Skype Gets Hot In China, Maybe They Will Pay

No one on Wall St. raises his hand when asked the question of why Ebay (EBAY) bought Skype, the big VoIP service. It already gave away its base service, so getting consumers to pay seemed like a tough road. It did have over 100 million registered users, but there was no guarantee that those people wanted to be in Ebay’s online auction market.

Skype has just announced that China has passed the US as its biggest market. A member of Skype management: "China has increasingly become very important for our business and we see it as a main driver for us," Scott Bagby, new market development director, told Reuters in Taipei

Ebay’s business in China has not been all that good. It runs its operation there in a joint venture with Tom Online. Skype hopes to get more business customers that can use the service to call cell phones and other handheld devices, but it would seem that China Mobile and some other locals have that business tied up.

Maybe EBay will have to write-down the value of Skype. Its presence in China is not going to prevent that.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.