TheDeal: Twitter, like Skype, is overhyped

"Despite all the hype surrounding Twitter Inc., it basically is nothing more than the next Skype.

To paraphrase Stephen Colbert's interview of Twitter founder Biz Stone, Twitter is a solution to a problem we don't have. So too was Skype, which was heralded as a shift in how we communicate from phones to computers when introduced six years ago. Sound familiar? It should because actor Ashton Kutcher is making the same claims about Twitter today.

However, Skype fans overlooked the fact that telecommunications options were flourishing earlier in the decade. Thanks to the 1996 Telecom Act, competition from cable companies and other providers ended the local phone company's monopoly on voice communications. Meanwhile, cell phones were practically ubiquitous by 2003. In other words, Skype would have been revolutionary before 1996, but by 2003 it was just another option -- albeit a less convenient one tethered to a computer -- on our telecom menu.

Nonetheless, the hype surrounding Skype was very much in line with the hype now surrounding Twitter. And just like the talk of a Twitter buyout bubbles up, so too did Skype rumors surface, ultimately culminating with eBay Inc. (NASDAQ:EBAY) purchasing Skype for $2.6 billion in 2005. That deal never worked out for eBay, and it is now poised to jettison Skype in an IPO next year."

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