Skype's Growth Staggering, Challenges Ahead

Rich Tehrani : Communications and Technology Blog - Tehrani.com
Rich Tehrani
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Skype's Growth Staggering, Challenges Ahead

Om Malik does a great job analyzing the Skype earnings numbers hidden within eBay's quarterly results. Here are some of the numbers/details worth sharing. 

  • $145 million in sales for the quarter
  • 26% greater sales than prior year
  • SkypeOut minutes go to 2.6 billion from 2.2 billion in the third quarter of 2008.
  • Superioor Growth in Asia is noted by the company
  • Skype-to-Skype minutes go to 20.5 billion from 16.5 billion in the third quarter of 2008.
  • 35 million new users were added this past quarter

Om also points out in an intelligent fashion that the growth at Skype is slowing. He focuses on paid growth of course - the free user growth is staggering.

The problem as you might imagine is Skype-to-Skype minutes are growing much faster than SkypeOut and this only makes sense when you consider broadband is spreading and computers are getting much cheaper. In fact you can potentially justify a netbook from your telephone savings of a month or less in some countries/situations.

Then there is the paradox of all paradoxes. Cameras are now dirt cheap and you can choose to pay for a call using SkypeOut or instead have a free video call with excellent quality. Which would you choose?

Oh and it gets worse - the quality of Skype-to-Skype calls can blow the quality of a traditional PSTN calls away when you consider the wideband codec and the fact you generally listen to the conversation with headphones directly on your ears.

Then there is the global recession - which is making people the world-over decide to use the free internet telephony solution whenever possible.

Om has great points but no one can deny the massive growth of Skype users. In addition, for this quarter at least, the team at Skype should be very proud of the 26% growth number they put up.

The question becomes can they come up with new ways to monetize the service and moreover find a way to have their premium features such as wideband codec and video be paid and their low-quality solutions like Skype-Out be free?

I realize the economics of this suggestion are suspect but the reality is when you have premium services which are free, people tend to gravitate to them.



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