Monday, September 12, 2005


To the collective group of telcos who consistently adopted an adversarial stance towards Skype, or dismissed it as heretical or ridiculous, I think you have really and truly blown it by not taking out Skype yourselves at some earlier stage in its development. We can debate the valuation eBay has tabled (it does look steep at $2000 per paying sub, assuming the full earn-out is paid), but the fact remains that Skype offered the ultimate opportunity in virtual footprint/brand expansion, and it's interesting that among all the mooted bidders for Skype (some of them apparently highly unlikely on first glance, like eBay itself), there was not one single incumbent telco ever mentioned. As my friend and sometimes partner in crime, Martin, once said, "Company X hasn't realized that it has two choices - dominate or die."

The EuroTelcos in particular seem to prefer buying network assets in adjacent markets, or taking out pesky players in core mobile markets, rather than waking up to the real long-term direction of voice communication - which is in presence, identity/relationships, and integration with other applications/activities. As a friend recently said of Google Talk, "These people are restoring innovation to communication in a way that the telcos never could/would, and also in a way which never occurred to the 'traditional' VoIP players." In my view, Skype accelerated this process by creating a sense of urgency, even crisis. No doubt the telcos will probably laugh at eBay, but I can't help but feel that this situation is a shameful reflection of the shortsightedness of telcoland. And to anyone who thinks that this somehow offers a respite from the Skype threat as the business is realigned to feed eBay, I would counter that in today's conference call there seemed to be a clear commitment on the part of eBay to Skype's existing standalone business - but this time backed by eBay's marketing muscle and budget. Anyway, it's over and done, unless of course eBay places Skype for auction on its own site.

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