Sunday, November 12, 2006

Skype is doing better, number wise, pundits and ebay say.

I was reading a comprehensive 3 page article today about how skype, the disruptive VOIP technology is doing in the market place. The article covers a lot of ground and shows off wishes of Ebay and the rest of us, what skype should be. Ebay paid 2.6 Billion to aquire Skype and the figure might run high as 4.1 Billion if all the promised bonuses were paid.
The Ebay has a task of proving to it's investors that it made a good purchase and skype will be profitable. It is not an easy task but not a difficult one either, if the numbers are correct.
Currently, there are about 206 Million broadband users worldwide. Broad band users tend to use VOIP IP Telephony applications like Skype, better than the dial up users. But Dial up users also try out these VOIP applications but I am not sure if it worth the effort. Initially there were many dial up users that used Skype in old days but the current bandwidth requirements and tag along improvements make it, that you have a broadband connection. And the world is heading that way. Some Users in Japan getting 100MB fiber to home for the same price I am paying for DSL in USA. USA is yet to catch up with broadband deployment with the countries like Japan and South Korea.

What I was surprised about the numbers on skype was the user base and it's distribution. According to the article; "The number of registered users, those who have downloaded the free Skype phone software, more than doubled to 136 million by Sept. 30 since the sale to eBay. That is more than half of the world's roughly 206 million broadband Internet users, according to International Data Corp. Each day, 250,000 people download Skype, compared with 130,000 before the sale."
So if you are able to make a $1 per month, it is around 1.6 Billion per year. Add some advertising like ebay goodies or Google ADSENSE, Ebay should be able to show to the investors that the investment was worthwhile.
Another fact that surprised me was that most of the skype users are concentrated in the Asia and Europe. Of all the users, only one fifth speaks English, and the highest number seems to be Chinese.
The article also tells us about slowing of Skype and it's competitors, not only the smaller outfits (a swarm of it) offering VOIP solutions, big boys like Adobe and Microsoft are entering the arena. Remember Netscape, dominant browser untill MS released the IE. Skype might go the same way.
"The biggest challenge facing eBay is that swarms of competitors, and not just Yahoo and Google, have climbed out of the woodwork, experts say. Besides smaller rivals like Vonage, Jajah or VoipBuster, which is based in Cologne, Skype faces Adobe, the digital document maker, which is developing its own Skype-like phone products, and Microsoft, whose Office Communicator software for businesses enables Internet phoning.

Traditional phone companies like Deutsche Telekom and France Télécom, and their competitors in the fixed-line and Internet businesses, are also giving away free minutes and Internet phone calls to retain customers.

In China, Skype's biggest market, the leading Internet phone company is QQ, owned by the Chinese operator Tencent Holdings, which says it has more than twice the number of users as Skype."
I think it is time, you read the article. Beacause I feel like changing the header to say, "Skype is on the way down"

Kevin O'Brien's Article on IHT


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