eBay on Skype Whoops

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EBay On Skype: Whoops.

By: Jordan McCollum
2007-10-03

Business Week and the Wall Street Journal are all over eBays latest word on Skype"and that looks to be Whoops. After paying $1.3 billion cash...

...and $1.3 billion stock two years ago, eBay is regretting its decision and partnering with Skype rival Jajah.

eBay reports that theyll be taking a 3rd quarter impairment charge of $1.4 billion. (An impairment charge, according to Investopedia, is the new term for writing off worthless goodwill. Did not know that!) Skypes division head and co-founder, Niklas Zennstrom, is stepping down, with eBays Chief Strategy Officer, Michael van Swaaij, taking his place.

From the WSJ:

"EBay acknowledged that Skype has been disappointing, with spokesman Hani Durzy noting that the business hasnt performed as well as wed expected. But he added that Skype remains an extremely valuable asset. . . ."

"Skype will likely remain an add-on phone service for most users, rather than a replacement of fixed-lines, analysts say. In August, Skype experienced a two-day outage, which the company was slow to explain. That helped reinforce user views that such a service can be ancillary, says Forrester analyst Sally Cohen."

To add insult to injury, Business Week reports that eBay is also partnering with Jajah.com, Skypes rival:

"One other announcement caught my eye, and it makes me wonder if eBay remains committed to Skype: Yesterday, eBay began allowing sellers to embed Jajah buttons into its site (check out this page for an example). By pressing this button on the Web page, buyers can call sellers directly from their PCs.

Yes, Jajah is a direct competitor of Skypes; it also happens to brag some of the same early investors. And it offers several functionalities which eBay hasnt encouraged Skype to develop: For instance, buyers dont have to register with Jajah to call sellers. Skype requires registration and, typically, a software download."

While the number of Skype subscribers has grown over the last two years, their revenue per subscriber has fallen. Augusts Skype outage and slow response havent helped the situation either.

(Am I the only one who cant help but think heavily-accented Gungans I when they hear the name Jajah? . . . . Yes? Well, never mind then)

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Tag: Skype, eBay

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About the Author:
Jordan McCollum is a staff writer for the popular marketing blog Marketing Pilgrim. She has worked in search engine optimization with clients including 3M, Little Giant Ladders and ADP. After graduating from Brigham Young University, Jordan joined the SEO copywriting team at the Internet marketing firm 10x Marketing. After 10x closed its doors in December 2006, Jordan became a freelance writer and Internet marketing consultant specializing in SEO. She also has extensive experience with web analytics, conversion rate enhancement and e-mail marketing.


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