Charles Arthur: The Geek

Can eBay bid farewell to its new rivals?
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The Independent Online

The talk on Monday, as the deal was announced, was all of "enabling e-commerce": if auction buyers and sellers can call each other, they should be more likely to take part in auctions, so people would be more keen to join Skype to contact sellers and buyers.

Probably true - but I think this purchase will also touch off a bitter five-sided war to dominate instant messaging and internet voice calling. In contention are eBay (with Skype), Microsoft (with MSN Messenger), MSM - instant messaging - and the VoIP start-up Teleo, Google (with its new Gtalk service), AOL (whose AOL Instant Messaging service, AIM, offers video and chat facilities) and Yahoo! (which also had video and voice via its instant messaging).

What's instant messaging? A method of connecting directly to one or more computers and swapping text or files. Mainly it's used for chatting, using an abbreviated language that resembles, but isn't, texting. American teenagers love it, but so, too, do 85 per cent of American companies, where employees send an estimated average of 160 IMs per day.

The trouble with IM is that nobody has yet figured out how to make money from it. AOL and Yahoo sell adverts on theirs, but there's little evidence that anyone buys anything.

So what will those five organisations be fighting for? Simple: to get you to use them exclusively, and then pay to use their add-ons, such as VoIP, to landlines.

Supremacy matters, because the rival IM networks lock each other out; if you're on AIM, you can't communicate with someone on Yahoo! or MSM, or vice versa.

The scary thing for the rival networks is that eBay and Skype might have found the magic recipe both for achieving supremacy, and for turning IM numbers into profit. IM is fine (and free on Skype, which is free to use for internet-only voice calls, too; you pay to connect to a mobile or landline), but voice calls will be attractive. And if it all helps auctions happen, well...

And then imagine a situation where most people you know have a Skype account. You'll register - it's free - and use that to IM them. Then you've got a VoIP system too. In which case, why bother with AIM? Or Yahoo Messenger? That's a scary thought for the rivals, which presently have just one feature - video chat - that Skype doesn't.

OK, Skype does have some catching up to do. It claims 51 million registered users. By contrast, there are anywhere between 320 million and 600 million IM users worldwide, 95 per cent with accounts on the other four networks.

But eBay gives Skype the critical momentum to break through. Something like this has happened before, when eBay acquired the online payment service PayPal in 2002. The sheer weight of eBay's popularity crushed PayPal's rivals within months.

It will take Skype a little longer. But there are surely some anxious instant messages being swapped at the other four companies.

www.charlesarthur.com/blog

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