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Why eBay offers cheap long-distance calling

Posted Apr 21 2008, 03:10 PM by Kim Peterson
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Looks like eBay is dusting off the "for sale" sign for Skype, and it's about time. The Internet calling division said today it's offering almost-unlimited calls in the U.S. and Canada for $3 a month. (Calls to other countries will be $10 a month; click here for more info). I say almost because there's a 10,000 minute-per-month limit, which is more than five hours of calling a day. 

Ebay has Skype under the microscope because it still hasn't figured out what to do with the company after buying it for $2.6 billion in 2005. Skype is a superstar on its own, with 309 million users and sales likely to hit $500 million this year. But meshing it with auctions? Hasn't worked. CEO John Donahoe said eBay will be testing Skype's "synergies" this year. But if the company hasn't found synergies in three years, why would it magically happen now?

Donahoe's comments were the first sign that a sale was imminent; today's announcement is the second. Will a $3 monthly plan help eBay recoup its $2.6 billion investment? No, which may have been why eBay shares dropped 3% today. But increasing Skype's user base will get eBay a better sales price.

Ebay could consider an IPO for Skype, but that's risky. Investors are wary of VoIP, given the disaster that is Vonage. And despite some strong revenue numbers, some analysts are unsure about the market's potential. "There's not really a market here," Gartner analyst Steve Blood told IDG. "Every few months they have to continue to reduce prices to compete."

Ebay's best bet is to unload Skype soon, and shoring up users with cheap subscription plans is a good move in the meantime. The tech rumor mill is naming Google as a possible buyer, and that makes a lot of sense given Google's nascent moves into VoIP.

This is a year of introspection and self-improvement for eBay, with a new CEO and new seller policies in place. Why not round out the year -- and bump up the stock price -- by dumping the Skype albatross? 

Disclosures: I don't own shares of any companies mentioned in this post. And while Microsoft owns this blog, Microsoft does not control, censor or otherwise have any editorial influence over what I write.

Comments

 

Ebay shares have fallen because of the mass exodus of sellers/buyers, not just because of Skype!

I just bought a watch on ebay and went through my first experience of paypal. That was the most frustrating and madding four day ordeal of my life. Paypal charged my credit card for the full amount of the sale but wouldn't credit the sellers account with the money. The seller and I talked to each other over the phone for 4 days and finally we were able to make it happen. I sure do hope I never have to deal with Ebay and Paypal ever again.

Maybe e-Bay should pay more attention to the fraud that exist on its auction site and people getting ripped off $1000. every day

Ebay's stocks are falling because the price to sell on the site is getting ridiclious...That and Paypal combined is a reason I dont put on as much as I do.

Skype will do well under Google. You will continue to see eBay shares fall under Donahoe. How can instill confidence in Skype when he is fast losing that confidence that was established buyers/sellers on eBay. Many, many web sites reiterate this sentiment and stock analysts and share holders need to start paying attention to that fact. Self-inprovement or self destruction?

Kim, you need to go to the discussions board at eBay Community.  Specifically, look at the Bidding Board.  Read and lurk a little, and it will tell you a story worth writing.  Many of the long time users are seeking other venues, and leaving eBay.  eBay members are tired of eBay's almost constant figiting with the rules, and increase in fees.  Latest are a bunch of changes that are supposed to make the experience safer, but in actuality encourage the bad folks to use the loopholes to create new identities to be shill bidders on their own auctions.  eBay denies it, saying they have improved software in place to find those folks, but many of the long time users doubt it, based on the first hand experiences of many. Under the old way, it was easier for the savvy user to figure out what the bad folks might be up to ... now we can't.  eBay is a business, and makes more money in their percentage of the take, when the item sells at a higher price.  Not good for bargain hunters.  They say they want to protect all buyers, but they seem more loyal to sellers. It's all about the $$$.  For me this is an example of a company that got too greedy, and has taken all the fun out of the game.

eBay should have never been a publicly traded company. They grew too fast, forced to grow earnings every quarter or their stock would suffer. They should have spent more money to train their stuff and improve their website. The company still makes a ton of cash, however due to demands from their stockholders, they are forced to raise fees everywhere every quarter. They should take themselves private, stop raising fees, stop changing website, dramatically improve security (and I mean dramatically, they have the tools, just use them) and become more proactive in weeding out scammers and such. Also, they have to proactively educate bidders as well in terms of spotting questionable items, payment methods, etc. They must also go the distance in terms of going after scamming bidders and sellers, make eBay a place where scamming will not be tolerated. Unfortunately, too often eBay simply puts the load on bidders and sellers to work things out amongs themselves.

Until those things are corrected, eBay will continue to suffer and gradually transform to a scam website.

I never could figure out what Skype had to do with eBay, anyway. eBay can drop off the face of the Earth for all I care - they will never see one more penny of my money as a shareholder or a user.  As a one time heavy seller and sometimes buyer, I left permanently with the last round of sellers fees being raised while giving almost all the feedback power to the buyer. It's just too expensive on either side.   Basically: See ya, wouldn't want to be ya for eBay.

e-Bay should pay more attention to the fraud that exist on its auction site . I was ripped off three times in e-bay in a matter of three months because I was naive. one seller sold  old worn thng which was not the thing that seller advertised in e-bay, seller would not take the item back; two other incidents of sellers never sent the items but e-bay would not do anything about, they let the bidders to suffer. No wonderful mass exodus of buyers, not just because of Skype!

You think Skype is an albatross?!  Take a look at what else is going on with ebay.  Honest sellers and buyers are leaving and moving to other sites because of high fees, woefully inadequate security, constantly changing rules, tweaking the parts that work fine and ignoring the parts with problems.  Their customer service ranks among the worst you will ever find.  For a company that makes money from the hard work of others and provides almost no support, Skype is the least of their problems.

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