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Anthony Capstick

Business, technology and broadband issues.

Thursday, September 15, 2005

eBay to buy Skype for up to $4.1bn (£2.23bn).

What will be the effect of this takeover, and what can we expect in the future?

If you have a comment please post it here - with or without your name attached.

I will bring together emails that have been sent to me individually.

Cheers, Anthony


  • At 4:31 PM, Anonymous said…


    I assume you are referring to the rumoured Huawei take over, with Marconi losing the 21st century network contract (namely softswitch) it has been a bitter blow but we just could not compete with the manufacture of equipment that pay its workforce in bowls of rice, however the installation, commissioning and support skills within Marconi will still be needed (services) plus existing support contracts need to be honoured , practically bt, if they were not then the government would have to step in.

    I think the company will still exist as a services division but to remain competitive cuts will be made and skills will be lost, from a personal point of view my wage as a highly skilled engineer in 1993 was very similar to what I am getting now.

    It’s a shame as Marconi actually designed, built and got softswitch working, we geared up to its rollout (maybe too many eggs in the basket) and lost out to foreign competition who only have the product on the drawing board.

    At one time I thought my skills would keep me in a well paid position within the company but now it could be time to sit back and re-think.

    Regards R

  • At 4:31 PM, Anonymous said…


    As Michael Vaughn said after the England victory with the Ashes 'The sky's the limit'. The attached has some info. re: VoiP for the not for profit section.


  • At 4:32 PM, Anonymous said…

    Hello Anthony,

    Nice to hear from you again. How's it going?

    I think one definite area this makes sense to eBay is the Infrastructure deals eBay will have in place. By this I mean that their core infrastructure and deals with network providers will be of a higher quality - Bandwidth, QOS etc than that of SKype or it gives them the lever they need to get the agreements in place. Another definite to me is the fact that to trade on eBay you have to be a member. This is probably now the worlds best database. EBay member / skype user. I can see lots of deals regarding Skype products coming into my in box with my eBay updates.

    Looks like eBay are looking to make Skype the worlds preferred voip related product through their existing database to me.

    Regards, N

  • At 4:32 PM, Anonymous said…

    Anthony - key thing is customers want to make calls and are not generally interested in the techology. But this year think you will start to see more players go out with Voice services based on VOIP not traditional PSTN calls as theire headline proposition - prob more in consumer than business where there can be QoS issues.

    PC to PC technology puts alot of people off - key is being able to make voice calls with a traditional desk or home handset - that's what most people are used to, so devices play is important. Customers will still need to pay cost of calls that terminate on a PSTN network. However this will go away over time as more users register or use a VOIP type service whereby most "on-net" calls are free.


  • At 4:33 PM, Anonymous said…


    I think this story from the BBC covers most bases

    I have a feeling that eBay might start to charge people for the currently free parts of the Skype service in the future and they have purchased Skype for the increased uptake of voip in the future, which could cripple the telecoms industry. I imagine there is an extremely large amount of money to be made there in the future. Also, I feel that many people won't use the Skype service as part of eBay because they either don't have broadband (voip with 56k modems is quite poor) or want to bid for an item and let the auction run it's course. I know for example that I'm happy sending the seller an e-mail if I have any questions about an item. Also, the sellers would always have to be available to answer the Skype calls, otherwise there would be no point in people using the service. This will be difficult if purchases are being made in different time zones or if the seller is on holiday etc.



    I'd also like to add that since Skype is made by the same people who made Kazaa, it's likely to be riddled with spyware just waiting to be released.
    Access to the Skype code was kept under lock and key, which made myself (and others in the world) suspicious of it's motives as it was providing something for nothing at the time. Also, Ebay will probably "upgrade" Skype and dress it with some banner advertising around it.



  • At 4:36 PM, Anonymous said…

    Anthony -- One of the primary aims of BT's 21st Century Network project - the world's most radical next generation network transformation programme - is to create a flexible VoIP based replacement for current PSTN services which will transform the types of services that can be offered in the future. BT, of course, was the first UK telco to launch a VoIP product and the first to offer a VoIP product for the mass market. You'll find a comparison with Skype below plus additional detail about BT's VoIP products, cheers, M.

