How many people use Skype? How much? @Skype tweeted yesterday:
- “Steve Ballmer announces new stat: Over 200 million avg. monthly connected #Skype users #CES”
- “And a 2nd new #Skype stat: More than 300 billion total calling mins annually, with approximately 50% being video calling mins #CES”
The 200 million average monthly connected users for December 2011 is consistent with an end-of-year bump as people substitute Skype for travel. Skype has been running weekly highs of 30+ million and lows of 15+ million concurrently connected for the last six months, more consistently high than in previous seasons.
Skype’s 300+ billion minutes of live talk is a little less than half the time people spend on Facebook, if we go by the 53.5 billion monthly minutes reported by Nielsen for May 2011.
Meanwhile, Skype continues stealing cross-border-calling minutes and hard currency from international telecoms, per Telegeography. PSTN traffic was 438 billion minutes in 2011 compared to their estimate of Skype’s 145 billion minutes; about 1 in 4 cross-border minutes are on Skype. This is up from about 1 in 5 last year.
Roughly half of all Skype minutes cross a national border if we trust these figures.
Skype is capturing share at a much faster pace than the international calling market as a whole:
 Phil Wolff designs and positions realtime collaboration products for effective people. Phil advises the Personal Data Ecosystem Consortium and is a director of the DataPortability Project. Email editor@skypejournal.com, Skype evanwolf, tweet @evanwolf, G+ or call +1-510-444-8234 to talk with Phil. Skype Journal is independent of Skype.
 OPSWAT reported market share of installed Windows instant messenger apps for 2011Q2 (pdf). With Windows Live Messenger at 40.67% and Skype at 27.39%, that would put Microsoft’s post-acquisition share of the desktop side of the market north of 68%. Should this affect the EC’s merger approval? Does this market consolidation justify anti-trust restrictions?
The report is incomplete on a few fronts.
- OPSWAT’s data source is specific to Windows desktops. So it leaves out web IM services like Google Talk, Mac clients like iChat, tablet apps like Skype for iPad and mobile IM clients like Skype for Android.
- It also wouldn’t register the millions of Facebook chat browser extensions connecting to the Skype network, newly released since the report.
- Microsoft’s other IM clients – MSN Messenger and Office Communicator – are not listed at all. Defunct or not reported?
- The measurements appear to be biased toward Europe and the Americas since products like Tencent’s QQ, with roughly four times Skype’s active user base, are dramatically undercounted.
Ignore nuance: Just look at that huge block of red. Roughly two out of three IM clients will be Microsoft’s. What does that mean for consumers? To competitors?
Does the desktop IM market still matter? Yes.
Desktop IM has been Skype’s gateway drug for eight years. It was the most straightforward way to bring friends in to your contact list and download the codecs and other software needed for voice and video. Ringing, alerting and other attention-grabbers make realtime desktop apps successful.
That is changing. Standalone desktop IM apps will lose share over the next three years to browser, tablet and mobile apps. HTML5 and WebRTC are becoming real and platform makers are baking live calling into browsers and operating systems.
For now, desktops remain how most people IM most of the time. And Microsoft will soon own that market.
Full chart is below the fold…
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 2,049,762,468 last I looked. Skype reports desktop clients downloaded from Skype.com. Doesn’t include mobile apps or Skype software downloaded from partners like TOM-Online in China. This is like hamburgers served: it doesn’t represent the number of accounts, active Skype users or their level of activity. Just a really big number. FYI, a Skype download is worth $4.25.
Skype’s network crashed from 23.7 million active users to 1.8 today, more than a small number. It’s rebounding, now around 12.7 million people logged in. A spurt of software downloads came with the crash, although Skype blogs this is not necessary. Darned misconfigurations.
Customer attrition makes or breaks your business. Until recently, Skype never shared details on abandonment rates. But we know Skype has roughly 170 million active users and nearly 700 million user accounts. So where did those dormant 500+ million accounts go?
Skype users climb a ladder of engagement, and can fall off the ladder at any rung: Preview, download, install, first call, more calls, first video call, convincing someone to get Skype, buying Skype credits, first conference call, buying a Skype voice subscription, buying an add-on or premium Skype product.
Look at the chart below. See monthly sales by cohort, people who signed up in the same year.
Chart from Skype’s S-1 Filing, page 142.
It’s startling. Going by SkypeOut billings:
- Most who use SkypeOut for the first time, stick with it the next year. Second year spending drop-off varies between 9% and 20%, roughly. It’s been 20% for the last two years.
- Later abandonment is offset by growth in SkypeOut revenue per user. Sometimes it is more than offset by spending growth.
Skype refers to this as loyalty, and they are right. Once a customer, your chances are 80% that you will not only stay a customer but that you will spend more on Skype services over time.
