Monday, September 7, 2009
eBay Sells Skype: Looks to Adapt to Changing Online Market
It may come as news to many, but the popular online telephone service Skype was, until just recently, owned by the online retailer eBay. Skype was originally purchased by eBay and was envisioned as a way to make communication between its buyers and sellers easier. Although Skype never produced results for eBay, the company now has over 480 million users. Bringing in $170 million in the second quarter, Skype has demonstrated that it is a viable company that is ready to grow as its own entity. The buyers, a consortium of private-equity and venture-capital funds, paid a whopping $2 billion dollars in cash for a 65% stake in the VOIP giant. The decision to sell Skype comes as eBay reevaluates its business and where it will go in the future. Decreasing sales due to the current recession and a new online consumer preference to purchase items at set prices has halted eBay’s growth. To give an idea of how significant a shift eBay is working through, they recently reported a 7% decline of year-on-year quarterly revenue, the first ever for eBay. To adjust to the new online market landscape eBay has made an effort to highlight its fixed-price items and prominently display highly rated sellers in search results. Will these changes keep eBay a relevant online market place? The popularity that Twitter and Facebook now enjoy is nearly identical to what eBay once experienced. Surviving past the initial growth is proving to be more difficult for eBay. When a new technology enters the market it can take off like wildfire. Some technologies become pillars in the economic system and others fall by the wayside. The current situation that eBay is in shows how important it is to keep innovating and changing for businesses and technologies.
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Very interesting post - as I was reading the article, I thought it was weird to learn that in recent years online shopping has somewhat declined. The author explains that online shoppers have grown tired of buying through the internet because it is often time-consuming and have reverted to buying offline at set prices. Because of this, as well as the recession helps explain why eBay reported its first year-on-year deline in revenue last January. I also thought it was very interesting how the author thinks that although today all the rage is coming from internet firms such as Twitter and Facebook,that eventually consumers might find better things to do with their time.
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