conference calling, online integration, applications and the ability to transfer money over a call — in one place for more people than any other service. So what is missing for eBay? The answer is a subtle one. Ebay has millions of users that need to communicate, but the company is a marketplace, pure and simple. Ebay is all about selling something. It isn't a community, and communication is almost deliberately limited to the mechanics of purchasing.

Enter StumbleUpon. Ebay acquired the social-networking/bookmarking/exploration site less than six months ago. As StumbleUpon is a nascent community (as in small, relatively speaking), better communication tools would be a huge boon to it. Ebay could very easily take StumbleUpon more in the direction of a social network. It is even possible to imagine lots of interesting new applications by putting elements of eBay, StumbleUpon and Skype together. So before we rush to judgment, let's see if eBay stumbles upon a new range of solutions.