Skype, the next Internet stock bubble?

Sep. 12, 2005, when eBay announced that it plans to acquire Skype by paying $1.3
billion in cash and $1.3 billion in stock. It also has performance incentives in the deal that would make a later payout of up to $1.5 billion by 2008 or 2009 if financial targets were met, giving the deal a total value of up to $4.1 billion. (The image above in its original context on the page: skype.)

It would be interesting to see what eBay' stock does when the markets open. Then again with plenty of market advertise surrounding VoIP (Voice-over-Internet protocol), we can make sure the stock trader and insiders will probably be heavily pushing their clients to buy eBay at the opening bell. “VoIP is hot right now. You can't lose!”

Although I had some information about that Skype (See the image at left in its original context on the page: skype.) always try to seek a buyer for their company early before 2005, when it really happens, I still felt surprised very much. Indubitably, in my opinion, VoIP is the next killer application (commonly shortened to killer app); but it might become the next Internet stock bubble, too.

After some meeting with people majored in this area, I started to have a clearer imagination of this kind of economic mode. Firstly, the technology of VoIP is not complex; almost company would have the chance to develop this kind of technique. For example, Seednet, an ISP (Internet Service Provider) of Taiwan, cooperated with National Taiwan University to give “Wagaly Talk” (See the image at right in its original context on the page: Seednet.) to the world. It means that every company can have a foot in the dish.

At second, as we thought, the fact that Skype would be so hot based on the development of broadband. But, it will be hard to replace the traditional telephone service by this kind of peer-to-peer voice transmission at all right now. The stress of telephone application must be reliable, such as the ability for someone to dial your cell phone number that will then ring your wired or wireless phone instead. In this sumption, the cooperation between the traditional network providers and software developers have to be very closed to abstain from any accident to keep the service stable. But the software providers to offer the high-speed and dynamic control functions that are necessary to support the deployment of VoIP are underfinanced. In this case, all that we can count on is the traditional network provider, like AT&T, which has the capacity to deal with the real network. I guess they just wait to have the advanced technology of VoIP or to buy a software company directly to come upon the stage. In my mind, nowadays, the software of peer-to-peer voice transmission, like Skype, just similar to a “toy” not coup de grace.

According to studies by British Telecom and Deloitte and Touche between 50-60% of companies will be using VoIP by mid-2007, allowing them to drastically reduce their telephone bills. In the future, the application of VoIP will be a trend for voice communication. But the only target we have to watch out is how the traditional network providers plan and draw the map of it.

The image above in its original context on the page: skype.