Phil Wolff

eBay: Skype still growing strong. Skype Journal: but not in the U.S.

July 19, 2006 04:04 PM

Topics: Business | Financial Performance | Marketing | News | North America | Skype杂志 | Strategy | ebay | skype | skypejournal

From today's Form 10-K:

"Communications net revenues totaled $44 million in Q2-06, representing a 26% increase from the $35 million reported in Q1-06."

The trend: large but linear. Skype's net transaction revenues six months' ago were $24.8 million (q4-2005). Linear growth means Skype's viral spread is offset by switching to a rival or people just dropping out.

The number of Skype accounts is growing slower than revenue.

Registered Users -- Communications had a cumulative total of 113 million registered users at the end of Q2-06, representing a 20% increase from the 95 million in Q1-06. Communications registered users represent the number of unique user accounts created on Skype.

So Skype is picking up about 6 million accounts monthly, worldwide. Now any other new softphone would kill and get VC money for numbers like this. But Skype is shooting for 200 million accounts by year end. At this rate they'll only make 149 million.

How about U.S. growth? 86% of Skype's revenue remained international, down a hair from 87%. This just means that Skype's growth in the United States, the great untapped market, is matched elsewhere. Let's assume 86% of the new accounts are international, just like the revenue. This means Skype's been picking up 840,000 new US users per month. Big in absolute terms but small as a percent of all US people online or even eBay customers. The U.S. market will need a promotional shove to grow faster and catch up.

Do you think the North American challenge may have factored in promoting Henry Gomez, former eBay Chief Marketing Officer, to be Skype's CMO? Or in offering the promotion of free SkypeOut in Canada and the States until year end?

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Comments

Posted by: bill campbell at July 19, 2006 4:56 PM

Hey Phil!

Good analysis.

A point to be made on the US: Niklas Z used to claim Skype were experts in viral marketing and had zero marketing costs. Well Skype is now spending SkypeOut dollars throughout North America and even running Skype ad-spots on the radio in the Bay Area.

You can't be a Global Teelcom and not be a big player in the US.

I think Skype fell in a hype trap two plus years back when they touted the US as their biggest source of downloads. Of course it was true when you compared the total to Belgium, Holland etc rather than to the total in Euroland.

Maybe they believed their own bull shit. They found out too late that cost is not a driver here and they missed finding the cultural hot-button My Space did. Over 70 million members in two years. Now the hottest spot on the Internet.

Posted by: MuppetMaster at July 19, 2006 9:52 PM

4.1 Billion worth of growth??? No...

Posted by: julian.bond [TypeKey Profile Page] at July 20, 2006 12:18 AM

Gotta love the numbers.

- 113M accounts. I figure this puts them in second or possibly 3rd in the IM market. The acid test would be to see "currently online" figures for the other IM players.

- I'd like to know how many accounts have bought Skype minutes. What's their actual customer base, ARPU and sold but unused revenue.

Posted by: Dimitar Vesselinov at July 20, 2006 11:39 AM

"Maybe they believed their own bull shit. They found out too late that cost is not a driver here and they missed finding the cultural hot-button My Space did. Over 70 million members in two years. Now the hottest spot on the Internet."

Myspace is popular only in the USA, BTW.

Posted by: Michael Pfannenstiel at August 7, 2006 2:15 PM

I dont get the obsession of "# of registered users". Have you ever downloaded a software, checked it out and never used it again? I want to know "Active Users", how many people actually use Skype for text messaging or a phone call in any one month. Why dont they report on it? Becuase it is a heck of a lot lower than 113 M.

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