Skype's Free Calling: Promotional Strategy Or Attempt To Submarine Vonage IPO?

from the take-that dept

There's been lots of buzz today about Skype's decision to offer free calling to US and Canadian phone lines through the end of the year. There's plenty of speculation about why they would do this -- from increasing their usage in the US to better competing with some of the new entrants, like AOL. However, the price of free shouldn't really surprise too many people. It's the obvious end result of the price war we saw breaking out last year. At the time, we noted that anyone trying to battle on price is going to lose out, because the price was going to become effectively free -- as it now is. The real trick was to focus on allowing people to do something new and different, which they couldn't have done before -- getting away from the price war aspect and into adding value. While this new move is supposedly only through the end of 2006, the odds can't be too high on Skype ever bringing back fees on these types of calls. When you're in a price war, raising fees isn't an option. However, a much more interesting angle to this move might be the time with respect to the up and coming Vonage IPO. Given existing reports that Vonage is struggling to find a market for their shares, it's quite possible eBay/Skype timed this little announcement to knock a few more dollars per share off the eventual IPO price.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Tin Ear, May 16th, 2006 @ 12:43am

    It is a good deal...

    And the quality of the calls is pretty decent as well. My only complaint is that they could have done it a day earlier so that I could have called my mother on Mother's Day for free, instead of using my Skype Credit. Oh, well.

    BTW... First Post!! YeeHaw!!

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

  2. identicon
    Virender, May 16th, 2006 @ 2:52am

    Good Strategy.................

    Super Quality of call and video as well .Its make so easy to talk with my brother with clear video. ;)

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

  3. identicon
    Anonymous Coward, May 16th, 2006 @ 6:04am

    All's fair.....

    I think this is a brilliant move by eBay and as the write-up highlights shows how comoditized tradtional wireline- style service has become

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

  4. identicon
    John W., May 16th, 2006 @ 7:43am

    Another Angle

    Another angle to this could be that they see the whole net neutrality thing leaning towards the telcos and they need to gain critical mass in the market before the tiered internet thing might happen so that when telcos try to block or hobble voip traffic (more than they do now), there'll be enough people to scream bloody murder and pressure their congressmen into siding with net neutrality instead.

    Just a thought.

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

  5. identicon
    Ben, May 16th, 2006 @ 8:39am

    phone spam

    They should really think twice about what this will cause. Prepare to receive hundreds of "spam" calls per day.

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

  6. identicon
    Brian, May 16th, 2006 @ 9:25am

    Re: phone spam

    Phone spam? Two reasons this won't happen:

    1) No one can call me over Skype unless I've allowed them to

    2) It would require actual people to make indivudual calls, unlike e-mail spam which requires virtually no effort. Not cost effective.

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

  7. identicon
    wuying, Jun 7th, 2006 @ 8:28am

    Price war? really, many companies are providing offer of free calls.
    In fact, I have tried another software:wengophone, it's not bad, the quality is great, and espescially, it has an offer of calling 26 star destinations illimited now.
    Try it, it's great

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

  8. identicon
    dsfsdfsfd, Feb 19th, 2013 @ 2:16pm


    Want to get free Skype credits?

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

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