To compete in the upcoming voice wars, Skype must have as many active customers as possible. It must fuel its growth in revenue terms too. Hardware helps with both.

First, most users won't use Skype without extra hardware. The minimum of earbuds and a microphone works for the occasional user, but many people want to "pick up the phone" when they hear it ring. Others need headsets to sit at the phone. And others need gear to keep Skype running even when their PC is off. Hardware helps Skype extend its reach and boost per-customer usage.

The current hardware offerings are mostly brain dead, not creating a complete Skype experience. This is OK: it is early. As more competitors enter this space, software will make the gear smarter, adaptable, and better blended with our many communication styles. We're already seeing this in Creative's embedded Skype, in YapperNut's Amy software making their YapperMouse phone smarter, and in ActionTec's VoSKY Exchange plugging Skype into your SMB-sized phone system.

That brings us to money. Skype gets abouts 5 percent of the wholesale price on Skype Certified gear, which Skype eagerly co-markets. On Wednesday we'll hear eBay report their financials for Q4-2005 and for the year. Folks have been guessing revenue from Skype about $60 million for the year. How much can hardware fees contribute in 2006 to a hoped-for $200 million? Let's pull out our handy numsum calculator:

Let's say they want to make $50 million in license revenue this year. They get 5% of products that wholesale for a weighted average (pulled out of thin air) around $20 (I'm thinking $35-45 headsets). To make that number, they must sell one unit to nearly every Skype user on earth, pulling $1 billion at wholesale ($1.5-2 billion retail?) through distribution channels. Tough? Impossible?

What can you change? Boosting the user base, establishing a recognized consumer brand, and getting retail shelf space makes it possible to move gear; all of these will cost money. Some users will buy more than one item a year for multiple Skype contexts: work/home, friends/family, fashion/function. Businesses will buy gear for the workplace at wholesale prices in thousands of dollars per site and for many employees (think call centers) although the distribution channel is more likely ICT/VAR/System Integrator than store front.

Skype Certification revenue, while growing and important, won't dominate Skype's 2006 financials. What will?