Questions Raised by Q1 Numbers
The Q!-2007 Skype-related numbers reported by eBay Wednesday raise some interesting questions. Start by looking at my updated tracking spreadsheet based on reported numbers:
Note that I use the term "Accounts" instead of "Users" as we know there is a significant % of Users with multiple Accounts for a wide variety of reasons.
One other number I measure is ARPU (or maybe should be ARPA): Average revenue per user/account: Last quarter was a record $0.40; however, it has more or less remained constant over the past year between $0.37 and $0.40 even as number of registered accounts increases.
Of most significance is that, while the numbers are only an indicator due to the assumption made, the growth in the U.S has slowed down significantly. It certainly backs up statements made to the effect that termination of the North American "Free" promotion last year has had an impact. But Skype remains largely a non-North American business with more attraction to Europeans and Asians probably due to the different economics associated with their local telephony costs.
But other questions remain:
- Why did SkypeOut minutes remain flat quarter-to-quarter? Was there not significant enough pickup of the Unlimited North American plan when the "Free" promotion ended. At C$35 per year, it is still significantly lower than my costs would be on Rogers or Bell Canada services (min. C$5 per month).
- Does Skype need to look beyond viral marketing to promote Skype, its benefits as well as Skype-certified phones and their features?
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More troubling as an indicator of demand is the flattening number of Skype-to-Skype minutes. Here we have a "no charge" service, with a widely recognized, simple user interface, and with a growing number of accounts, that is largely not affected by pricing promotional plans, yet no growth in usage minutes.
- Are we communicating more via mobile devices?
- Are we communicating more via text messaging? (or, going forward is Twittering replacing the need for voice calls <gr>?)
- Are users tiring of using their PC's as a "clumsy" primary voice communications device?
- Is there an increasing use of alternative free VoIP services such as GTalk or Gizmo Project? Switching costs to the user are nonexistent.
- Has Skype saturated the "geek" and "adolescent" (student) market?
- Or, are we simply spending less time on voice communications?
What action can Skype take to address these issues?
- Expand Skype's marketing activity beyond viral. The geek and student markets are getting saturated when it comes to Skype; at this point Skype needs to build awareness with a much broader consumer public (especially in North America).
- Skype hardware can lock more users into Skype. But, building on the broader awareness issue above, Skype needs to develop more traditional distribution channels to get product into retail stores where "point-of-sale" purchase decisions are made. Just the products' existence in physical stores will drive demand on virtual stores. But retail distribution runs on a different business model involving market development funds, reseller training and building appropriate distributor relationships.
- Focus on promoting Skype PC-Free Cordless phones that allow consumers to continue to use their current landline service but also gradually transition to Skype where appropriate and beneficial.
- Launch a mobile strategy that uses current mobile technology to at least get a presence onto mobile devices (with at least IM, including chat and presence) beyond simply Windows Mobile devices. Did I say Nokia and Blackberry, both of whom have just reported record quarters?
Fodder for future posts. In the meantime what are your thoughts on these issues?
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Comments
I really believe there needs to be a primary driver or motivator other than just costs. For the average consumer there is a lack of awareness and need. For alot of people who call overseas to their homeland use telephone cards. It's simpler and if not the cheaper to use then skype. For 4.50 I can call from Canada to China and talk for 4 hours. Quality of receptions is clear. I sometimes encounter voice distortion using skype and it's very irritating and a big incovenience.
Posted by: hapkido | April 22, 2007 06:23 PM
I have been paying for skype for two years now and have know about skype since it first emeraged as a technology. I don't use it. Basically because it's unreliable and voice quality is unpredictable. From what I have found out is inherent in most VOIP applications without both high upload and high download speed and is reliable. Which many isp's in Colorado only have high speed download. I do use Qwest as my DSL provider. I also know that comcast sells its own VOIP service here for 33$/month above the Internet bill. I'm assuming there cable modem based service offers Superior data rates. And also I'm guessing that no one would put up with the bad connection quality of skype paying 33$/month for comcast. In theory if I use there Internet service I will be rid of my skype problems.
But I digress
The peer to peer info structure of skype also bothers me. Why should I allow skype to use my computer as a super-node. It bothers me that I have to change my fire wall settings to use skype--How safe is my computer using this product? Really?
Kaza the peer to peer program that skype was based on got hacked to the point that network traffic over the P2P network was overloaded by people who got around factors that controlled and streamlined the p2p networks traffic.
Now with skype all the free users bog down the p2p network for those who pay. But without computers ruining skype, bouncing call traffic around the Internet, how is skype going to support the paying customers? Now nearly every IM program (ie google talk) allow over the internet calls. Why won't the free users just use google talk?
Skype is now selling hand held skype devices. These devices i would guess are not acting as a node in the network-- thus supporting it. If everyone starts using the handset devices what will be left of the network?
I agree skype needs to go main stream and be as a phone company rather than a computer service. Get away from the desktop. But it needs to get up to modern standards. If they need to charge me a bit more I would do it. They need some technical solutions that involve fixing the inherent problems with P2P--Or just possibly bi-pass it at some level.
I keep Skype as a "just in case " service. I pay 150$/month for cell phone service because I need good service (sound/reception) with unlimited minutes in my line of work. I know of many people like myself that have tried skype and no longer use it. I would love a chance to stick it to my phone company and just use skype.
I would love to get skype to work like a real phone service or even a limited cell phone service. The promise of skype is grand. It just doesn't deliver.
Posted by: jp | May 20, 2008 06:15 PM