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
- January 7th, 2008
- 3:02 pm
Sony has confirmed that it is adding Skype features to its PlayStation portable gaming device. Registered Skype users will be able to make free voice calls to other Skype subscribers over the PSP, view and manage contacts, see which friends are online, make SkypeOut calls to landlines and mobiles and use their SkypeIn number to receive calls. PSP users worldwide will be able to start using Skype features and services through a system software update scheduled in late January. After updating the PSP system software, a Skype icon will be added to the Network category in the home menu. PSP users who do not yet have a Skype username can register by clicking the icon and following the instructions. PSP users who already have a Skype user name can immediately sign in by clicking the Skype icon and entering their user name and password.
Wireless Mobile Telecom Wireless News
- November 5th, 2007
- 9:54 am
Advertising is an enormous U.S. economic force; in 2006, it was estimated to be worth $296 billion. In old media, it funds terrestrial network TV, radio and Yellow Pages while paying half or more the cost of most newspapers and magazines. Online digital content is also largely free to consumers, with e-mail, social networking, popular information and listings paid for by $20 billion in banners and sponsored search. Virtually anyone with a computer is online, most have broadband and use is unconstrained by price.
Access to content at no incremental cost to consumers stokes up demand by orders of magnitude. Un-metered dial-up and flat-rate broadband Internet access make online usage free. Google, Yahoo!, eBay, MySpace, YouTube, Skype and Sling Media ride for free on the carriers’ pipes, but among others, these destinations are why most households pay $20-$45 per month for fast Internet access. Advertising charges underpin these Web players’ business models, whereas monthly recurring charges have made large and healthy new business for telcos with DSL and for cable companies’ with Internet modem services.
NO SUCH THING AS FREE
In mobile, there is no such thing as free for most subscribers, where uptake and usage is significantly constrained by pricing. Additional phones can be added to my AT&T family plan for $10 per month. My bucket of 1,400 voice minutes can be shared among them, but data plans are on a
per-phone basis with unlimited Web starting at $20 per month and rising to $40 with video and text. Without a data plan, usage charges are a whopping $10 per megabyte.
Mobile Internet uptake and usage will increase dramatically as unlimited data plans become more widely adopted and cheaper with increasing competition. Not many users are willing to pay a subscription or variable charges to access weather information on a phone when they can get it so many other ways for free. New data users are even less inclined to pay monthly subscription fees for premium content and will have less need to do so with increasing availability of free content. Leap has recently undercut the leading carriers by 40% with its Cricket unlimited EV-DO PC data card plan at $35.
Intensifying price competition in handset data plans is also inevitable. Information providers will provide much of what we want with advertising support and with “free” generating massively increased demand. Carriers also benefit – as they did with online – with substantially increased subscriber uptake for mobile data.
MORE ROOM TO GROW
Potential abounds. Several pioneers with ad-supported business models are jumping in with the same entrepreneurial drive as in online. So far, for example, only around 13% of mobile subscribers access news and information each month and less than half that percentage use search. Only a small proportion of content pages viewed on the mobile Web or via rich clients such as Java or BREW include any advertising. Nevertheless, approximately 1 billion ads are served by Admob and Third Screen Media each month in the United States, and the number is growing rapidly. Mobile advertising is at bargain prices. Display ad cost per thousand (CPM) and search cost per click (CPC) are substantially less than their online equivalents, where in search, for example, clicks average more than a dollar and frequently fetch $25 or more for hot key words with high priced purchases such as mortgages or insurance.
Mobile search providers Medio, JumpTap, Microsoft (MotionBridge) and Google have the additional capability of click-to-call. With location-based capabilities, local search and advertising has unique potential in comparison to its 15% share of online. For example, location-based click-to-calls from Saturday night revelers who fall on the wrong side of the law would be worth a lot to attorneys who specialize in these matters.
There are still significant challenges in this nascent marketplace. Advertisers want national reach across all major carriers. Whereas consumers frequently switch TV channels, consumers tend to have just one phone and one on-deck carrier experience. Advertisers also need systems to make buying and formulating campaigns easy, the workflow capabilities to target and match advertisements with Web page inventory and the measurement tools to measure effectiveness.
Mobile advertising revenues are less than 1% of wireless carriers’ $20 billion in data service fees which are growing at double-digit rates. Advertising revenues in support of the content subscribers consume will surely grow to a significant proportion of these figures over the next few years.
Wireless Mobile Telecom Wireless News
- October 25th, 2007
- 1:37 pm
US-based software services provider Noise Free Wireless has announced that a beta version of its NoiseFree VoIP application is now available for user trial. NoiseFree VoIP provides mobile professionals and VoIP clients with software that cancels distracting and call disabling background noise regardless of the environment. NoiseFree VoIP offers receive and transmit signal-to-noise ratio enhancement in excess of 15dB, ensuring that callers can be heard clearly regardless of background noise environments. Noise Free products provide, receive and transmit noise cancellation and require no additional hardware devices, DSP chips, or other additions to support laptop or VoIP handset usage. NoiseFree VoIP supports a wide variety of VoIP software including Skype, Yahoo Messenger, Google Talk and softphones. NoiseFree VoIP Beta is being offered in a free trial version and is available now for download from the Noise Free website. The general availability release is planned for Q4.
