eBay off loads Skype after it fails to be popular with buyers and sellers
On Wednesday, eBay CEO John Donahoe suggested that Skype has not proven a successful tool as a means of communicating for sellers and buyers. Mr Donahoe was defending his decision to sell the company at just a five per cent profit after purchasing it in September of 2005.
Back in 2005, eBay bought the online communication firm in the hopes of allowing buyers and sellers on its online auction site the ability to communicate in real-time. However, at the time the purchase was made, analysts warned the firm that online auction users would not be keen on real-time communication, which may actually hurt the business not help.
Skype was bought by eBay for $2.6 billion with the aim of using the VOIP company to let buyers and sellers speak quickly to finalise deals. Ian Fogg, of Jupiter Research, said that language barriers would be the downfall of Skype because foreign language users of the online auctioneer would not wish to communicate in real-time. The senior analyst said that it was one thing for speakers of English as a foreign language to communicate by email, but a much more difficult endeavor to speak on the phone.
Four years after the sale, eBay sold 65 per cent of its shares to Silver Lake Partners, a private equity firm. Now, eBay will shift its efforts to more successful web endeavors like PayPal, retaining only a minority share in Skype.
As eBay continues to weather failed web ventures, the company plans to continue to expand its e-commerce. Mr Donahoe has said the company will look to the continued growth on online commerce, but learned that Skype may not be the future for merchants.