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Skype sees Microsoft, Yahoo, AOL as main threats

Posted by iTech - 2005-10-17

Internet phone-calling phenomenon Skype, which was bought by online auction company eBay Inc. for almost $4 billion last week, said it sees computer giant Microsoft as one of its biggest potential rivals.
 
"I think the biggest threat to us is companies like Microsoft, Yahoo and Time Warner's AOL, because their customer base is so big," Skype's Chief Executive and co-founder Niklas Zennstroem told a conference on Sunday.

Microsoft bought Teleo in August and Yahoo bought Dialpad earlier in the year in efforts to catch up with Skype's lead in the booming voice-over-Internet-protocol (VOIP) market.

Luxembourg-based Skype offers free computer-to-computer calls between Skype users. It charges for calls made from or to numbers outside the network.

The company has quadrupled in size over the last year and is adding 150,000 users per day. It now has 54 million users.

EBay is paying $2.5 billion plus another possible $1.4 billion if certain targets are met for Skype, which will allow it to add free Web telephone calls to its online auctions, smoothing the way for more deals to go through.

Zennstroem said he had thought long and hard about the sale to eBay and had talked to other potential buyers as well as considering an initial public offering before plumping for eBay, which promised Skype the most autonomy.

"EBay had a good record, especially with PayPal," Zennstroem said, referring to the online payment company eBay bought in 2002. "They don't want to disintegrate the company. They'll nourish it and allow it to grow."

Zennstroem confirmed that he had talks with Rupert Murdoch's News Corp before deciding to go with eBay. "We had meetings with a lot of companies. We met with News Corp, yes," he said.

Zennstroem said he saw growth possibilities in facilitating such services as live online translation.

"I'm convinced that over time pretty much all voice communication will be over the Internet," he said.

"Our objective is to change the way people communicate. In a few years' time the idea of paying for phone calls will seem very strange."



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