A time machine would take us back to September 2005 when eBay paid too much for Skype, or so many thought, myself included. That’s not saying Skype wasn’t valuable, it was puzzling how eBay would use it. Fast forward two years later and the only major addition between companies has been Skype PayPal integration. Or is there something else I’ve missed?

Sure, Skype has done some fantastic things on the developer side, increasing the attractiveness of their developer platform. They’ve continued to update the client adding more and more features, but what have they done on the eBay side? Have live Skype-eBay auctions caught on? Are more people using eBay because of Skype? No sarcasm intended with these questions, I’m curious if any of this was ever attempted or done?

eBay recognizes a loss
Yesterday I’m sure many readers already saw stories about how eBay is disappointed with the Skype deal and made some changes, including reporting a loss in the deal:

EBay said it will take $1.43 billion in charges related to Skype, which hasn’t grown as fast as the San Jose company expected. EBay is also replacing Skype co-founder Niklas Zennstrom as CEO of the Internet telephone service (don’t feel too bad for Zennstrom, though - he and his fellow Skype shareholders are getting a $530 million payout from eBay as part of the writeoff transaction).

Rather than parrot what others already wrote yesterday in my own piece today, I started thinking about the possible reasons Skype may slow in gathering further adoption and didn’t see too much discussion or thought criticizing one major area. I wonder if the biggest Skype adoption snag could be the underlying technology: peer to peer (P2P)?

The one thing has been pointed as Skype’s strength could also be its greatest weakness.

Is P2P to blame, at least partly?
Strange, but not shocking that Joost was launched with the same Skype founders to do in video using the same model: P2P (and lest we forget that the same team left Kazaa to work on to Skype). Why these guys think P2P is the model of the future for the web is a curious strategy to me considering current bandwidth availability in the US. Let’s face it, the pipe is getting more and more clogged.

I’ve complained about the bandwidth usage in our home — and admittedly our family of five is probably the extreme since we all have something we connect to and interact daily using the internet — is already taxing a healthy cable bandwidth pipe. When the kids are playing Halo 3 on two different live accounts, when my wife and I are working in the office downloading and using other online applications, when our oldest son is running all his applications and playing games online it’s network overload.

There isn’t that much room for P2P applications in a household like ours and yet we are using Skype. When I hear of a new application and then realize it’s P2P-based, my interest wanes for these reasons. Is our family the exception or the rule? It’s like trying to fit a new piece of furniture into a crowded room and saying: hey, we’ll use the space when nobody’s looking. We’ll share what little amount of space exists with the rest of the world. Not to be selfish here but we don’t have enough space as it is. Maybe Skype is intelligently recognizing this and not adding to the problems or maybe it requires more overhead than we can give up for always on usage.

Niklas Zennstrom, the Skype CEO stepping down, remains proud of Skype’s growth over the last two years:

“Very few companies can claim to match the growth trajectory Skype is on and continues to be on.”

Though Skype is turning a profit, it’s a small one in relation to the amount of money eBay paid for them. Some are reporting that SkypeOUT and SkypeIN activity is declining, but I didn’t see an authoritative source to link on this point. Speaking for our own usage, we have a SkypeIN number (two years now) and pay for the unlimited SkypeOUT plan (January 2007).

On Joost:

Zennstrom said the company’s peer-to-peer style of network allows for better distribution of higher quality content than server-based video systems, such as YouTube or Daily Motion.

I don’t recall having any problems with YouTube that resulted in almost a full day of service outage. I don’t follow Daily Motion that closely so can’t speak of how reliable they’ve been on a firsthand basis.

Getting more bandwidth
I’ve been contemplating adding DSL at home. This would give us cable, DSL and EVDO at home and make concerns about P2P applications less an issue. A friend of mine in chat mentioned he wished he could get a second cable connection.

I wonder what Jim Courtney and his associates at Skype Journal would think about this premise. Jim writes:

The past eighteen months with Skype Journal have given me the opportunity to meet many levels of the Skype team from tech support, development and quality control personnel through to Partner Program managers, Product Line Managers and a couple of Vice Presidents.

Could it be possible that P2P isn’t the right direction to proceed going further? I know this is a radical thought and I’m not convinced in it myself, but looking at our own household situation and talking to friends there might be something here worth exploring and understanding how Skype plans to overcome these hurdles.

• Skype (wireless) comes to Pocket PC
• Skype 1.1 (BETA) contains group IM chat
• Life after TV = IPTV?
• Windows Media Center 2005 the Nordstoms of digital media?
• Metered internet services rearing ugly head
• Google pulls sites that allow unauthorized Kazaa downloading