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Stuart Henshall
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SkypeIn "Lock-in" Strategy

April 15, 2005 03:36 PM

Topics: observations

Strategically Skype is almost silently slipping SkypeIn into the market, obtaining numbers slowly but surely country by country. Strategically, going into "stealth mode" with SkypeIn is a good move. Telecoms appear not to be worried, and afterall Skype is just another VoIP upstart. And that friends is a result of blind foolishness.

Concurrently AOL announced their ATA related VoIP solution at the Spring VON in San Jose. AOL, Yahoo and MSN are equally blind. In a recent post we noted that Skype probably has the predominant share of IM voice traffic already. Now Skype who's business development team and investors must be working furiously to capture SkypeIn number deals is engineering the "lock-in" solution. Some will ask what am I talking about at this point.

The fact is that as Skype becomes a telephony option it also becomes the preferred IM option. Add a world class video system and this becomes even more likely. Skype is first to activate legacy phone numbers in any quantity for IM systems. (BT Communicator did provide an illustration, however hasn't seen much uptake.) Consumers will be adverse to losing their SkypeIn numbers as they are to losing a cell number or something else. Beating MSN, Yahoo, and AIM to this point is important. It will also buy Skype time in the future should someone bring out a Skype beating application - better voice, video, etc. That's looking increasingly more and more difficult to do. The ties and the deals done to connect to the PSTN is something that was available to all the other IM providers. They just never approached it the right way. Now it could be too late.

By the time they figure this one out.. the "presence" game will have begun. Interestingly neither Skype or any of the telecoms, fixed or mobile are really prepared for the real impact of "presence" when consumers take control of it. That will be the next wave...

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Comments

Posted by: rick at April 16, 2005 11:15 AM

Skype has had excellent market timing with both their product and added features. They have successfully added the right features at the right time.

I'm not sure if this is due to their being first to market or other companies lagging.

Posted by: Graham J Wallace at April 17, 2005 9:35 AM

The key to the power of the "next wave" is not only the sense of ownership that the the users have; they discovered Skype, it resides on their computer, they set it up and they shared it with others but also the comfort and ease that the user has in expressing themselves which ranks right up their with the base needs of life. People desire to communicate.

gjw

Posted by: Stuart Henshall at April 17, 2005 8:19 PM

Graham,
Your comment really resonates with me.
Cheers
Stuart

Posted by: Uri L. at April 19, 2005 1:17 AM

Here we just call this behaviour - "people like to talk a lot" :)

This post is great, as it directs the spotlight to the right corner. I'd just add that another sticky feature for IM's is SMS gateways.

Meanwhile, the legacy IM's provide a partial solution for this, and skype is still lagging behind, with that irritating draft 3rd party trial.

Voice outnumbers SMS usage, but when the aim is to present a complete communications sphere (video, voice, IM, presence, short range...)
SMS can't be neglected.

I assume it hasnt been slipped from the eyes of skype honchos. But again, they might just leave that aside and concentrate on Wlan phones, where SMS is irrelevant.

Posted by: Phil Wolff at April 19, 2005 4:29 PM

Uri, I think you're pointing to a traditional problem startups face: scope. There's a world of features and capabilities and business opportunities. So the strategist must ask which ones are important now, which ones create opportunity not just for better product but for playing the Grand Game against entrenched PSTNs, mobile operators, governments, et al.

imho, Short term, SMS might make sense as a SkypeOut service. I've seen IM-to-SMS gateways before.

Posted by: David N at May 2, 2005 6:47 AM

How do I invest in Skype?

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