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Skype to get independence -- for better or worse

Sun Nov 8, 2009 12:47pm IST
 
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By Sinead Carew - Analysis

NEW YORK (Reuters) - Now that eBay has vaulted a major hurdle in its efforts to sell Skype, the Web telephony service must prove it can make it on its own.

Since its founding six years ago, Skype has built up a roster of more than 520 million registered customers who use the free Web service for voice, video or text communication. In just the last quarter, it added 40 million users.

Still, Skype is facing some challenges. One problem is growing competition from other high-profile services, including Google Inc's (GOOG.O: Quote, Profile, Research) Google Voice.

Another, perhaps larger, issue is that consumers are increasingly using mobile phones rather than landlines for communication. For Skype, mostly used on desktop computers, this means it must quickly make inroads into mobile.

But if Skype is to stay relevant, it will have to do so without the backing of corporate parent eBay Inc (EBAY.O: Quote, Profile, Research) , which is selling a large stake in the service to a group of private investors. A lawsuit that threatened to sink the deal was settled on Friday.

Behind the deal is the idea that eBay can return to its central business -- an online auction and payment service -- without being distracted by managing a telephone service.

Skype, meanwhile, will not have to answer to a corporate parent, one that may have different strategic goals, and can therefore concentrate on its own growth prospects.

"It puts you in a different mindset," said Marc Andreessen, a co-founder of investment firm Andreessen Horowitz, which will hold a stake in Skype once the deal closes.  Continued...

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