As we kiss 2006 goodbye, we can look ahead to 12 months that may prove to be the most challenging chapter in eBay's
I'm going to eBay that hideous throw rug that your aunt gave us for Christmas.
I swear, if you let me borrow $50, I will PayPal you back come Sunday.
I don't have time to discuss things right now. Skype me later.
Oh, how great it would be if eBay's satchel could just open up and have verbs joyfully pour out. Those action words -- they just never seem to sit still in one place. Unfortunately, eBay's three verbs are all fighting battles at the moment, and 2007 may prove to be a bloody battlefield if eBay messes up on any of the three fronts.
The hype about Skype
Something pretty important is happening this weekend. The free SkypeOut promotion that allowed Skype users to call phones in the United States and Canada for free in 2006 will come to an end. The regular rates will return. Yes, paying $0.021 a minute is pretty darn cheap, but will the forced upsell work?
Skype is adding a layer of urgency to accepting the change by promoting an unlimited-dialing option for $14.95 for a full year. The incentive to hop on now is that the unlimited plan will more than double to $29.95 a year come February. Will folks pay? Is this the chance that VoIP providers such as Vonage
Jot down Jan. 18, 2007, as a day to check back in on Skype. That will be the day the service announces "an innovative and disruptive pricing structure."
eBay paid between $2.4 billion and $4.2 billion for Skype last year, and the initial analyst expectations of embedding the chat service into the company's auction site haven't really taken off. Skype will have to prove itself as a stand-alone entity, and the shift to a pay model next month for many freeloaders will go a long way toward dictating the platform's success.
There's nothing papal about PayPal
Over on the financial-transactions side, PayPal remains one of the brightest spots in eBay's story. PayPal is growing more quickly than eBay's auction marketplace. The global need for an easy and proven system to complete online money exchanges has been a feast for PayPal; it has opened the service up to a greater potential market than eBay itself.
However, we can't dismiss the peskiness of Google
When retailers know that the margins on sales are fatter if they prod buyers to go through Google Checkout, can PayPal ignore that kind of threat? Will margins be squeezed if PayPal makes concessions to remain competitive? I don't think that Checkout will prove to be as easy a fly to flick as the now-defunct payment functionality of Yahoo!
Taking "It" to the next level
Over on eBay, many are left to wonder whether the online auction business has matured. Oh, the site's popularity continues to grow. The problem is that the temporary glimmer of accelerating domestic growth at eBay has come and gone. There are also challenges overseas.
This may appear to be the calmest of the verb trio, but it's not. Aside from the popularity of free listing sites such as Craigslist, the same entrepreneur spirit that bred power sellers on eBay has moved on, with the creation of cottage industries elsewhere. Folks are marketing their wares through MySpace, building out Google AdSense-fueled websites, and getting crafty about reaching out to customers through YouTube. Yes, eBay is still a very necessary cog in the e-commerce engine, but its flexibility to inch rates higher is going to be tested now that there are so many free outlets springing up for the entrepreneurially minded.
So keep eBay -- a winning Motley Fool Stock Advisor newsletter recommendation -- on your radar come 2007. Win? Lose? One way or the other, it looks as though eBay is going to latch on to a new verb in the year ahead.
eBay and Yahoo! have been Motley Fool Stock Advisor newsletter recommendations over the years. Microsoft is an Inside Value selection.
Longtime Fool contributor Rick Munarriz is a satisfied eBay user, with 170 positive feedbacks to show for it. He does not own shares in any of the companies mentioned in this story, and he is a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy .