by Carlo Longino

Skype, Rhymes With Hype

from the mr-telephone-man-there's-something-wrong-with-my-line dept

Skype hype is starting to kick in to overdrive, with the company increasingly being touted as a takeover target for Net giants like Yahoo and Google -- all this for a company whose revenues are estimated to be something like $6 million to $10 million. Skype gave a presentation at some conference today, where one of its VCs, Tim Draper, shared some, um, unbiased opinions on it, many of which are pretty questionable. He pointed out how it's taking tech companies less and less time to reach $1 billion in market cap, adding that it took Skype only three weeks -- which is pretty curious considering it's still privately held, not to mention those revenue estimates. Of course, Draper, who's put $10 million into Skype, says he's holding out for a billion-dollar offer "before he'll give the acquisition path a thought". But is he, and many commentators, overestimating the impact of Skype? The company likes to tout its nearly 140 million downloads, though it says it's got 45 million users (of course, it's unclear how they define a user), but just 1.7 million of them pay for any services, which is a pretty small number. While Skype may be a cool product, its business model -- which CEO Niklas Zennstromm says is based on a low revenue per user, but a very high number of them -- remains a huge question mark. Skype's making a play to grab lots of users in the hope it will cement its place in the market, but it's hard to see just why anybody that's not using any paid services -- 96% of its users, apparently -- will be any more loyal to it than any other free IM provider. There's a lot of hot air comparing Skype to incumbent telecoms and wireless carriers, but perhaps a bigger threat could come from another upstart company developing a similar product, because if nothing else, Skype's a proof of concept that a small company can make a competitive and compelling VoIP product. However, that doesn't mean it will be the last telecom company left standing.

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  • identicon
    spam, 20 Jul 2005 @ 4:00pm


    Skype is definitely the CEO approved buzzword app of the year.

    reply to this | link to this | view in chronology ]

  • identicon
    JOFeG7E4Ei, 5 Jul 2006 @ 3:52pm


    8SlL0UwHDo8 wWH274TZNg7nA QYVakkCQ4Gic

    reply to this | link to this | view in chronology ]

  • identicon
    Google, 4 Oct 2006 @ 3:35am


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    reply to this | link to this | view in chronology ]

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