Wireless Mobile Telecom Wireless News
- October 18th, 2007
- 2:41 pm
Social networking site MySpace has agreed to integrate Skype into its website, allowing users to call each other over the VoIP service. Starting in November, MySpace users will get free calls to other MySpace and Skype users and be able to buy Skype prepaid credit for calling fixed and mobile lines. The service will be added to the existing MySpace instant messaging platform, with no software download required. MySpaceIM with Skype will be available in 20 countries with local MySpace sites. No financial details were released. MySpace has around 110 million active users each month, while over 25 million people use its instant messaging platform.
Wireless Mobile Telecom Wireless News
- September 26th, 2007
- 2:19 pm
THE NEWS that Blyk is continuing “the rigorous testing of its technical platforms” emerged this week. Which in effect means it has missed its launch deadline of mid-2007. The new mobile network is aimed at 16 to 24 year olds and will provide them with free texts and minutes just for looking at a few mobile ads.
As long ago as April, Blyk revealed that it had tied up with France Telecom/Orange and is launching in the UK first, despite its Scandinavian connexions.
The company confirmed that it had got Buena Vista, Coca-Cola, I-play Mobile Gaming, L’Oreal Paris, StepStone and Yell.com mobile to sign up as advertisers.
But this doesn’t appear to have been enough. Blyk claims to be “acting on insight from consumer research conducted alongside our launch.” We sounds like adspeak for we ain’t got enough supporters yet.
The INQ has always questioned the value proposition behind advertising to people that are so broke they can’t afford prepaid minutes.
The argument is that these youngsters eventually become high earners. Well, yes. But will they remember a mobile ad they saw eight years previously?
Virgin Mobile USA recently said that it signed up roughly 330,000 of its 4.8 million subscribers to its ‘ Sugar Mama’ programme.
With Sugar Mama, all youngsters have to do is watch 45 seconds of ads on the Virgin Mobile web site to earn one minute’s worth of air time.
It must be working because Virgin reckons it has given away around 9 million minutes of call time so far.
So the theory works but it simply doesn’t look a strong enough proposition to allow subscribers to talk for absolutely nothing.
Unfortunately for Blyk, if it is going to become the mobile equivalent of Skype then it’ll have to be totally free. At least free between callers on the Blyk network.
Wireless Mobile Telecom Wireless News
- August 29th, 2007
- 2:43 pm
Networking products provider Netgear has introduced the SPH200W, its latest Wi-Fi Skype phone with 802.11b/g compatibility. The phone enables its users to make calls at public Wi-Fi hot spots and via home networks. The white handset comes with a charging cradle and includes a speakerphone, support for seven languages and storage for up to 500 contacts. Talk time is estimated at four hours and standby time at 48 hours, double the amount of Netgear’s first Wi-Fi phone, the SPH101 released last year. No pricing and distribution details were available on the Netgear website.
Wireless Mobile Telecom Wireless News
UK messaging group SpinVox has signed an agreement with Skype to offer the SpinVox voice-to-text service for Skype’s internet communications software. The SpinVox service will allow Skype users to have all their voice messages converted and sent directly to their mobile phones as an SMS when they are not at their PC. The service will be available at launch in English, Spanish, French and German.
Wireless Mobile Telecom Wireless News
Skype(TM) is now available on the Nokia N800 Internet Tablet, bringing Skype conversations anywhere in the world where there is an available wireless internet connection (WiFi).
Skype is the recognized leader in internet calling, with more than 196 million registered users worldwide. The Nokia N800 gives people easy access to the Internet and it’s a natural step that they will want to make Skype calls away from their desktop.” said Ari Virtanen, Vice President, Convergence Products, Nokia. “Consumers can now start enjoying the benefits of Skype on the Nokia N800 and experience a free and easy way to stay in touch with friends, family and business colleagues around the world.”
Skype for the Nokia N800 will be available for download for existing users. There will also be Skype download links on the latest release of Nokia N800 devices which will be available at retail and on the Skype online store. From coffee shops and public parks to offices to hotels or even on the beach - users will now be able to make Skype calls anywhere they can find a WiFi hotspot.
“Skype for the Nokia N800 is another important step in our mobility strategy,” said Eric Lagier, Skype’s head of business development for Mobile. “Our users are no longer just using Skype on their computer desktops. With the growth of mobile devices and WiFi, consumers expect to be connected wherever they are, at the office, at home or on the move. Making Skype available on such an innovative, portable device, lets us bring internet conversations to the mobile masses.”
Wireless Mobile Telecom Wireless News
Ericsson IPX has signed an IPX Messaging with VoIP company Skype, negotiated by the IPX team in the UK. The Ericsson IPX Messaging service will allow Skype to offer a more robust service to their customers in delivering SMS services through their Skype application. The system supports the outbound SMS messaging capability built into Skype software, currently used by 196 million people worldwide. Ericsson IPX operates as a global broker between operators and content companies, providing connectivity and payment mediation. It focuses on mobile premium and non-premium connectivity via SMS, MMS, web and WAP.
Wireless Mobile Telecom Wireless News
eBay mulls Skype sale
