While analysis has been all over the board as to why eBay decided to acquire Skype, let me assert that the underlying driver for the deal was actually somewhat different than what conventional wisdom suggests.
eBay concluded that ensuring long term relevance was a function of having a proprietary software application/platform that could capture more of a consumer’s daily mindshare than their current transactional focus affords. So they bought Skype as their client software play.
The scenario goes as follows. Meg Whitman and her lieutenants are reading the Web 2.0 relevance tea leaves and see Google rolling out its Desktop application with Sidebar, Yahoo enhancing its “My” strategy with (among other things) Konfabulator, and Microsoft closing in on Vista (and everything that entails).
And all of these folks are jumping on the syndicate, subscribe and open API bandwagon to capture more of a consumer’s daily mindshare and engage developers to create compelling, differentiated, mashed up Web apps.
Double clicking down to the next layer, the eBay-ers conclude that the scenario suggests that whereas in Web 1.0, staying away from proprietary software was a virtue, in 2.0 leveraging an installed base specifically by getting them addicted to your proprietary software is critical.
Why? Because it ensures your relevance to consumers since they can easily customize the service to their needs. This in turn increases the aggregate amount of time they spend engaged with your service and best of all, de-couples your service from a single web site. Not only is the user always online now, but your service is always running alongside with them.
Playing this scenario to its logical end, if the core online real estate is Marketplaces for buying stuff, structured Listings for finding people, products and jobs, Communication for connecting with people, tools for Search and management of online information, Spaces for user generated content and the virtual Wallet for executing transactions around all of these domains, by buying Skype, eBay (if they execute – a big if) now has a platform for integrating the segments they currently dominate (Marketplace and the Wallet), extending a nascent foothold in Listings and instantly becoming the dominant player in Communications.
Plus, there is ample room under this scenario to expand into Search and Spaces since they already have a strong community infrastructure and will significantly broaden the type of content within their index.
If I am correct, the competitive fireworks should be pretty dramatic over the next 12-24 months, and consumers and developers will be the big winners. Also, if I am correct, this acquisition and the larger tea leaves analysis suggests that this deal should be an “Oh shit” wake up call for Amazon, whose Amazon Web Services play was pioneering but has done a poor job of connecting the larger strategic dots, and now needs a client strategy.