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Subject:  Re: Ebay paid way too much for skype.. Date:  9/22/2005  1:33 AM
Author:  highfructose Number:  22951 of 25883

If Skype was such a dominant force before eBay bought them, how come they could only create $1 of sales per user? I think it's because as a stand alone, it wasn't necessarily going to create tons of value.

Skype isn't yet a dominant force. If it became one eBay would be in a position to nickel and dime certain users, like eBay sellers and other businesses. This would be similar to the situation with PayPal. It's easy for buyers to set up an account with BidPay or other services but few do and if buyers only want to pay with PayPal then sellers generally have to accept that (and be charged a fee for it). If Skype became dominant and if callers to businesses didn't want to bother using anything but Skype then businesses would have to take Skype calls and be charged fees.

I think it was mentioned in an article somewhere but if WiFi ever had wide coverage you could replace cell phones with VOIP phones. If Skype was the dominant VOIP service it could replace the cell phone business.

One switching cost which might tend to lock users into a service is their unique calling ID. With cell phones people want to keep their numbers but their numbers are portable. Skype IDs probably won't be portable.

Whether Skype does become dominant is the big unknown. However, if it does become dominant it could be an extremely valuable business.
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