KEY POINTS:
Internet giant eBay's admission that it paid US$1.4 billion ($1.88 billion) too much for the internet telephony provider Skype has undoubtedly taken some of the fizz out of the latest dotcom boom.
Skype may not be the cash cow eBay had hoped - most users make computer to
computer calls which are free, rather than paying for calls to landlines and mobiles, but it has done more than most web services to change the behaviour of people.
When my mother expects me to be logged into Skype all the time so she can call me free on a whim, the technology has well and truly gone mainstream. So how does Skype convert that mindshare into dollars, especially when the whole attraction for people like my mother is that they don't have to pay a cent to make a good quality call?
By going after Generation Y - those young people who have grown up with instant messaging and make most of their calls from mobile phones.
To Gen-Yers, the idea of paying a monthly fee for a fixed phone line is perverse. They'd rather use their mobile phone or the internet.
For most broadband users, that connectivity still requires that you have an active phone line account. But that's about to change in New Zealand and Australia, where internet providers are gearing up for the launch of "naked DSL", a service some of them will offer that will allow you to purchase broadband without having to buy the obligatory dial-tone as well.
Internet providers such as Orcon, CallPlus and XNet plan to bundle internet telephony in with broadband, the promise being that the mix will be cheaper and more user-friendly than the old packages of regular phone line and broadband.
How naked DSL will work in practice and how much it will cost is still up in the air, but its drawn-out arrival finally signals a shift in the way telecoms services are delivered.
But back to Skype and those tech-savvy Gen-Yers.
Skype revealed yesterday it is partnering with leading social networking website MySpace and will build its internet telephony into the instant messaging software used by legions of young web surfers. The statistics driving the deal are revealing. Skype has 220 million members, MySpace has 110 million members.
According to internet research firm Nielsen Netratings, only 6.7 per cent of Skype users also use MySpace's instant messaging software, which has 25 million users.
The room for growth through this partnership of web giants is immense. But are Skype and MySpace just buying a larger membership of freeloaders, few of whom will pay to make calls?
That may be the case in the beginning, but the two companies are picking up their future paying-communications consumers. Skype charges customers to call landlines and mobiles and, once users are old enough to own credit cards, they will be more likely to use internet telephony services delivered over broadband than the traditional services on offer.
In the meantime, there's the lucrative online advertising market to tap.
So how does Skype calling from within MySpace work? Each MySpace member will have a "call me" link beneath their profile which other members can click on to call them. There'll be caller-ID, so users can see what incoming calls are coming from other MySpacers and limit those who can call. The question now is how long it will take for Skype to repeat the deal with Facebook, the social networking website popular with a more adult audience. After all, it is Facebook subscribers who are more likely to stump up for Skype credit and start making premium calls right now.
One thing is for sure, VoIP tie-ups will constitute the next big internet fad. The long-term gains for the companies seeking to unseat the traditional telcos are too great to ignore.
