Tuesday, September 1, 2009

For Skype it’s a New beginning

Skype says, Freedom at last. Free to do what its best at. Not gone get bogged down by all those big corporate policies. Today, eBay, the company that made the founders of skype billionaires , announced it has signed an agreement to sell its Skype communication unit for $2.75 billion. The buyer is an investor group led by Silver Lake and includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board. EBay will retain 35% equity investment in Skype. The deal is expected to close in the fourth quarter of 2009.

Here is what eBay CEO says about the deal:

“This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype,” said eBay Inc. President and CEO John Donahoe. “We’ve acted decisively on a deal that delivers a high valuation, gives us significant cash up-front and lets us retain a meaningful minority stake with talented partners. Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments businesses. As a separate company, we believe that Skype will have the focus required to compete effectively in online voice and video communications and accelerate its growth momentum.”

Josh Silverman, CEO of Skype calls it a beginning of a new chapter for Skype . He has been instrumental in leading the company in the right direction after the founders cashed out. There was a great momentum going for Skype in the mobile arena under the guidance of Josh. The revenue projection for this year looks solid and stands at $600 million. Skype carries 8% of the global long distance traffic.

From a technology standpoint, eBay did a poor job by not acquiring the P2P technology IPR. The P2P technology used by Skype is proprietary and is owned by Joltid, a company that was founded by Niklas. Yes, Skype doesn’t use a standard VoIP protocol. It uses a proprietary protocol. Time and Again, folks from VoIP industry have raised this issue many a times. I don’t see a motivation for skype to support standardized protocol like SIP. NADA! From a user standpoint, they don’t give a damn what protocol is used for communication as long as the quality of service is good. However, from an interoperability standpoint, it makes sense to support a standard protocol. (They do support SIP protocol for PSTN interface and maybe for SIP trunking.) I guess this is more to do with software support than hardware. Supporting standard protocol is gone cost them tones of money. They need to build SIP proxy servers, media servers to traverse NAT fire walled clients and support CALEA compliance. All these infrastructure cost would affect their revenue margins as well. With 400 million users worldwide, they could probably become a bigger MagicJack, which is making close to $100 million in revenue .

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