EBay bid shows promise of VoIP

The $2.6 billion purchase of Skype last week by eBay further cements VoIP as an industry-altering business technology.

The deal raises the public profile of VoIP just as Fall VON 2005 opens its doors this week in Boston, where service providers will grapple with what IP voice services they should offer to keep competitive and what equipment they need to support them.

Now in its ninth year, the show has grown dramatically, drawing crowds in both Boston and Northern California at six-month intervals. Last year's Boston show took up 70,000 square feet of floor space, and this year's will occupy 120,000 square feet to accommodate an increase in exhibitors from 200 to 330. Attendance is expected to jump from 5,000 to 7,500, show sponsors say.

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The $2.6 billion purchase of Skype last week by eBay further cements VoIP as an industry-altering business technology.

The deal raises the public profile of VoIP just as Fall VON 2005 opens its doors this week in Boston, where service providers will grapple with what IP voice services they should offer to keep competitive and what equipment they need to support them.

Now in its ninth year, the show has grown dramatically, drawing crowds in both Boston and Northern California at six-month intervals. Last year's Boston show took up 70,000 square feet of floor space, and this year's will occupy 120,000 square feet to accommodate an increase in exhibitors from 200 to 330. Attendance is expected to jump from 5,000 to 7,500, show sponsors say.

Meanwhile, eBay is showing the potential of VoIP and related IP communications that other businesses and service providers might imitate. EBay plans to combine with Skype to offer its customers ways to make transactions more quickly and efficiently using Skype's VoIP capabilities, not to tack on VoIP as a separate unrelated line of business.

Because Skype is a peer-to-peer technology that also supports video, it would be possible to link buyers and sellers directly, for example. "Voice is the dominant requirement for a communications session, but voice is just one thing you can do with Skype," says Bob Rosenberg, president of Insight Research. "With it you can create your own application environment and support video."

While Skype may allow eBay to do business in new ways, it does not transform eBay into a phone company, says Jeff Kagan, an independent telecommunications consultant. "It will help eBay expand into new lines of business where buyers feel more comfortable buying and selling big-ticket items like cars and houses. It will be an add-on service helping to expand their traditional online service," Kagan says.

So rather than relying on eBay as an arbiter of trade that is carried out online and via e-mail, eBay customers will use Skype to create a more immediate environment in which to do business, says David Willis, vice president of enterprise communications for Gartner." People in the Middle East typically haggle to get the price they want," he says. "Skype will allow eBay customers to do that."

For now, the bulk of business customers and providers are light-years behind eBay on the VoIP innovation scale, according to research that will be presented at VON. Businesses want bundles of IP services that are less expensive and take up less administrative time than their traditional services, according to the survey by Savatar of 300 telecom decision makers at small and midsize businesses. They are not seeking to push the limits of the technology to create new ways of doing business a la eBay, says John Macario, president of Savatar. "They say, 'I'm looking for a vendor to establish that they can do voice really well before I'd consider buying other services from them,'" he says.

Click to see: VoIP coming slowly