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Five Reasons Nokia Should Buy Skype From eBay


Posted by Stephen Wellman, Oct 1, 2007 01:13 PM

According to Henry Blodget at Silicon Alley Insider (Henry Blodget and Silicon Alley, two great Web 1.0 tastes that go great together?), eBay's acquisition of Skype can now be officially tagged a bomb. How long will it be until Google, Yahoo, or Microsoft buys Skype?

Blodget analyzes the collapse of Skype:

The Skype acquisition never made sense strategically, and one reason Skype has struggled, we think, is that it is just a distraction to eBay (which needs desperately to focus on its core commerce business). EBay should immediately sell what's left of Skype to Yahoo, Microsoft, or Google, all companies that offer portfolios of communications services that Skype might actually benefit from being a part of.

Skype is rapidly surrendering its early dominance of soft-phone VoIP to other more focused competitors, and if it stays within the eBay fold, we think further write-downs will be in the offing. Skype was a $2 billion to $4 billion eBay hail-Mary pass, and it just officially fell incomplete. EBay should acknowledge that and move on.

Of course, Blodget argues that eBay should sell Skype to Google or Yahoo or MSN. While I think that's interesting, I think the company that should buy Skype is Nokia. And here are five reasons:

1. Skype's Real Potential Is On Mobile Devices
Skype's real promise has always been with mobility. I use Skype for all of my long distance when I travel abroad on business trips. While Skype on a laptop is great, I'd much rather have Skype on a dual-mode smartphone with Wi-Fi access. That way I could Skype over 3G or Skype over Wi-Fi in my hotel room or at the trade show conference floor.

Imagine the Skype client built in to Nokia's S60 platform and the Symbian OS. This could give Nokia's mobile devices a new differentiator and competitive advantage.

2. Nokia Is Getting Serious About VoIP
Nokia is making a major push into the VoIP market, especially for business users. Skype has amazing brand recognition with consumers and business travelers (many of whom use Skype the way I do to cut down on telecom costs while on the road). Nokia could easily upgrade Skype's business offering and make a more robust version of the platform for both the enterprise and the SMB markets.

3. Skype Would Make Nokia More Of A Web Services Company
Look, Nokia just kicked down $8.1 billion for Navteq in large part because the company wants to evolve from being just a handset maker. Why not combine location technology from Navteq with Skype's VoIP, IM, and other IP communications technologies? Imagine what this could do for mobile communications.

Surely, with its global share of the handset market, Nokia more than any other company could figure out a way to make money off Skype.

4. Embrace The Agent Of Your Own Disruption
By buying Skype, Nokia would move from being a handset maker that caters to carriers to being the company that helps revolutionize the mobile industry. Let's face it, peer-to-peer VoIP technologies like Skype will eventually cut into the carrier business model. Nokia knows this and the carriers know this. Why not buy the company that helped kick-start this trend and then use it to rebuild this industry?

5. Do It Before Google Uses Google Talk To Win The Handset Market
It looks like the gPhone is coming, and you can bet Google is going to push its own VoIP service, Google Talk, on it. Google has the cash and the brand name to push peer-to-peer VoIP into the mainstream. By buying Skype now, Nokia can use Skype's technology and brand name to fight Google and the gPhone.

What do you think? Should Nokia buy Skype? And could Nokia use Skype to help it fight Google and become more of a Web services company?

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