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EBay to Acquire Internet Phone Leader
EBay chief executive Margaret C. Whitman discussed the merger with Skype co-founder Niklas Zennstrom.
(By Sergio Dionisio -- Associated Press)
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In an interview, Whitman said Internet telephone service using downloadable software is the future. She cited statistics indicating that by 2009, an estimated 1.5 trillion minutes of voice calls will be Internet-based.
She added that Skype is well ahead of its competition for such systems and already is partnering with such companies as Motorola Inc. for handsets that will work with Skype.
"But we would not have done this if that is all we could see," she said, insisting that integrating Skype, eBay auctions and PayPal would yield significant new revenue for eBay's current businesses.
Closely held Skype had sales of about $7 million last year and is projected to bring in $200 million next year, according to the companies, causing some analysts to question the price eBay paid.
"It's a pretty big number and a pretty big gamble," said Carmi Levy, senior research analyst with Info-Tech Research Group of London, Ontario.
But Levy said that eBay's growth had become stagnant and that it needed to find a way to make its auctions more dynamic.
Zennstrom said in a statement that his vision was always "to build the world's largest communications business and revolutionize the ease with which people can communicate through the Internet. We can't think of a better platform . . . than with eBay and PayPal."
Analysts said the deal would accelerate the evolution of two new classes of voice communication providers.
Led by Skype, one group makes voice a part of the suite of applications on the computer "desktop." These include Google, Yahoo and Microsoft.
The other is made up of telephone and cable companies that seek to make voice calling part of the suite of offerings that comes with high-speed Internet access and television services.
Left out in the cold, said Kate Griffin, consumer technologies analyst for the Yankee Group, could be unaffiliated Internet-phone providers such as Vonage or 8x8 Inc.
Whitman said she does not expect Skype to be a substitute for basic telephone service for a long time, in the same way that eBay auctions have not replaced retail stores.
EBay's new competitors reacted cautiously.
A BellSouth Corp. spokesman said that his company takes Skype seriously and that it should be expected to fulfill the same obligations as other carriers, such as providing 911 services.
Whitman acknowledged that joining the ranks of communications companies would require eBay to "get to know a whole new set of players" in Washington and elsewhere.
Staff writer Arshad Mohammed contributed to this report.
