Mobility the key for Skype and eBay

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When eBay acquired Skype for up to $4.1bn this month, Meg Whitman, the online auctioneer’s chief executive, called Skype a “great stand-alone business” but her rationale for the acquisition seemed focused on how it would benefit eBay’s web-based business.

Is Ms Whitman missing the best part of Skype?

In just two years, Skype has evolved from geek toy to mainstream voice over internet protocol service with millions of users. Central to this transformation has been the vision that Skype could break free of the desktop PC and integrate with traditional telephone networks.

But as the world went wireless, Skype’s lack of mobility meant it was left out of a lucrative market.

Recently, the company has announced a series of baby steps into the wireless arena, such as pre-installing Skype software on cellphones from Motorola. But such partnerships did little more than raise brand awareness.

Skype’s first serious foray into the wireless business came in July, with partnerships with Boingo and Cloud, leading WiFi hotspot service providers.

The subscription service gives customers access to Skype as well as “all you can eat” WiFi access at more than 18,000 hotspots worldwide.

“We want to give consumers the choice to avoid expensive roaming fees,” Skype said at the launch.

“By tapping into the mobile world, we are extending our reach into a market that is nearly double the size of the existing fixed internet, and fast-growing,” says Niklas Zennström, chief executive of Skype.

Tim Draper, a venture capitalist who helped finance Skype and other successful start-ups such as Hotmail, shares Mr Zennström’s mobile vision. “The wireless industry is a natural for developing products that can operate in the Skype environment. We expect wireless Skype to become prevalent as a primary voice transceiver with cellular as a back-up.” Next year, Skype will launch a WiFi telephone that enables Skype calls over any public WiFi network. “

Unless cellular data tariffs drop, Skype’s mobile dream will remain hobbled inside WiFi hotspots.

In October, the German mobile operator E-Plus will join the few service providers to offer such “all you can eat” data packages, charging €40 a month for unlimited access via a PC data card.

E-Plus will distribute Skype software, a headset and include 30 minutes of Skype call credits.

But lkka Raiskinen, a senior vice-president at Nokia, believes mobile Skype may appeal for reasons besides cheap calls, with users willing to pay more for “access to a large community of users [such as Skype],” he says.

Other cellular operators are waiting to see whether Skype turns out to be friend or foe.

“Ultimately, I think mobile operators will need to embrace Skype rather than fight it,” says Gartner analyst Martin Gutberlet.

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