    Skype allows calls from PC to PC and also to and from the landline and mobile networks. However, it is still only a secondary line at best, as it does not support emergency services.
    SkypeOut runs on a pre-paid credit scheme. Customers can find that calls can not be made once their credit has been depleted, at which point they will have to refresh their balance in order to place calls to the landline or mobile networks. Calls with BT Communicator are charged on the blue bill, which is much easier for them. Broadband Voice is a flat fee package, so there’s also no hassle with pre-paid credit.
    Although Skype allows the use of USB-connected traditional handsets, it is still a PC-based service. Its users still have to turn on their computer and run the service off their PC. For BT customers who wish to make VoIP calls without their PC, they can use Broadband Voice and enjoy the benefits of VoIP communications without the hassle/inconvenience of having to work through the PC.
    BT Communicator has additional benefits that Skype does not, such as 100 free enquiries per day on 118 500 and Caller Display
    BT has currently identified 2 key proposition in the consumer market - Emulation of normal telephony (Broadband Voice) & Integrated multi-media communication (BT Communicator)

  • At 4:36 PM, Anonymous said…


    I've no real inside info on this - I only know what been said in the press (FT etc.) or on pages such as silicon -,3800004463,39152176,00.htm



  • At 4:37 PM, Anonymous said…

    Hi Anthony,

    A personal view:

    I think this is illustrative of convergence between community, commerce and communication. Merger demonstrates the central importance of Broadband as essentially a disruptive technology that capitalises on the convergence of the communications, content, software industries with the potential to create and destroy value.

    To paraphrase a recent Intellect report on convergence, Deloitte (July 2005) predicts that worldwide it will lead to a $1 trillion shift in valuations and revenues in the converging sectors by 2010. As such, convergence represents both a disruptive threat and a huge opportunity for companies across a wide and fast moving sector of the UK economy.

    Kind regards,


  • At 4:38 PM, Anonymous said…


    According the the Garner Hype Cycle VoIP is on he cusp between the ‘Slope of Enlightenment’ and the ‘Plateau of Productivity’. I’m not sure that it’s there yet because there has been quite a bit of press recently about dissatisfied VoIP customers. Mostly complaints about the smaller providers but Vonage has had its fair share of critics. In the case of Skype and Vonage both management teams (+VCs) have been looking to capitalize on their investments. Vonage is looking for a buyer but is probably going down the IPO route. Microsoft has bought Teleo, Google has brought out it’s own instant messaging client; so I think the key activity at the moment is the bigger players making sure they have a product to work with. Not sure why Ebay bought Skype but most pundits seem to think it is for the potential 50m customers.

    My thoughts for the next couple of years is that we will see VoIP becoming more main stream but the area to watch is the fight back from the telcos and cable companies.



  • At 4:38 PM, Anonymous said…

    Dear Anthony,

    I wish I could see where it was going - presumably e-bay have some clever plan which will use Skype to the limit. I can only see mass marketing of cheap rate VoiP in the short term.

    Incidentally, following our meeting I bought an Ipod and then read of your HP experience. I now spend most of my spare time loading cds to my Ipod and listening to tracks I'd almost forgotten. I have now gone really mad and added an Ibook to my collection. A wonderful device which I now use all the time. A lightweight machine with a 12 inch screen which I spotted in a pawn shop in Salford for £350. Manufactured in April 2005 and with MS Office 2004 - it was a bargain.


  • At 4:39 PM, Anonymous said…

    Anthony,I have no idea.I think the future of high long distance call charges will disappear.However Skype charges to UK phones are nothing special-unless its Skype to Skype.
    In a business sense Skype fails information security standards and so big businesses do not use.Its a consumer thing at the moment.
    I think,however that with ebays "brand awareness" this product will become very visable

  • At 4:39 PM, Anonymous said…


    I'm hoping that we sell our company for a similar price.


  • At 4:40 PM, Anonymous said…

    Hi Anthony

    Have you read the following article:



  • At 4:40 PM, Anonymous said…

    Hi Anthony,

    Skype was doing just fine providing a much needed service to the community but I have doubts that eBay can afford to concentrate enough top level resources (short term) to make it a viable proposition without charging handsomely for the service. In short, Skype will not continue as a free service for much longer - or if it does, it will only offer minimal functionality.

