Auction site’s CEO says VoIP unit must show strong synergies to justify its place in eBay’s portfolio.
eBay this week said it may sell Skype at the end of the year if it fails to find the best way to position the Internet telephony business within its core operations.
“What we’re testing this year are the synergies… If the synergies are strong we’ll keep it in our portfolio. If not, we’ll reassess it,” eBay’s new CEO John Donahoe told the newspaper.
Donahoe hinted that this could lead to a sale of the business.
The online auction site’s $2.6 billion acquisition of Skype in 2005 was met at the time with some scepticism.
eBay justified the purchase, claiming Skype would make communication between buyers and sellers easier, however, scepticism turned into ignominy for eBay last October when it wrote down the value of the VoIP unit by $1.4 billion, after it failed to live up to expectations.
However, on Wednesday eBay reported that Skype’s first-quarter revenues rose 61% year-on-year to $126 million, with membership increasing by 33 million during the last three months bringing its total number of customers up to 309 million – more than any other user base in eBay’s portfolio.
The online auction site’s VoIP division also achieved 100 billion cumulative Skype-to-Skype minutes.
“What we know is, Skype is a great stand-alone business,” said Donahoe.
A great stand-alone business it may be, but the $126 million in revenue Skype generated in the first quarter is a small proportion of the $2.19 billion in revenues that eBay generated as a whole.
What’s more, Skype’s growth weighed on eBay’s first-quarter operating margin, which declined on year from to 32% from 33.6%.
“The decrease in operating margins was caused primarily by our faster growing lower-margin businesses, such as PayPal and Skype,” said eBay in a statement.
However, Donahoe said he expects Skype to turn a profit in 2008, with revenues topping $500 million.
Meanwhile Skype is also ramping up its push into the mobile space through its on-going work with 3 UK.
The operator said Tuesday that it plans to release an enhanced HSPA version of the co-branded Skypephone it launched in 2007 in the next two to three months.
Wireless Mobile Telecom Wireless News
French mobile operator SFR has extended its Illimythics unlimited mobile internet offer until 11 March. To date, the service has attracted 250,000 subscribers, well above an initial target of 100,000. Some 25 percent are new customers and 48 percent are SFR subscribers who have changed plan free of charge. The company states that users can enjoy unlimited internet surfing, messaging, music and live TV, with no time or download volume restriction. A 2 hour Illimythics plan will cost EUR 39 for two years to the first 50,000 consumers who sign up by 11 March. The price then rises to EUR 49 per month. SFR ’s 3G+ (HSPDA) network covers 70 percent of the French population. It carries big internet names such as Google, Dailymotion, YouTube, MySpace, eBay, etc. A broad range of 3G+ handsets are available.
Wireless Mobile Telecom Wireless News
Vodafone’s 3G and 2.5G customers will be able to surf the web for a fee of 99 cent per day or €9.99 per month subject to “fair usage” price caps from tomorrow.
While customers can continue to access all sites on the internet, Vodafone has teamed up with Google, Myspace, Ebay and Youtube to allow a more enhanced service on those sites.
With Mobile Internet, users will have access to such websites on their mobile phones, with the new system allowing for the compression and rearranging of web content to make it more mobile-friendly.
Wireless Mobile Telecom Wireless News
ORANGE, the mobile-phone company that made its name by trying that bit harder for customers, was recently rapped for misleading advertising.
The Advertising Standards Authority upheld a complaint against a broadband ad in which Orange promised “unlimited UK and international calls . . . and unlimited downloads”. In fact, there were “fair use” caps on both aspects of the service, limiting calls to 1,000 minutes a month and downloads to 40 gigabytes (GB) of data.
Orange has a similar problem with the flat-rate data bundles it introduced in May to encourage people to access the internet via their mobiles. Some customers have been irritated to discover a “hidden” usage cap ? this time set at 30GB of data.
These incidents are indicative of the decline of one of the great brands from the 1990s. From the introduction of per-second billing onwards, Orange established a reputation as the customers’ friend ? a company that would shun the opaque money-making schemes of its rivals.
Seven years after its takeover by France Telecom, it has shed much of its former lustre. One City analyst said: “It has lost its way. The strategy went awry and the brand was tarnished.”
Jean-Pascal van Overbeke, the vice-president who heads Orange’s UK mobile business, does not duck the issue. “The brand has been eroded, absolutely,” he acknowledged. “We lost our track a bit. It’s a combination of the competition copying a lot of the positioning, and us doing less to differentiate ourselves.”
But Van Overbeke believes he can see the first signs of a revival. Seven years after paying £4 billion for 3G mobile spectrum, mobile internet services are finally starting to become popular. He said 2m of the company’s customers now access the internet from their phones every month.
“We really believe we are at a [crucial] moment,” he said. “People are using the internet more every day. We can feel it’s coming. We see 2m users, we see the revenues we get, we see what’s happening on the web. We feel it in our figures.”
