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eBay Bids on Becoming VOIP Power


In a real shift, eBay, as is evidence by its purchase of Skype, wants to not just help you auction off your old stuff, but it wants to become your Internet phone company as well.

Good luck, guys.

When eBay CEO Meg Whitman said, “Communications is at the heart of e-commerce and community,” who can disagree with her? What I have trouble with is “combining the two leading e-commerce franchises, eBay and PayPal, with the leader in Internet voice communications … will create an extraordinarily powerful environment for business on the Net.”

I see no fewer than three problems in that last statement.

The first is that I dont see any natural synergy between Skype’s VOIP (voice over IP) and eBays auctioning and online purchasing systems. Do you?

Yes, you could have voice bids for online auctions, but why bother? eBay has honed its online auction system to a fine edge. For eBays core businesses, Skype doesnt really add anything.

Next, I thought eBay and PayPal made money from consumer-to-consumer or business-to-consumer plays, not business-to-business. When I think about business wheeling and dealing, I dont think of eBay, PayPal or, for that matter, Skype.

Finally, while Skypes 40 million customer base is bigger than that of Packet 8, VoicePulse and Vonage combined, theres serious—much more serious—competition coming into the field: Google, Microsoft and Yahoo.

Google has already dipped its toe into VOIP by introducing it into its new IM client, Google Talk Beta. Unlike Skype, which uses a proprietary protocol, Google Talk uses the open SIP (Session Initiation Protocol). Google is already working on interoperability with other SIP-compliant VOIP services such as EarthLinks Vling and the SIPphone teams Gizmo Project.

Microsoft is already deploying VOIP in businesses with LCS (Live Communication Server) 2005 and MSN Messenger for the hoi polloi. The company also recently purchased Teleo, a VOIP provider.

Yahoo isnt being left out of this charge either. Earlier this summer, Yahoo bought Dialpad Communications to add VOIP calls to the PSTN (Public Switched Telephone Network) to its existing Yahoo IM clients PC-to-PC call capabilities.

So, why is eBay doing this, instead of sticking to its strong points by focusing on its recent push to make Internet micropayments viable?

Part of it may be that the other companies are moving in on eBays home turf. While no one has mounted a credible threat against eBay in online auction in years, Google is getting ready to move against PayPal with its “Google Wallet” project.

And, as trite as it sounds, I dont think you can underestimate the “everyones doing it” factor. In turn, whats driving that is that broadband, necessary for practical VOIP use, is becoming increasingly more common. Informa Telecoms & Media predicts that the global broadband Internet market will be over 190 million users by the end of 2006.

Thats a lot of eyes looking at ads on a PC during a phone call.

eBay, even more so than Google and Microsoft, knows its users. The auction company doesnt know just what sites its users look at, it knows what they actually buy. That, in turn, means that eBay has the capability to place ads it knows its users will look at in front of them.

Thats not a small thing.

As Cisco CTO Charlie Giancarlo said recently, “The world in the future will be made up of the quick and the dead. In business terms, the quick are those who capture information about their market and suppliers and act on that information rapidly. The dead are people who dont know and cant act on information.”

eBay clearly wants to be quick. My questions boil down to: All things considered, will eBay be quick enough?

A version of this story first appeared in eWEEK.

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