Facebook Should Buy Skype, Analysts Agree

By Clint Boulton  |  Posted 2010-10-02

Facebook Should Buy Skype, Analysts Agree

Just hours after news surfaced that Facebook and Skype could be entering into a VOIP (voice over IP) partnership, industry watchers seized on the potential deal as flirtation that should evolve into an acquisition.

AllThingsDigital reported Sept. 29 that Facebook and Skype are mulling an integration that would allow users of the world's largest social network to send text messages and make voice and video calls to friends and contacts via Skype.

Facebook users will be able to sign into Skype through Facebook Connect, which allows users to sign into third-party Websites with their Facebook accounts.

The integration-which would enable Facebook's 500 million users to connect to Skype, which has 560 million registered users of its own-is expected in the Skype 5.0 beta this month.

But that is not the same as buying Skype outright and dumping the platform into Facebook. Far from it.

GigaOm issued the obvious question, "Should Facebook Buy Skype?" in this blog post, noting that a merger of the dominant Web calling platform and largest social graph is a logical combination to keep users from Google. Others have similar beliefs.

Industry analysts largely agree, with caveats. Forrester Research analyst Augie Ray said Facebook has already become a significant communication channel for many people.

Ray added that whether Facebook buys Skype, forges the allege deal with the VOIP company or creates its own VOIP capabilities, video chat provides important face-to-face connections for users.

Ray noted that while Facebook status updates are already near-real-time communications, the social network's chat application isn't very efficient.

"This is a great next step for Facebook," Ray said. "Skype will give Facebook users the chance to make true face-to-face connections."

To Buy Skype or Not to Buy Skype ...


IDC analyst Irene Berlinsky said Skype and Facebook have the same goal of becoming accessible from any device, anywhere, anytime, adding that Facebook clearly needs a robust calling option to compete with Google, which also wants to become the "be-all, end-all of consumer communications."

Google offers VOIP calling capabilities in Gmail via Google Voice, its phone management application, in addition to voice and video chat capabilities.

Berlinksy agreed with Ray that Facebook needn't buy Skype to gain this capability.

She noted that a simple integration with Skype, such as the one AllThingsDigital unearthed, may be enough for this to happen without going through the hassles and headaches of an acquisition.

Gartner Research's Ray Valdes said the hypothetical combination of Facebook and Skype makes a lot of sense, except for the high price tag it would entail.

Privately held Facebook, valued at $33 billion, might have to pay $7 billion in stock for the company, which has seen nasty legal battles for the right to own and manage the assets.

"The battle for the social Web is shaping up to be a conflict among giants and would-be giants," Valdes told eWEEK. "If Facebook is to stay at the top of the heap, it needs to bulk up, and buying or merging with Skype would make a lot of sense."

Valdes, like Berlinsky, found a Google hook in all of this speculation. "If Google wants to topple Facebook, then it too would have to make a sizable investment-such as buying Twitter," Valdes said.

Ah, but that's a whole other rumor, one rekindled by Google CEO Eric Schmidt Sept. 28 at TechCrunch Disrupt when he fawned over Twitter's advertising revenue potential.  

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