eBay gets Skyped

Yesterday eBay announced that it was buying Skype, the Internet phone calls company, for $2.6 billion. $2.6 billion for a company with no profit, about $60 million in annual revenue and limited synergy with the online auction business. Has eBay gone mad?

The price is a bit steep but what eBay is interested in is not the current revenue figures. It is the number of users (52 million,) the growth (going through the roof at the moment) and the brand (Skype is well known in both the business and consumer community.)

The $2.6 billion price tag means eBay have payed $50 for every registered user. However the speed this thing is growing means there could be 500 million users in 5 years time which works out at a more reasonable $5 per user.

Skype's penetration into America is limited at the moment so there is huge scope for eBay to use some of its cash mountain to market Skype in the USA and bring about some serious growth. No doubt eBay will find a way to integrate Skype with its online auction sites, probably more as a way of advertising Skype than anything else.

As for seriously monetizing the use of Skype I imagine that will come later once a big enough community is built up. For now it is about growth, growth, growth.

If you wanted to invest in Internet growth then three areas you would want to get into would be auctions, payments and VoIP. With eBay you can now buy the leader of all three! For those with a long term view I would say buy, buy, buy!