Orange is not alone in this. The mobile internet was once a dirty term in the industry, because the reality of “wap” browsing was such a disappointment. Now Vodafone is willing to put serious money behind the slogan: “The mobile internet is now” ? and Apple is entering the mobile arena with its internet-browsing iPhone.
Critics contend that the Orange brand was damaged not by any one big failing, but by numerous small ones ? such as the limitations on its “unlimited” broadband and mobile deals. A series of management changes, and the change of priorities forced on it by France Telecom’s financial crisis of 2002-3, sapped its energy, and weakened its focus on keeping customers happy.
Although this caused no immediate harm to Orange’s financial results, its customers’ loyalty was tested. Its industry-leading level of churn ? that is, departing subscribers ? rose substantially before peaking last year at 25%.
Van Overbeke said the relationship with France Telecom has often been awkward. Orange (the group, not just the UK business) has remained based in London but control has shifted to Paris.
Under financial pressure, France Telecom ? a traditional telephone company ? dumped Orange’s original vision of a “wire-free future” in favour of a “convergence” strategy that combines mobile with fixed-line services such as broadband. The group’s British internet arm, originally called Freeserve, was rebranded as Orange.
Sanjiv Ahuja, Orange’s chief executive for the past three years, doesn’t speak fluent French and is reckoned to have struggled to assert his authority. Although he remains chairman, he recently stepped aside to be replaced by Olaf Swantee ? Orange’s fifth chief executive in seven years.
Another important factor was the slowing growth of the mobile industry, and the slow take-up of mobile data and entertainment services.
Orange believes that mobile internet technology has finally matured to a point where services ? such as browsing for information, online shopping and auctions, or seeking maps and directions ? can be delivered in a form that makes them easy to use.
For example, picture-messag-ing was one of the mobile industry’s great disappointments. Nearly everyone loved camera phones but few people could be bothered to send pictures.
In contrast, Van Overbeke is excited by the results of a trial with Nokia, which built in an option in some of its phones to allow pictures to be uploaded easily to an online album. More than 80% of those who had phones with this feature are uploading photos to a web portal where they can be seen by friends and family.
With this experience, Orange is working with eBay, Bebo and other popular web businesses to produce versions of their services that are simpler or otherwise more “relevant” to people who are out and about with their mobile phones.
The mobile internet simply cannot replicate the full experience that is possible with a computer, said Van Overbeke. “People want to snack,” he said. “We need to identify the mobile part of the service that we can make perfectly relevant on the phone.”
Orange was slower than rivals such as T-Mobile and 3 to introduce flat-rate data tariffs, which give customers certainty about what they are spending.
Van Overbeke suggested that these plans were only a partial solution because they required customers to commit to spending almost £100 a year.
Moreover, he insisted the slow take-up of the mobile internet had faced a bigger hurdle than the price of the service. Cost was important, he said, but not as important as persuading consumers that the service was relevant to them. Better handsets, more targeted applications and more understanding among consumers was finally making that happen.
In the next few months, the company will make changes to its Orange World mobile portal to make it easier to use. Free sections of the site will be clearly labelled “free to browse”. And Orange will use its customer information to help users find what they are looking for more quickly.
It will also start to charge for internet usage by time rather than by data usage, making it easier for people to understand how much they are spending. Van Overbeke said selling 15-minute sessions would encourage people to try the mobile internet without having to sign up for a flat-rate plan. “You cannot be afraid because whatever you do there is a maximum per day,” he said.
Orange hopes these steps can help restore its brand to its past glory. “There are small innovations coming every week, every month, that will put Orange in the driving seat,” said Van Overbeke. “It will help us reposition this brand where it always has been ? as the champion of the customer.”
Wireless Mobile Telecom Wireless News
Three is tying up with Ebay, Google and Skype! - All of this spells “Good News” for the consumer. We’ll see how it is priced eventually. T-mobile came up with an all you can eat price plan with web’n'walk which was great! This would be one to watch.
Original article from BBC Below:
————
Mobile firm 3 has agreed a tie-up with top internet firms in a move it claims will make the mobile internet work properly for the first time.
Third generation (3G) mobiles have proved a financial disaster as companies have struggled to interest consumers in using the new technology.
Firms spent billions on technology making it possible to surf the web or watch television through handsets.
But they found customers were only using them for simple phone calls.
Service promise
3, the company which launched Britain’s first 3G network, now says it is going to make the mobile internet more interesting.
It is launching a partnership with internet firms including Skype, Google and eBay.
The promise is that users will be able to make free internet phone calls, watch their home television on their phone and tap into their home computers on the move.
The price for all these services will be a flat-rate monthly fee.
Mobile phone companies often make big claims when launching new products - but analysts say 3’s move could change the industry.
eBay mulls Skype sale
