The announcement today that eBay was paying US$2.6 billion for Skype left many people scratching their heads. What in the world is an online auction retailer doing buying a two-year old VoIP telecommunications company?
The mistake confused people are making is that eBay is not an online auction retailer, and Skype is not a VoIP telecommunications company. Recently they might have been so easily described, but in the world of Google, a world where a search engine is no longer just a search engine, these companies must become something else entirely.
Bidding on an auction, making an audio call between computers, and typing in a keyword at a search engine, are all related activities. Each is a form of communication, person to person, person to computer, computer to person, and computer to computer. The meme emerging, a meme that these big companies cannot quite bring themselves to articulate, is the rise of the communications platform.
Communication platforms have existed before, in the form of traditional telecommunications industries including radio, television, telephone, cable and satellite. In addition, and separately, software development companies have provided other forms of communication.
What eBay, Google, Amazon, and Yahoo are becoming is the next step in the evolution in communication. They are positioning themselves as the perfect merger of the above traditional media platforms with the Internet, in a package that will be much more than a sum of their parts.
The cost of entry into the telecommunications industry has plummeted, leaving the traditional companies in shock. When a small band of software developers can independently create in just two years a gigantic voice network that uses the computer and networking infrastructure that already preexists, all bets are off. Suddenly computer to computer voice calls are free, computer to phone and phone to computer calls cost a fraction of traditional price plans, and the platform itself gets put to new uses by third party developers nearly every day. This is Skype, a company that freely released a small VoIP client to the public and one year later shocked the existing telecommunications world by announcing that they had over 30 million users after only one year.
Ebay started on their current path several years ago with a decision to treat their auction site as a communications platform that brought buyers and sellers together in a virtual marketplace full of advanced and efficient tools. Their decision to buy Skype enhances that virtual marketplace with more cutting-edge technology, just as their purchase of Paypal allowed them to provide a convenient payment option to their buyers and sellers. Also just like Paypal, Skype will provide new opportunities outside of eBay’s virtual marketplace. After all, Paypal is not just used for making eBay auction payments. It has become a payment option for many other companies and vast amounts of small entrepreneurs.
The company most aware of the changes afoot is the very company driving companies like eBay to purchase companies like Skype. Google, the maelstrom of change that began with a better search engine, has quietly been diversifying into other opportunities, including shopping, advertisement, email, VoIP, mapping, social networking, and many others. Again, each one is a form of communication. Google is building a platform that dwarfs anything AT&T or the cable companies have every imagined.
This seamless platform will be something never seen before in human history. It will be your phone, radio, television, newspaper, library, email, daily planner, map, address book, yellow pages, shopping list and coupons, and dating service.
Google Earth is one early convergent platform for many of the above. It is a 3-D globe of the Earth pieced together from increasingly high resolution satellite images overlain with layers of information as varied as the third party developers that created them. Locating nearby businesses is easier than thumbing through the phone book, with additional conveniences like a map and the ability to fly over the landscape so that you know exactly where to drive and exactly what landmarks to look for. Soon the ability to call a company you found will be as easy as a click on their 3-D representation on Google Earth, provided by local VoIP networking with existing landline systems.
EBay starts out with different initial products but heading toward the same direction. Their marketplace will eventually merge with a 3-D globe of the earth while Skype allows another communications option between buy and seller. Beyond auction sites, small and large businesses alike will save enough amounts of money currently spent on telephony services by networking their existing computer infrastructure with Skype. As more and more people start using Skype, the price of a business telephone call will collapse to near zero, just as it has already begun to do with personal telephone calls. Value-added services like video conferencing, social networking, automated recording of all calls, and others will become cheaper for end users while still providing a huge windfall for the parent communications platform company.
Yahoo, unlike its search engine competitor Google, is betting on content to be the launch pin for their own communications platform. After developing relationships with existing media content providers, Yahoo has recently begun to provide its own original video programming. It has hired a seasoned reporter to provide original news reports just for Yahoo (pitting it against the existing news media companies.)
And then there is Amazon, the direct sale retailer who has an obvious competitor in eBay and, until recently, a not so obvious competitor in Google. Amazon has launched its own search engine initiatives, building off of the technology it developed for its main ecommerce site. Its relationship with book sellers, publishers, and authors has allowed it to begin accruing a vast library of digital material. Its dependence on buyers to provide their own personal recommendations about books and other products has lead to a vast experiment in social networking, while creating a platform with an active membership it can offer for a fee to interested parties keen on integrating the platform into their own business models.
The real breakthrough in all this activity is the convergence of services and communication tools into a much larger whole. Microsoft, while trying to keep up with these developments, did not see that convergence was the endgame. Instead, they thought they simply needed to have their fingers in as many different pies as possible. Google understood that a million different tools were ultimately useless if they were not integrated into a userfriendly, flexible, and adaptable platform that could be adapted for many different situations.
This is why eBay, Google, Amazon, and Yahoo are not just software companies, or retailers, or search engines, or telecommunications providers, or media companies. They are all of these and more, setting up a future littered with the remains of traditional players in each separate industry who could not quite manage to get their heads around the convergence of all human activity into just a few communications platforms.