An assortment of information, discussions,events, news and views on VoIP Services.

Friday, March 14, 2008

Google Acquisition: Concrete news, or just plain ‘Skype’

Writing something on the current on-going rounds of transaction between eBay and Google regarding the acquisition of Skype is not any easy task by any means. Particularly as we bear witness to the amazing pace at which the online market is changing. But anyways, since it is the ‘in’ thing today, let me start off by saying something that Billy Crudup said to Tom cruise in Mission Impossible III after he discovered that Crudup was an ally of his enemy. “It’s complicated.”

Calling Skype as the undisputed king of the VoIP industry might not be an overstatement. Especially if you consider the fact that it has close to 280 million users and will continue to add-on to that huge list, thanks to its ever-popular brand-name. Google Talk, on the other hand, which is Google’s take on the VoIP platform, has just under one million users (according to comScore). While Skype posing a serious threat to Google could both be the biggest joke of the new world and also be a very valid point, the focus now shifts to eBay.

eBay had acquired Skype for $3.1 billion in September 2005. Almost two years after the deal was through, and shortly after signing off as Skype’s CEO to concentrate more on along with Janus Friis, his co-founder for Skype, Niklas Zennstrom had made a statement at a tech conference held in Budapest that eBay had overpaid for Skype when it was acquired. While Joost can be described as an excellent software to watch video streaming with exceptional clarity, and starting off on a new venture is something that entrepreneurs usually have a habit of, the fact of the matter is that Skype, despite its rather healthy run-rate revenue of $400 million, is being sold, and that too at a written down price of approximately $2.28 billion.

It is without a doubt a well known fact that Google has all the monetary resources and commercial network while Skype has an extensive user-base that could be utilized by Google in a variety of ways. Say, for example, Google could send invites to Orkut, its immensely successful social networking website, to its newly acquired database, courtesy Skype. While this is all good going for Google, eBay is clearly in a soup after acquiring Skype. A project that can not be called as a failure by any means, but was not managed properly after its acquisition, sums up the story for Skype. Industry critics had raised doubts over eBay’s strategy while talks were going on by the leading retail chain to acquire a product that was clearly not its forte. While the deal is still being negotiated, only time will tell whether Google is able to bring Skype back to the position it had gained when it was first launched in August 2003.

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