Mercator Capital Looks At Skype and Possible Lack of Focus

The most recent VoIP Newsletter from Mercator Capital takes a close look at eBay’s acquisition of Skype and seems to be echoing the issue about focus that others have been saying to me for some time by stating in the opening paragraph “Both the number and variety of announcements, launches, partnerships, and investments beg the question as to where Skype is going and what this means for the IP communications sector.”

The line “On a business level, Skype needs to prove its value to eBay, and this
means monetizing their brand. They have had limited success doing so
with SkypeOut/SkypeIn, and these moves are a clear signal that Skype
needs to move off the PC and into the hands of consumers to generate
appreciable revenues…” is to me the key here.

eBay bought what they hope will be a future revenue stream via the Skpe acquisition and also wants to fend off the intentions of Yahoo and MSN into its world, while expanding into their own as a potential portal play by offering shopping, content, financial services and making it all simple via communications. In net speak that e-commerce to an E, so I get that, but as the newsletter points out “Millions will continue downloading and using Skype, but with so many
broadband voice alternatives now, the value proposition for paid Skype
services needs to evolve substantially to capture the kind of dollars
eBay will soon be looking for.”

Here the author is calling into question if Skype will ever really generate the earnout needed to get all the money from eBay it expects. All of this is expected to come not only from increased usage of In/Out and VoiceMail, but from licensing via third parties who produce and market new products, and from developers using the API.  Skype has a problem here as developers and licensees I spoke with at CES and DEMO seem to always voice a recurring disconcerting theme in their comments about trying to work with Skype (especially post Pooj) that Mercator Capital seems to have picked up on too.

The opportunity is there for the Skype/eBay taking, as long as they can pull off what they need to. I’m still rooting for victory, but right now, it’s too early in the game to make a prediction on the outcome.