A rough chart of the same data, but by what happens in each year after you join the Skype network. The second year drop is followed by an increase for two years and slight fall off in year five.
More evidence that Skype is addictive. A relatively flat retention over three years?
What does this kind of loyalty mean to Skype’s managers?
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Churn is not an immediate threat to revenue. Customers who stay spend more and more, offsetting those who leave the service.
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Lowering early and ongoing abandonment should continue to be a priority. Perhaps more social proof that Skype is the network to use?
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Improving existing user engagement and ARPU will come through two fronts.
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Investing in R&D for new premium products (cloud services, enterprise products, ) so customers have more to buy.
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Adding social network mechanisms will help people get more from the people they already know, like better relationship management for your Dunbar circle, and widen their social circles productively through better discovery for relevant strangers.
Many people try products before the products offer the right combination of convenience and value. Later, as both the market and the product matures, customer often return to the product category, if not to the specific brand. Skype is in a race to raise convenience and value – through pricing, design, availability, and the network effect of its membership – before other offer competitive choices.
Winning back those who tried Skype and left could change Skype’s messaging and design choices over the next few years. Yes, it’s a defensive strategy, but keeping and winning back former customers is cheaper than winning new ones. And much more satisfying.
[blackbirdpie url="https://twitter.com/#!/Skype/status/53231840756109312"]
I didn’t notice when Skype’s login servers and SkypeOut services went offline but several people Skyped and tweeted it at the time.
Andy Abramson can’t believe Skype’s servers don’t have the redundancy enterprise customers expect. I’m sure all hands showed up.
And yet I’m unable to see an outage in Skype’s stats showing the number of users online. I can only imagine the service interruption was short, the interruption was intermittent, it affected only a few people, or the data we’re seeing is incorrect.
Dan York wants transparency in the form of prompt, ongoing, and more explanatory communication.
I agree with Dan. Skype’s Heartbeat reports could have been much more specific.
- What exactly is the problem?
- What are the symptoms?
- Does it apply to everyone?
- How can I tell if it affects me?
- What caused the problem?
- What should users do?
- How long might this continue?
- Why do you think it happened? (I’m hoping for ninjas).
- How is Skype responding?
And an after-action report, summing things up.
So, what really happened, Skype?
The last and first quarters of the year show seasonal growth spurts in the number of people signed in to Skype. Just marking when the number of concurrent users crosses a new high-water mark, like it did at 30 million users yesterday, you can see the growth slow as Spring comes to the northern hemisphere.
Skype spoke to seasonality in its 2010 S-1 report:
Concerned that seasonality may become more noticeable…
“Our rapid growth may have overshadowed whatever seasonal factors might have influenced our business to date.”
On seasonality’s effect on profits [emphasis is mine]:
“Our net revenues exhibits seasonality because many of our users reduce their use of our products with the onset of good weather during the Northern Hemisphere’s summer months and our users tend to use our products more in the fourth quarter during the holiday season resulting in weaker net revenue growth during the second and third quarter of the year. Furthermore, we experience significant spikes in the use of our products during significant world events, such as Christmas and the Chinese New Year, or regional events, such as the recent volcanic eruption in Iceland. Due to our high revenue growth rate, the timing of product launches and movements in foreign exchange rates, the seasonality trends are not substantial when reviewing our quarter over quarter results since January 2008.”
I’m only looking at Skype’s dialtone, the people who show to call or be called. Skype hasn’t said much more on other elements of seasonality affecting usage or income. I’m sure investors would want to know:
- North/South. Is the seasonal behavior consistent between hemispheres? Does South America slow down as North America speeds up? Are there opportunities for offsetting some seasonality as Skype grows in Africa, southern Asia, and Oceania?
- Are other indicators seasonal? Logging in and revenue seem to be seasonal. What about adding contacts, call frequency (do I call more often), call duration (are my calls longer or shorter), call size (are more people in my calls), call mode mix (are more of my calls video)?
- Is workplace Skyping also seasonal? Does it vary by industry? By occupation? By country? Where is enterprise seasonality stronger or milder than consumer seasonality?
- Does seasonality vary by age? Gender? Income?
- Does product commitment moderate or accentuate seasonality? Do active users with many Skype contacts and many conversations demonstrate the same seasonal ups and downs as newbies with just a few close contacts?
- Does Skype on mobile phones dampen seasonality? When you don’t need to go to a landline, are you more likely to stay connected to the network? Has Qik experienced the same seasonality over its last five years?
- How similar are Skype’s patterns to seasonality experienced by other companies and industries?
Are you North Americans and Europeans slacking off on your Skyping as the weather clears up?
We have a new high: 30 million people logged into Skype at the same time. I’d guess this puts the number of active Skype users about 180 million, since most people turn off Skype at night and don’t log in every day.
Dialtone is one measure of the size and capacity of a network. Your chances of finding the people you want to talk or work with rise as more people join and use the network.
