I have always thought of eBay as a great company, but I did not think that acquisition of Shopping.com was a great idea. I still continue to believe that while Paypal integration with eBay has been excellent, it does not mean that it was a great strategic move.
So acquisition of Skype by eBay is plain and simple stupid. Particularly because I am convinced that paid VOIP telephony business model is not viable, despite the fact that VOIP is going to be a major platform for communication in the future. It will just not create a lot of value for VOIP providers.
That is why eBay’s hypothesis that “pay-per-call basis through Skype” does not make sense. Why would eBay want to enter into this highly competitive business? eBay goes further with some very optimistic scenarios. “Pay-per-call communications opens up new categories of ecommerce, especially for those sectors that depend on a lead-generation model such as personal and business services, travel, new cars, and real estate.” Indeed, it does. Yeah, if I buy a server I can not only run our website more cost-effectively, I can host other websites and open up new sources of revenue. But does it make sense for us to be in hosting business? What I am trying to say is that just because something is helpful to your business, you do not have to acquire it. There are millions of other ways to integrate that offering into your business model.
eBay has some more far-fetched ideas on how to use Skype. “[A] PayPal wallet associated with each Skype account could make it much easier for users to pay for Skype fee-based services, adding to the number of PayPal accounts and increasing payment volume.” Probably not. If you have a bank/credit card account, you hardly care about making payments.
“Skype can help expand the eBay and PayPal global footprint by providing buyers and sellers in emerging ecommerce markets, such as China, India, and Russia, with a more personal way to communicate online,” eBay says. Indeed, consumers in these economies may be more sensitive about paying for overseas phone calls, but they could have done that without Skype being part of eBay. In fact they might already be using competing services that they may be reluctant to switch. “And consumers in markets where eBay currently has a limited presence, such as Japan and Scandinavia, can learn about eBay and PayPal through Skype. Skype can also help streamline cross-border trading and communications,” eBay keeps talking about how it will change the world. The reality is that eBay has a sad story to tell about its Japan experience and what it is hoping to achieve through an acquisition could have been easily achieved through advertising.
I am afraid that eBay, whose growth is maturing, is following the GE model – Use acquisitions as a way to show growth. While GE has a done a good job with portfolio management managing the company like a conglomerate, the question is Will eBay be able to do the same?
Recommended article: What not to do as a business leader?