Should Facebook Buy Skype?

Photo of Skype CEO Josh Silverman By Phil Wolff via Flickr

Ever since Skype was freed from the shackles of eBay (s EBAY), I’ve marveled at the company’s management team led by its CEO, Josh Silverman. Sure, it has a whole lot of powerful backers, but in the end, it’s the team and their strategy. For now, Skype’s strategy is very simple: omnipresence.

As we’ve outlined before, Skype is trying to embed itself in every conceivable connected device. Whether it’s an LG television or an iPhone (s aapl), the new team wants Skype’s IM, voice and SMS services to be embedded as an API, a strategy they successfully learned from my other favorite company, Netflix (s NFLX). More Skype in more places means more opportunity for them to capture dollars from folks looking to make calls to traditional phones.

Skype Pokes Facebook

Last month, for instance, the company announced Skype Connect (Formerly Skype for SIP), which would allow it to work easily with other PBX systems. This technology will bear fruit with Skype’s partnership with Avaya, which will be announced today. There’s also news that the company is working closely with Facebook and integrating with the social network’s experience. (It has a similar arrangement with MySpace.)

Kara Swisher reports that the deal involves integration of Facebook Connect, SMS and Voice Chat:

  • You can call and SMS Facebook friends from Skype
  • Skype is building Facebook Connect into its system.
  • You can videochat with Facebook friends.
  • It will be part of Skype 5.0 beta, likely to be released in a few weeks.

Facebook, Buy Skype. Seriously!

Facebook wants to mesh communications and community together, which explains why Facebook Phone is in the cards. Skype has become a dominant force in Internet telephony over the years, and if it wants to become the communication console of tomorrow, a vision outlined by CEO Silverman, then it needs to embrace newer forms of communication such as Facebook and Twitter.

It’s logical for Facebook and Twitter to come together.

I propose Facebook should just pony-up and buy Skype, even before they go public.  There have been rumors that Skype might be up for sale. Skype and Cisco (s CSCO) have been mentioned in the same breath, but to me, a Facebook-Skype deal makes more sense, considering both are software-driven, social-centric, communication utilities and not hardware-centric like Cisco.

Sure, this would be a big, hairy merger, but look at it this way: In one swoop, Facebook would dominate what I’ve maintained is both the new age and classic social networking. They have people’s credit cards; they have their real-world phone information; and in the end, they have a better, more useful, social graph than Facebook itself.

The Skype-Facebook client on the desktop would mean both Facebook and Skype will be jointly in people’s faces, and take time away from other web services, such as Google. A simple search box inside the Skype client, and the two companies are starting to take attention away from arch-nemesis, Google (s GOOG).

To be honest, for our readers, this marriage won’t be a new idea. In 2008, Dan Berninger, one of our guest writers, proposed the need for a social directory:

The social directory represents a far more elegant solution than that of spamming friends with requests to update contact information through services like Plaxo. The social directory could make a social circle accessible via clickable links while hiding the actual contact information. Rather than giving out a telephone number or email address to a new acquaintance, users of a social directory would associate their listing with keywords (such as “plumber” or “dog lover”).

As the number of communication options increases, so does the burden of managing contact information, yet Internet-enabled directory options remain lacking. Riches await the infocom company that achieves gatekeeper status for the Internet’s communications applications.

Need we say more?


With over 560 million folks who’ve signed up for Skype, and revenues touching nearly a billion dollars, Skype is nearly as big as Facebook itself, though its value is less than Facebook, mostly because it’s monetized its vast base of users poorly in the minds of some. Facebook has over 500 million members, and is said to be doing a billion dollars in sales every year. How much should the deal be worth — no idea, but say if its five times next 12-month revenues, Facebook, which is a valued at $33 billion should pony up around $7 billion-to-$7.5 billion in its stock for Skype.

Now if the two companies come together, that would be one intimidating combination. Given that Marc Andreessen sits on the board of both Skype and Facebook, thanks to his investments in the two companies, he may get them talking!

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