Ever wondered what you could do with Skype beyond making voice calls? Then, check out this list of 25 tips and hacks to get more out of Skype.
VOIP Services, Competition/Skype
Too Early to Grade eBay-Skype Deal
Has it already been more than a year since eBay decided to cough up as much as $4.2-billion for Skype? The International Herald Tribune takes a look at the deal and how Skype has evolved within the eBay empire. So did eBay get suckered into making a pre-emptive bid ahead of rival suitors such as Google, or did eBay made a savvy move by acquiring the world's leading VoIP player? So far, there has been little indication eBay has been able to do anything with Skype strategically other than giving sellers the option of putting "Skype Me" buttons on their stores. On the other hand, Skype as a telecom service provider is showing promise as a standalone business. In the past year, the number of registered Skype users has more than doubled to 136 million, while Skype's revenue is expected to more than triple this year to $195-million from $60-million in 2005. But is that enough to justify spending $4.2-billion? The answer – and apologies for being so wishy-washy – is only time will tell. But let's conservatively assume Skype's sales see compound growth 25% over the next five years. This would result in sales of $675-million by 2011 with healthy profit margins. That's a pretty good business. Let's also assume eBay can use Skype to get into the pay-per-call market, which the Kelsey Group forecasts will become a $1.4-billion to $4-billion business by 2009. Assuming Skype captures 10% of the PPC market, that would be another $140-million to $400-million of sales – boosting Skype's total revenue to $810-million to $1.1-billion. Again, that's a pretty good business. Of course, the $4.2-billion price-tag will always be used as a benchmark on how the deal is "valued". But if Skype grows as expected, its acquisition may look like a pretty good move in five years. Tags: eBay, Skype, VOIP, M&A
Kazaa, Skype….Venice?
News flash: Internet rebels Niklas Zennstrom and Janus Friis are apparently moving into the video business after wreacking havoc on the music and voice businesses. According to BusinessWeek, the dynamic duo are using some of their eBay dollars to develop video distribution technology code-named "The Venice Project" (which sounds like a film that Matt Damon would star in). I realize this is the year of video but is anyone doing anything other than video these days? Then again, it's hard to look at YouTube's 100-million video deliveries a day and not believe there's gold in them thar fields – especially when the company has apparently targeted $1-billion as its take-out price.
 The challenge facing most (all?) video start-ups, including YouTube, is turning all those downloads and streams into revenue. Sure, this is a theme I've hammered on before but you can't turn cool Web-based technology into a business without revenue. If you examine Zennstrom and Friis' entrepreneurial track record, Kazaa was not a business but a way to download music and video for free while driving the music industry crazy. Skype was on its way to becoming an interesting telecom business before eBay stepped in with a $4.1-billion takeover. As for "The Venice Project", your guess is as good as mine about its prospects. There's plenty of competition but Zennstrom and Friis has three major weapons in their arsenal: lots of personal cash, plenty of VCs likely chomping at the bit for a piece of the action, and the relationship with eBay. The big question facing Zennstrom, Friis and the boys over YouTube is whether they can attract another Skype-like mega-offer.
Update: Other signs of the video-craze include the launch of Dabble and Gotuit. John Battelle has a post on why YouTube isn't worth $1-billion.
 The challenge facing most (all?) video start-ups, including YouTube, is turning all those downloads and streams into revenue. Sure, this is a theme I've hammered on before but you can't turn cool Web-based technology into a business without revenue. If you examine Zennstrom and Friis' entrepreneurial track record, Kazaa was not a business but a way to download music and video for free while driving the music industry crazy. Skype was on its way to becoming an interesting telecom business before eBay stepped in with a $4.1-billion takeover. As for "The Venice Project", your guess is as good as mine about its prospects. There's plenty of competition but Zennstrom and Friis has three major weapons in their arsenal: lots of personal cash, plenty of VCs likely chomping at the bit for a piece of the action, and the relationship with eBay. The big question facing Zennstrom, Friis and the boys over YouTube is whether they can attract another Skype-like mega-offer.
Update: Other signs of the video-craze include the launch of Dabble and Gotuit. John Battelle has a post on why YouTube isn't worth $1-billion.
