IP Democracy: Can eBay Make Skype a Winner in the VoIP World?
Back in 2002, VoIP promised to shake up the telecom world by introducing a low-cost rival to incumbent voice carriers. The upstarts had a simple plan: deliver cheap competitive voice services to businesses and consumers over those telcos' (and cable operators) own broadband connections.
So many promising start-ups jumped into the voice business that Rupert Murdoch even said back in 2005 that “I believe that free voice will be ubiquitous, not within ten years but within three years."
But along the way, cable companies (at least in the U.S.) jumped into the VoIP business in a big way and both cable and phone companies began to woo consumers with triple-play packages of voice, video and data services, nipping VoIP's cost-advantage in the bud. As a consequence, one by one, VoIP providers have been falling by the wayside. SunRocket shuttered this past summer and Vonage is barely surviving.
Another VoIP pioneer, Skype, is on the ropes too, but it's still the strongest player among the pack of still-standing independent VoIP providers. Despite causing its new parent company eBay a lot of pain by forcing the online retail giant to write-down nearly $1 billion in acquisition costs in Q3 07, Skype continues to grow at a healthy clip.
| Skype User, Revenue Stats (in mil.) | ||||
| Num. of Registered Users | Quarterly Change | Revenue | Rev/User | |
| Q104 | 4.1 | na | na | na |
| Q204 | 6.8 | 2.7 | na | na |
| Q304 | 11.5 | 4.7 | na | na |
| Q404 | 19.8 | 8.3 | na | na |
| Q105 | 32.9 | 13.1 | na | na |
| Q205 | 44.1 | 11.2 | na | na |
| Q305 | 54.0 | 9.9 | na | na |
| Q405 | 74.7 | 20.7 | na | na |
| Q106 | 94.6 | 19.9 | $ 35.20 | $ 0.37 |
| Q206 | 113.0 | 18.4 | $ 44.00 | $ 0.39 |
| Q306 | 136.0 | 23.0 | $ 50.00 | $ 0.37 |
| Q406 | 171.0 | 35.0 | $ 66.00 | $ 0.39 |
| Q107 | 196.0 | 25.0 | $ 79.00 | $ 0.40 |
| Q207 | 220.0 | 24.0 | $ 90.00 | $ 0.41 |
| Q307 | 246.0 | 26.0 | $ 98.00 | $ 0.39 |
| Source: Emerging Media Dynamics analysis of company data © 2007. | ||||
During Q3 07, Skype added 26 million new registered users, its single biggest quarterly gain ever, and boosted revenues by 9%. Year-over-year revenues nearly doubled for Skype, advancing from $50 million to $98 million.
While all this is not enough improvement to justify eBay's $4.1 billion purchase price of Skype, it's not too shabby either. Despite the black eye that it has inflicted on its corporate parent, eBay isn't throwing in the towel on Skype yet. During the company's earnings call yesterday, eBay CEO Meg Whitman said that with the write-down in the past, "we have the opportunity to have a new day at Skype."
Skype is already lining up some potentially high-growth initiatives. Business Week reports that Skype is gearing up to launch a set to launch a customized cell phone developed jointly with international carrier 3 Mobile. And Skype has a new deal with MySpace to allow the social network's denizens the ability to talk to each other with a click of the mouse.
The latter deal underscores a key advantage that Skype holds over its remaining VoIP peers. Unlike other independent VoIP proviers such as Vonage, which is dependent on physical connections via routers hooked up to customers' broadband lines, Skype is and always was entirely software-based and works entirely over the Internet.
If more mobile, social networking and other innovative deals are in the pipeline, Whitman may be right about a new day dawning for Skype.
Posted by Cynthia Brumfield on October 18, 2007 6:50 AM to IP Democracy