eBay CEO: Free Phone Calls by 2010

eBay CEO Meg Whitman went toe-to-toe with a financial analyst during the company's quarterly earnings conference call Wednesday over the purchase of VoIP provider Skype. Analysts have criticized the buy, saying eBay overpaid for a technology that, at least at first look, will not advance its core business.

However, Whitman disagreed with that assessment. "By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net," she said at the time.

Whitman said eBay sees a VoIP landscape where consumers will be able to place phone calls at little or no cost to them, where fees could be subsidized through advertising revenues.

Skype's success could make this possible, as it has some 57 million registered users and continues to grow. Revenues are also expected to triple next year, from $60 million to $200 million in 2006.

Whitman also said that she understood the risks of such a transaction. However, "in the end, the price that anyone can provide for voice transmission on the net will trend toward zero," she added.

Whitman said that free calling would not happen immediately, but rather gradually by the end of this decade.

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