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From BusinessWeek comes a long profile of the Facebook economy. As I discussed on 10 August 2007, Facebook has become very popular as the service opened its APIs to third-party applications last 24 May. Slide recently received a US$50 million round of venture capital funding, based on that company’s suite of Facebook widgets like Top Friends, SuperPoke and FunWall. That seems like crazy money, considering that these f8 applications are little more than features in a social network. Gigaom.com points out that the recent acquisitions of MySQL, BEA and Skype don’t make much sense, either.

Security is another major risk. A cracker named DMaul recent posted a 17 gigabyte file of photos that he downloaded from thousands of private MySpace profiles, according to this report in Wired. The massive file was posted on BitTorrent, and includes photos posted by 14- and 15-year old MySpace members. MySpace makes profiles private by default for that age group.

Meg Whitman, eBay’s CEO, is stepping down after a brutal year for the company. The New York Times reports that John Donahoe will be promoted from president of the Marketplace division, and will assume his new role on 31 March. The Times ran a story about Donahoe on 21 February 2007.

It has been a brutal year for eBay. The company’s stock price has dropped by a third in the last 90 days. The e-commerce sector continues to grow, but eBay’s market share is shrinking. This interview published today by Reuters, Donahoe claims that eBay will rebound in a recession as casual sellers return to eBay to earn additional income.

eBay’s acquisition of Skype has been a disappointment, even with an additional 30 million subscribers in the last quarter of 2007 – see IP Democracy for more details. Last August’s outage damaged the VoIP’s service’s reputation and customer standing. In this 2 October 2007 article, I discussed how competitive rivalry was increasing in the VoIP industry. eBay may never recover its investment in Skype.

Another eBay acquisition has attracted attention in Hawaii. StubHub, which was mentioned in this 12 December 2007 article in the Star-Bulletin, became an important secondary market for 2008 Sugar Bowl tickets.

24 January 2008: Here’s an article about Donahoe from yesterday’s BusinessWeek. He’s committed to an eBay turnaround, even if it hurts the stock price. First task: reduce the seller fees. Next: make eBay an easier and safer web site for buyers and sellers. As the New York Times points out, better search tools may be an important part of the second task.

Yesterday, Forbes reported on eBay’s continuing problems with Skype. Om Malik also discussed this development yesterday.

eBay purchased the VoIP company in 2005. eBay CEO Deb Whitman wanted eBays sellers and buyers to use Skype as a real-time communications tool during and after auctions.

eBay management is scrambling to save Skype

It hasn’t worked out well for eBay. The massive Skype outage that I discussed on 17 August gave new entrants and existing competitive rivals more opportunities to convert disgruntled Skype customers. Forbes published an article about the outage here.

… eBay’s stock barely moved on news Monday that Skype’s founder and chief Niklas Zennstrom is leaving and that eBay will take $1.4 billion in charges related to the acquisition in the third quarter. When eBay makes its quarterly report on Oct. 17, analysts won’t expect Skype to contribute more than 5% of the company’s revenues — that’s how much it coughed up in the second quarter, just $90 million…

In our local market, there are several VoIP providers who have targeted business and residential customers. Pacific LightNet, Oceanic Time Warner, and AlohaTone. Google recently purchased GrandCentral, which provides users with a single mainland phone number that redirects incoming calls to the user’s other phone numbers. The New York Times discussed GrandCentral in this 15 March article.

Even the incumbent local exchange carrier (ILEC), Hawaiian Telcom, offers CallWave VoIP voicemail services to cits mobile customers. See this 19 September 2005 Pacific Business News article for the initial announcement.

Meanwhile, one of the best-known national VoIP providers, Vonage, is losing patent-infringement lawsuits filed by Sprint and Verizon. Here’s Malik’s summary from 25 September. Vonage lost its CEO in April, and is struggling to keep customers.

It’s hard to compete when the key success factors in an industry are not in your favor.

It is possible to use a Windows personal computer on an iPhone. Of course, the computer isn’t inside the phone. WebEx, a Cisco company that offers remote computing services, now supports iPhone on its PCNow service.

That will let users search and retrieve files on a remote desktop computer. The remote computer needs a LAN or broadband connection to the Internet, of course. Users can also edit, create, send, view and receive Outlook email, contacts and appointments.

As a bonus, WebEx connects iPhone users to Skype to allow VoIP telephone calls using an iPhone.

One nice benefit of this approach is that the WebEx iPhone client isn’t giving the user direct access to the Windows desktop.

Of course, anyone who can get access to that iPhone and the user’s passwords could get access to that remote PC. WebEx allows users to remotely connect one or two PCs to their iPhone for US$11.95 a month. For a small business, this might be a nice option.

Larger companies may not want their employees to breach the corporate firewall in this manner, though.

This ZDnet article has some additional details.

Skype, the popular peer-to-peer VoIP service owned by eBay, was unavailable yesterday. Long-standing errors in Skype’s client software shut down the company’s supernodes, which took down the entire service. See this New York Times article for more background.

Convenience is all about timing

eWeek reported today that Skype is slowly coming back up, but millions of users are still unable to access the service.

Skype is releasing situation reports on its blog – here is the most recent post.

eBay had moved its North American office telephones from landlines to Skype, which didn’t help matters much yesterday. I discussed some of the business reasons behind this decision on December 13.

For eBay and many small companies that had based their telecommunications strategy in Skype, yesterday was a bitter lesson about redundant systems and failover. As two analysts noted in the eWeek article, Skype is not a landline replacement. The Financial Times pointed out today that disappointed Skype users may go back to less convenient, more reliable options.

Reliability is valuable

Systems will fail. Skype had four years to fix the problem that emerged yesterday. At Los Angeles International Airport last weekend, 20,000 passengers were stranded when a single network interface card (NIC) on a workstation caused a major LAX network to crash within 70 minutes. See SlashGear, CrunchGear and Consumerist for more details.

Bloggers including Mark Evans and Allen Stern discussed one interesting reswult of the outage – it really does appear that Skype matters.