• by Gavin O'Malley  @mp_gavin, September 13, 2005

Web auctioneer eBay on Monday said it would buy the Web telephony start-up Skype for between $2.6 billion and $4.1 billion, with the exact price depending on whether Skype meets performance targets over several years.

Skype is a leading player in the voice-over-Internet market--which, with its lucrative pay-per-call implications, has already attracted America Online, Yahoo!, Google, and Microsoft.

In two years, the Luxembourg-based Skype has attracted 54 million members worldwide, who use the service to talk for free to other Skype users via computer. The charges kick in when Skype users make calls to--or receive calls from--regular phone numbers. The company expects revenues of $60 million this year and more than $200 million in 2006, but isn't currently profitable.

Online traffic to Skype has increased significantly in the United States since last year--from 385,000 unique users in July 2004 to 1,490,000 this July, according to comScore Media Metrix.

EBay said the deal will give its estimated 150 million merchants the ability to make, for example, last-minute sales questions with a "click to talk" function, and thus stimulate trade.

Meg Whitman, eBay's CEO, said on a conference call Monday that eBay, Paypal, and Skype should amount to an "unparalleled e-commerce and communications engine."

Some analysts, however, said the estimated acquisition costs appeared high.

"I'd hate to second guess a company with the proven track record of eBay, but they're going to have to be extremely creative to make this deal worth their while," Jupiter Research analyst Joe Laszlo said.

Laszlo floated the possibility that eBay envisions live auctions, with multiple bidders on the phone at the same time.

Ian Fogg, Jupiter Research's VoIP analyst in Europe, said simply that eBay could not be buying Skype for its current revenues, which he pegged at $7 million in 2004. He speculated that eBay might want to use Skype's technology to start a pay-per-call business. "Skype brings technology that Ebay hopes will boost auction sales and generate a per-call lead-based business," Fogg said.

Marc Barach, chief marketing officer at pay-per-call firm Ingenio, indicated that the deal between eBay and Skype is a sign that their nascent market is growing in legitimacy. "Whether the method is VoIP or telephone, the thesis remains the same--sellers will pay more for a phone lead than for a click, and buyers are more confident purchasing from sellers with whom they can speak live," he said.