Starting off the tech news with Skype

Good God, this is going to be a big week. And it's only begun.

Let me start with Ebay buying Skype.

There are some that feel like Ebay has no business model, or is going nuts doing this (especially for that kinds of dough). There are others who think this is just a visionairy move by a company that's already had success and is trying to push that even further. I think I have to go further than Scoble in saying this is just an "enrich the marketplace" kind of deal. In fact, not even Ebay's talking points are extremely compelling... are the fact that people are going to be able to make free phone calls to close the deal really that compelling? Pay per call for demand generation? That's pretty novel, but I'd like to see it implemented.

Ebay appears to be one thing to me... a giant point-of-sale device. The largest the world has ever seen. Yes, there's a catalog function, but that's a distant second. People go on Ebay to put sell goods in an efficient way... they don't care if a billion people see it or one person sees it, as long as the person who is willing to pay the most the market will bear sees a product and is able to buy it in an efficient way.

Why else would there be so many companies that use Ebay as their primary (or sole) display, sales and redemption engine? Maybe if Internet search engines were a hundred times better at identifying and structuring items that were for sale from existing online stores, finding all the bargains out and sorting them in a fairly clean way and then providing a trusted and straightforward interface for both the seller and buyer to exchange wares, there wouldn't be a need for Ebay at all. People would just maintain their own stores and be done with it. But in 2005, the way to get your stuff listed in the way you want it to the largest audience to take it to the best marketplace, rather than putting up whatever you want and letting the marketplace come to you. In this case, it means YOU do the work to enter in the product names, identify the price, set the description and then ... *magic happens* ... it gets sold and you fulfill it.

Now, thinking about Ebay as a point-of-sale, Skype becomes a different story. Today, if Ebay wants to become the point of sale front for vending machines, car dealerships and all those millions of other things that have no decent point of sales systems today, the likely path seems to be to hook up with a thousand different cell phone carriers and use them as your local representation (namely the connection between the seller, the buyer and the money exchange). But that is clearly unnecessary, as those cell phone carriers could ALREADY handle the transaction. But what if you reduced the value of the cell phone infrastructure to just giving you Internet on the fly. You'd need a way to communicate back and forth (such as Skype or broadband), a verification mechanism (Ebay's selling system) and some sort of credit card processing infrastructure (such as Paypal).

I guess we'll see... maybe it's just a huge deal because Ebay sees the company growing to $200 M in revenue in 2006 and will have over a hundred million users. At that rate of growth, it could look like a cheap acquisition by 2010.