Friday, September 23, 2005

eBay's Skype buy: Not Just a Recipe for Hype....

Does this deal signal the next logical step in the evolution of ecommerce?

Even as the dust settles on eBay's purchase of Skype, there is considerable befuddlement among analysts and observers as to the strategic motivation behind the buy. The consternation arises not only from what people see as an apparent lack of synergy between online auctions and IP telephony, but also from the seemingly exorbitant price paid - upto $4.1 Billion. Some may be tempted to wonder whether eBay hasn't landed itself with a winner's curse!*.

Surprising as the deal initially appeared, a semblance of rationale is beginning to emerge. For one thing, this deal is entirely consistent with eBay's aspirations of being one of the internet honchos, along with Amazon, Yahoo and Google.

More fundamentally, it may be the logical next step in the evolution of ecommerce. How?

- By allowing buyers and sellers to communicate instantly, an integrated eBay-Skype platform could smoothen buyer-seller interaction which is a critical component for ecommerce.

- By allowing real-time, synchronous online auctions – these would be just like regular auctions where aspiring buyers attempt to outbid each other, with one difference – the bidders may be sitting in different continents and bidding via telephones / videoconferencing equipment. Achieving this using conventional telephony is prohibitively expensive, but costs virtually nothing using VoIP.

eBay hasn't said this is in the roadmap, but it appears likely.

* defined by the wikipedia as a phenomenon that occurs in auctions, where the person who bids the highest frequently ends up paying a price that is more than the "true" value (or at least worries that he has done so). People have researched the winner's curse phenomenon in eBay auctions.