Telco Hell
Is the GizmoProject's “All Calls Free” program the beginning of the end for telecom carriers and the telecom industry. According to Andy Abramson, Gizmo Project users will be able to make free, unlimited calls to 60 countries around the world. Andy, who has come out of his blogging hiatus with a bang, said “All Calls Free” demonstrates “the cost of calls has really dropped to nothing”, and he wonders if other VoIP service providers will jump on the bandwagon. This is a savvy PR move by Gizmo Project, which is battling to establish a foothood against rivals such as Skype. The idea of free calls will no doubt appeal to the bleeding and leading edge who have no concerns about using software and computers rather than traditional telephones. For the mainstream, the Gizmo Project is probably difficult to grasp. That said, telecom executives can't be happy with the idea of consumers not paying anything to make a phone call. It's bad enough their high-profit, local phone business is under siege from Vonage, et al, and that the long-distance business has gone from lucrative to nothing in less than a decade. Faced with all kinds of financial pressure and increased competition, the carriers are becoming desperate, which explains why they are so adamant about getting rid of net neutrality so they can start charging fees for traffic travelling on their high-speed networks.
Insight: GigaOm offers some good perspective, particularly the idea that nothing is really free and that consumers will still pay to call certain countries and other premium services. Om also mentions how Vonage might be affected. Also check out Alec Saunders.
Skype's Strategic and Monetization Potential
As Vonage's brand and stock comes under siege, it is interesting that Skype continue to enjoy growing goodwill as it becomes more of a mainstream tool (the free SkypeOut offer for calls in North America doesn't hurt). Nicholas Carr had a post last week critical of eBay CEO Meg Whitman's assertion during an interview with the Financial Times the company will eventually figure out how to monetize Skype. Here's Carr's take:
“We'll figure it out.” “There's something here.” “We already have some
ideas.” “We'll see.” I wonder how many other multibillion-dollar
acquisitions have taken place before the acquiring company had “figured
out” how to actually make money from the deal. I know there've been
plenty where the acquirer's money-making strategy turned out to be pure
fantasy, but how many have there been where there wasn't any strategy,
where the justification boiled down to “don't worry, we'll figure it
out later.”
ideas.” “We'll see.” I wonder how many other multibillion-dollar
acquisitions have taken place before the acquiring company had “figured
out” how to actually make money from the deal. I know there've been
plenty where the acquirer's money-making strategy turned out to be pure
fantasy, but how many have there been where there wasn't any strategy,
where the justification boiled down to “don't worry, we'll figure it
out later.”
While eBay will have a difficult time to ever justifying the $4.1-billion it spent to buy Skype, I would argue Carr's assessment is somewhat off-base and too dismissive. First, Skype is a high-margin $200-million, profitable business (unlike Vonage) that is growing as it becomes more of a mainstream tool with a variety of premium services. Second, Skype is starting to be more integrated in eBay's e-commerce operations. This will generate soft benefits such as better customer service and more efficient transactions, as well as hard benefits such as revenue from premium services. Skype was a major strategic gamble for eBay, which fumbled the ball when it bought whole-hog into the master M&A sales pitch of Niklas Zennstrom and Tim Draper. At the end of the day, however, Skype will become a good strategic vehicle for eBay – and a variety of “monetization” opportunities will emerge to generate plenty of revenue – contrary to what Nicholas Carr opines.
Vonage Continues to be Savaged
It didn't get a lot of attention but Vonage shares crashed through the $10 barrier to close at $9.60 on Friday – a 43% tumble from its IPO price. Preston Gralla savages Vonage and the fools who bought into the IPO, while raising the well-trodden notion eBay overpaid for Skype. While it's difficult to argue with Gralla's assessment, I would contend there are a few major differences between Vonage and Skype – aside from financial issues. Perhaps the biggest is that Vonage has mostly been seen as an opportunistic investment play by Jeff Citron and his band of VCs more than a disruptive business. On the other hand, Skype is still seen as a cool technology with plenty of potential to make a major impact on how people communicate and do business online (without even getting into whether it's worth $4.1-billion. Perhaps this is the real genius of Niklas Zennstrom and Janus Friis. They sold the world on Skype's disruptive potential, and then convinced eBay to buy into the dream. One point where I will disagree with Gralla is Vonage's takeover potential. Gralla contends he “wouldn't count on” a buy-out but I would argue anything can be sold at the right price. Vonage wasn't worth $2.65-billion (its IPO valuation); and you could argue it's not worth $1.5-billion (its current valuation). But what happens if Vonage shares drop to $5? Would a suitor justify making a $750-million bid for 1.6 million customers?
Addendum: Bloomberg reports that Pali Research downgraded Vonage to a “sell” from “neutral” after analyst Richard Greenfield learned Vonage is offering existing customers a discounted rate of $19.99 if they threaten to leave. “It is increasingly apparent that Vonage is struggling to drive subscriber growth following the IPO,” he said in a research note.
