Skype, that VoIP company, is on a tear, and some people are calling it the next big thing.
Skype continues to expand its customer base and its offerings, having just rolled out its P2P VoIP software for Linux and Macintosh platforms, and passed the 24 million registered users mark. By some estimates, it will have 140-245 million users worldwide by 2008.
And, just last week Skype was awarded the Tornado 100 Overall Winner Award as the best-performing and innovative high-tech private company of Europe and Israel for 2004.
According to Evalueserve, existing telecom operators will be hit hard by VoIP — they may experience a permanent reduction in profitability of between 22-26 percent by 2008 due to Skype, Voiceglo and other VoIP providers. If my business card had AT&T or SBC (Southwestern Bell Corporation ) printed on it, I might have cause for concern.
My prediction: Skype will be killed off in 2006 by Google’s unannounced Gtalk service (although they might choose to call it Gchat or Gabble instead).
Evalueserve describes Skype’s Business Model as follows:-
Skype offers its users free unlimited worldwide PC-to-PC calls and aims to keep thisbasic functionality free forever. The companys main source of revenue is SkypeOut. Currently, SkypeOut is the largest source of income for the company, with 200,000 users paying a minimum of USD 12 in order to buy calling time. The sale of cyber phones and PC headsets also contribute to the companys revenue. In the future, the company plans to introduce features and services such as voice mail, etc., which will require a paid subscription or pre-payment.
Currently, Skype does not have any offerings customised for enterprise clients.
According to Kat James, Public Relations, Skype, We are currently working on a Skype for Business offering to be launched in 2005. However, the exact nature of the announced solutions both in terms of technology and economics is still to be disclosed. Skype aims to generate revenues through its enterprise solutions.
Skype co-founder Nikolas Zennström indicates that it costs them one-tenth of a cent to add a new user to Skype, and of course, the marginal cost is zero for each call made over Skype … hard to beat those economics. Here is Skype’s view of their model:-
And, if I were Skype, I would be worried about the possibility of Google, MSN or Yahoo launching their own VoIP services in direct competition with Skype. However, none other than Om Malik, dismisses that notion, stating:-
Since Googles business model revolves around embedding text-ads in pretty much everything, it doesnt make sense for them to even indulge in VoIP.
And the telco’s are fighting back — the AT&T CallVantage service, for example, is VoIP-based, but it costs $20/month and requires an ‘Adapter’.
I can’t decide if the current buzz about Skype is litotic hyperbole or hyperbolic litotes. It will be interesting to see how this all turns out.
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Skype is still a big deal, but I don’t think it quite matched some of the early predictions for it. Maybe it has a lot of growth ahead of it.