Cisco May Be Making A Run For Skype | Hacker News Reader

Cisco May Be Making A Run For Skype

techcrunch.com

31 pointsmjfern21 comments

Okay, so here's the new plan for startups: develop your product and execute it to near its full potential, then sell it to someone for $2B. But keep the core technology (just tell them it isn't important and/or you're just licensing it from this other corporation you just happen to own). Continue to collect licensing fees on said core tech. Then, when that person can't put enough time/effort/etc. into it, buy it back from them at 20% of the original price (after they've taken a huge write down of course). Next, raise a ron of VC money cause you're the shit, and then plan to IPO a very small portion of the company. Finally, while you're in the process of doing your IPO, get bought AGAIN, except for $5B this time. /rant

This would make for an interesting movie script.

This is almost exactly what actually happened with WebShots (only with smaller amounts of cash).

http://en.wikipedia.org/wiki/Webshots

After doing a bit of contracting for Skype and eBay quite a few years ago, the problem was that eBay's management are a bunch of clueless goons. That they would get taken for a ride like this is no surprise to me at all.

The article should mention Webex, instead of leaving that for the fluff in the bottom.

http://en.wikipedia.org/wiki/WebEx

CISCO might want Skype just for the brand and userbase, since it already has a VOIP platform, far richer than Skype's (except maybe for the P2P stuff)

> CISCO might want Skype just for the brand and userbase, since it already has a VOIP platform

hmm, with at&t as well as verizon legally allowing skype on their networks, i think it is much more than that. also, with 4g (sic) lte networks ims voice seems to be a long way away...

edit: at least one (high profile) cisco exec has moved into skype too.

WebEx is the most horrible user-hostile piece of software out there, so hopefully they'll kill it in favour of Skype.

One a remote desktop control tool, the other's a phone call app.

WebEx Connect is still a frustrating piece of "Enterprise" software that I wish I wasn't forced to use on a daily basis.

This acquisition certainly makes a hell of a lot more sense than the lame eBay purchase. Seriously, how did anyone convince the board at eBay that purchasing Skype would be a good thing?

At least Cisco is in the telecommunications business and could roll the Skype brand and tech into real products.

I was in the same state of WTF until I asked about it a friend of mine, who was the CEO of one of larger Boston startups. It took him a couple of minutes to crunch the numbers in his MBA head and to show that eBay's purchase price was reasonable.

Apparently it was a viable business transaction when it was conducted (excluding the not-purchasing-the-core-technology part).

Of course another possible explanation for this is that MBAs are all taught to value things the same (crazy) way and he is simply running the same valuation calculation as the MBAs at eBay and coming up with an equally crazy answer.

Cisco owns Jabber, inc. Maybe they'll turn Skype into an xmpp-based service, allow federation with other service providers, and lose the proprietary protocols.

or maybe not.

What possible benefit would this be to Cisco or Skype or even to Skype's current users?

Federation would allow interoperability with other services. A user on Skype could communicate with users on other networks, such as Google Talk/Voice. Basically, freedom from being locked into a single service provider.

You're saying that Skype should take a year or two off, rewrite all their software, and come back, safe in the knowledge they'll now be able to interoperate with a bunch of broken VoIP services that have no users.

I can't see the killer business plan yet, sorry.

I think they should be bought and shut down, simply for non-compliance with any written standard.

Buildings that don't meet building codes get shut down and condemned.

So you want government intervention to ensure user-hostile technology is forced on the marketplace.

okay now this is heading into ridiculous territory.

standards-based is user-hostile?

If you truly believe this, the IETF and IEEE would like a word with you.

Cisco makes a lot of money on high-margin equipment to deal with IP traffic. If an inter-operable VoIP solution becomes the future of communications (or just raises the level of internet traffic in general) Cisco wins as people have to buy more network equipment (of which a bunch will probably be their equipment).

Skype's current business model is non-interoperability. If people are locked into Skype for Skype to Skype calling, then they'll pay Skype Out rates to dial phones. However, there can be a limit to how pervasive you can get with a closed network model. Cisco might calculate out that increased hardware sales would do them better. Likewise, they might feel that the Skype brand has enough clout to stand on its own.

I'm not saying that it's likely, just that there is a potential benefit. More internet traffic is probably a very desirable thing for Cisco.

Skype's current business model is very interoperable. I have a traditional phone line right next to me which interoperates with Skype really well, and so do a billion other people.

By contrast, VoIP has never worked (until Skype came along, and even now all non-Skype VoIP services are generally technical and business failures).

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