eBay gets a discount on Skype as management shuffle continues

John Shinal · October 1, 2007 · Short URL: https://vator.tv/n/63

Yes, eBay is paying less in earn-outs to Skype investors than it might have had the startup hit all of its performance benchmarks. That clearly isn’t great news for eBay CEO Meg Whitman. https://www.gadgetell.com/images/2007/05/90279-ebay-logo.jpg


But whether eBay paid $3.1 billion or $4.1 billion for Internet telephony software isn’t the most important question right now. Unless Whitman can find someone who can figure out how Skype fits into eBay, either amount is way too much.


The Skype executive shuffle suggests that either no one wants or can do the job of integrating the two companies’ operations. Skype co-founder Niklas Zennstrom has given up the CEO position – for the second time in two years. That’s not a big surprise, given that he’s also a co-founder of Joost, the video download site that opened up its beta site to all comers today and that startup entrepreneurs are usually a bad fit in billion-dollar companies.


But Skype’s former president, Henry Gomez, is going back to his job running eBay corporate affairs, while eBay chief strategy officer Michael van Swaaij will take the top job at Skype while an outside firm looks for a permanent replacement.


The jury is still out on whether Skype’s main value to eBay is to enhance the experience of users, by letting buyers and sellers talk to each other online, or to create a separate Internet telephony business.

If it’s the former, then Whitman overpaid for Skype big time.


And if it’s the latter, the Skype model faces some serious headwinds. A growing number of large corporations are now simply piggybacking their voice service on top of their own data traffic, so Skype’s value proposition in the enterprise market will continue to be less compelling than it is for consumers.


But even there, the big phone and cable companies are offering packaged consumer services that often include long-distance voice calling for little or no additional charge. And another Internet company called Google is also making a push into free voice-enabled messaging.


Does eBay really want to allocate precious resources to taking on the telcos, the cable companies and other deep-pocketed rivals in the battle for consumer phone service, just to justify the Skype deal? Probably not.


That may be why the Skype CEO chair has been so uncomfortable.



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