    The good news is that Skype should develop quickly if enough money is thrown at it. Potentially it could threaten conventional phone companies as it is capable of providing extremely good quality VOIP to every internet computer equipped household and business in the world. I can see the end of ‘phone shops’ and rip-off international call charges. Telephony will become extremely affordable – so much so that ‘junk calls’ will need special legislation to control them.

    Problems created by inexpensive VOIP on an international level could actually affect the way we need to govern the world because the internet (and telephony) does not recognise boundaries or borders. I believe the internet really is a problem child in the making – and this is just the start!

    Best wishes,


  • At 4:41 PM, Anonymous said…

    This is what I just wrote for our management group:

    Skype, eBay and ki work

    eBay has just announced that it is to buy Skype for $2.6 billion, creating "an unparalleled e-commerce and communications engine" for Internet users worldwide. This is very significant for ki work. Unlike Vonage, it's main competitor, Skype is linked directly to users' PCs, therefore also to ecommerce transactions assisted by voice. Its growth is linked directly to expansion in the use of broadband.

    In an FT article last Friday, the forecast for broadband users worldwide is 190m by end 2006, and 440m by end 2010. With free and very low cost telephony now one of the main drivers for broadband take-up, Skype is now likely, with eBay as a partner, to scoop the major market share. As of today some 50 million people that have downloaded the Skype software for free worldwide calls within the Skype network, having now penetrated almost a quarter of broadband users. There are 3.4 million users online as I write. Some 2 million have signed up for SkypeOut, giving them very low cost calls onto the global PSTN and mobile networks.

    The significance for ki work is that eBay and Skype are now very closely linked to opportunities in e-commerce.

    Last week Brian Richard wrote in the VoIP Magazine that "of all the business application opportunities available, CRM (customer relationship management) will be huge. We’re starting to see some movement in that direction now with third-party plug-ins for and some less well-known CRM packages that have integrated Skype support into their commercial offerings. It’s only a matter of time before companies like Siebel get in the game but I think when it will really get interesting is when some company builds a CRM package from the ground up based on the idea of packetized voice." This is exactly what we are doing with OfficeSpark.

    Not just the CRM packages, but the networks of suitable agents required to provide the service. As more and more sales go onto the web, the need for agent-intermediated sales is likely to grow substantially, and with it, a networked organisational structure that supports it. This is where ki work comes in, providing access to the most flexible, high quality and low cost agent resource possible, at the closest point to the customer.

    Inbound sales from the web is likely to grow substantially through Skype and other VoIP solutions linked to the web. Outbound telesales are now under substantial pressure in the UK and other countries as Telephone Preference Services kick in. According to CM Insight, by the end of this month 10 million landline users will have registered under TPS and half of all landline subcribers will be on TPS by May next year. The shift from outbound to inbound sales is likely to significantly affect working patterns of the current 165,000 full time workers in outbound sales, currently generating some £3 billion annual sales according to the DMA.

    The current opportunity that we have with VEAS and Hutchinson 3 UK in the outbound/inbound sales of mobile phones will provide us with an ideal platform to test and penetrate this emergent agent-supported e-commerce market.

    We are now wholly focused on the opportunity with VEAS. The recruitment process is well advanced, training is due to start next week, and we are ready to go as soon as we can sort out the funding.

    Best regards, Michael

  • At 4:42 PM, Anonymous said…

    I’m not totally sure why ebay have done this, but it will give Skype a lot more visibility and therefore more people will try it.

    I use Skype and it works through my firewall with no changes – users disillusioned with MSN’s failure to work may migrate.

    If more users take it up and start to use the “to land line” service there could be implications to the telco’s call revenue


  • At 5:10 PM, Anonymous said…

    Technically this does not make lots of sense but, Yahoo and Google are fighting over the Chinese market and since Yahoo bought out Alibaba which owns a Chinese version of Ebay then Ebay are fighting back by moving into the Google/Yahoo market space.


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