News that Ebay was going to spin off popular VoIP service Skype in the first half of 2010 was widely seen as a positive step towards restoring Ebay hegemony.
Like a couple who hastily got married while drunk in Las Vegas, the pair tried to reconcile their differences but there was not much to hold them together in the first place. Here are four reasons why Ebay and Skype going separate ways is good for both parties.
(1) Legal issues
The New York Times points to the fact that not everything is as straight forward as it seems; when Mr. Zennstrom and Mr. Friis, the co-founders of Skype, sold the company to Ebay in 2006, they retained the ownership of the peer-to-peer technology that Skype uses and licensed it back to Ebay, a very clever move.
But Joltid, the firm which now owns the P2P technology, has threatened Ebay with legal action after it said that Ebay breached the original agreement. Offloading Skype will give Ebay some well needed funds to acquire firms and startup closer to Ebay's core business while getting rid of any potential legal conundrums.
(2) Opportunity Window
Ebay has already written off $1.4 billion off the $2.6 billion which the auction house paid for the voice over IP service. By announcing that the sale will take place by the first half of 2010, it gives Ebay almost a year to find potential suitors for Skype.
The founders of Skype are apparently keen to get something on the table but they have failed to wet the appetite of Ebay with their offer.
With the recession in full swing, Skype might actually be betting on a recovery by next year and Skype's IPO announcement will help it get the best price possible while not totally closing the door on a potential acquisition.
(3) Share Prices and Investors
News that Ebay will spin out Skype is causing its share prices to rise. A long term 10 percent rise on the company's stock prices will add another $1.85 billion to its market capitalisation.
The company has lost around 60 percent of its value since 2006. Skype has been one of the contributing factors to its downfall. As for Skype, it is still one of the hottest services around.
It is still growing and is expected to reach 500 million users by the end of the year with revenues expected to reach $1 billion by 2011.
Ebay was never a technology company. It was and still is a quasi-brick and mortar virtual dinosaur that has immense difficulties in adapting to the world of web 2.0. Going back to its core business might be what Ebay will have done best. Skype on the other hand is the disruptive tech company par excellence.
It came at the right time on the market and made the concept of making free calls over the internet popular. Like Stumbleupon, Skype is neither dependent on Ebay for business, nor is remotely close to Ebay's core business.
Without Ebay, Skype could well be another great acquisition, especially for Google who would in one swoop get its mitts on more than 400 million users.