Study. 24% of immigrants to the US – smartphone owners – make video calls. Of those, 47% Skype for video; 74% of the women claimed to Skype; 42% of the men. 21% said they would pay for a monthly subscription for video calls.
Want to show Facebook you’re partner material? Get your app into Facebook’s top-ten.
Microsoft’s Windows Live Messenger app for Facebook has been growing steadily in use and adoption. 14.5 million daily average users, 17.3 million monthly uniques. Frankly, that’s about one tenth of Skype’s activity. What’s meaningful is that this is just the share of WLM activity within Facebook.
If I’m Facebook, I want users to spend more time on my site (world domination) so I can sell their attention to advertisers (ARPU).
If this works for WLM users, why not GTalk, Yahoo!, Tencent, and Skype users? As a hub, Facebook can offer other networks more IM activity with Facebook social objects (those things we chat about). As a hub, Facebook can offer two great advantages to users: access to more of their contacts and network independence.
Where does Skype fit in?
- Skype will get its private gateways beefed up so Skype IM can flow across the Facebook message hub.
- The industry is begging for a Rich Presence Roadmap summit, so presence becomes more useful, not less, with proliferation of devices and partners. Skype me, I’d be glad to host.
- Skype’s user experience folks should start prototyping how to present people search, presence, profiles, and descriptions of access points for “alien” users. This is a hunt for metaphors; I’d start with twitter’s “via” attribute.
- These networks are not the same, so not all features are available everywhere. For example, Skype lets you edit an IM message and send IM even when the person is offline. A list of services provided by each partner would let the clients constrain user behavior to what is possible, and to provide appropriate informational messages.
- Skype Live for the browser. Voice, video, desktop sharing, conferencing, etc. Skype’s best opportunity to differentiate among the other IM networks.
- SkypeKit mobile. I know that’s asking a lot, but the app world would love to easily build Skype features into their mobile apps. And Facebook mobile will want to be a full client in Facebook’s hub.
What am I missing?
Checking just now, 29,527,474 accounts were connected to the Skype network. That will be close to today’s peak. That’s a lift of 12.8 million from 16.7 logged in last night. This suggests Skype is running at about 177 million active users. Skype’s dial tone is a measure of the value of the network to users; the ability to call and be called.
The last high-water-mark was 17 January 2011, with 28.2 million. That’s a 4.3% bump of 1.3 million in 35 days. This rate of growth seems to be seasonal, based on previous years. We should see growth slow to a crawl by April. Nevertheless, my prediction of reaching 30 million concurrent for this year seems awfully conservative.
Will we see 29 million concurrent Skype users next week as the Lunar New Year continues and people Skype home when they can’t travel home? About 230 million people make the annual trip to their families but hundreds of millions more can only call. These Skype dial tone peaks usually happen on Mondays (in the Americas and EMEA) with the start of the workweek. That this one fell on a Wednesday (Thursday in Asia) signals a change in skyping behavior.
Or will the next peak come the week-after-next for Valentine’s Day, when romantic lovers call longer? Stay tuned.
Last week 28.2 million Skype users were online at the same time, setting a record high water mark for Skype dial tone. This week’s high was 28.4 million, a 0.7% growth in seven days. If this keeps up for half a year, dial tone will rise to 33 million and active users to 200 million. Dial tone is a measure of the capacity of Skype’s network to help people talk with each other.
 Contrast this with Tencent QQ, the world’s largest IM network. At the end of September 2010, QQ had 118.7 million peak simultaneous online IM user accounts, chart on the right, about four times Skype’s current dialtone. QQ had 636.6 million active IM user accounts in September.
Two data points aren’t a trend, so let’s see if Skype keeps picking up more new users who sign in more days of the week, stay connected longer each day, and connect using more touch points (mobile phone, office computer, home PC, or home TV).
The number of Skype accounts concurrently logged in to the Skype network hit a new high of 28.2 million today, despite (because of?) this being a national holiday in the United States. Dial tone is a measure of Skype’s capacity: those logged in can use Skype’s services. More importantly, they increase the chances that someone you know is available IM or live voice or video chat.
The “Skype everywhere” product strategy makes this possible. Skypers are signed in from desktops and laptops where Skype is often preinstalled, mobile phones, and televisions.
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7 years and 12 days since Skype Journal launched as a stand-alone blog.
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Phil Wolff designs and positions realtime collaboration products for effective people. Phil advises the Personal Data Ecosystem Consortium and is a director of the DataPortability Project. Email editor@skypejournal.com, Skype evanwolf, tweet @evanwolf, G+ or call +1-510-444-8234 to talk with Phil. Skype Journal is independent of Skype.
Chart showing timeline of effect of North American Level 3/TimeWarnerCable Internet outage on 7 November 2011. 
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