In September 2005 eBay, the Silicon Valley-based on-line auction site, stunned California's high-tech community by spending $2.5 billion to buy a company called Skype. The small European startup had pioneered technology that allowed the Internet to be used for voice communication.
At first glance it's an unlikely combination. Why would the world's biggest on-line market place want to buy an on-line phone service?
Skype co-founder Niklas Zennstrom, a Swede, based his company in Luxembourg. Its software was written in Estonia. "Skype is a free software that you can download to your computer and make free, unlimited phone calls to anyone in the world, over the Internet."
While Skype remains headquartered in Europe, just 13 people run its North American operations from a house on eBay's sprawling campus an hour's drive south of San Francisco.
Jennifer Caukin is Skype's director of corporate communications. The service, she says, requires a broadband Internet connection. It is winning customers because it is simple and cheap.
Kevin Werbach, a professor at the Wharton School of Business in Philadelphia, predicts steady growth for voice over Internet. "What's striking about Skype is that it became such a phenomenon, especially in Europe and Asia, with virtually no marketing."
Skype has 136 million users worldwide, including 25 million in China. Jennifer Caukin says Skype enhances the shopping experience on eBay. "(But) if we can enable that communication to be even closer by having voice where you can chat between buyers and sellers it reduces friction. It alleviates any questions the buyer might have about the seller."
eBay is marketing Skype as a stand-alone product. It remains the hottest software on the Internet and 250,000 users are signing up for it every day.