How Skype Will Grow in 2009

Guest Post by Hudson Barton, The Borderless Communicator

2008 is turning out to be a great year for Skype growth (real users), nearly matching the record year of 2006. In my view, the patterns of Skype growth are affected by:

1. The popularity (name recognition) of the software itself... in comparison to communications alternatives.
2. The capability of computers and mobile communication devices.
3. The quality and capability of the software for multi-modal communication... in comparison to communications alternatives.
4. The state of the world economy
5. The availability of broadband

So for 2009 here is how things are shaping up.

• Skype has no discernible marketing program. It never has. Skype relies almost entirely upon word-of-mouth. If Skype were to introduce a marketing program, the opportunity for growth could be significant. There seems to be zero prospect for such a marketing plan.
  
• The power of computers will grow marginally. The capability of mobile devices, especially smartphones, will grow hugely. The latter is a real opportunity for Skype if it can develop quality software for the most popular platforms such as the iPhone, BlackBerry and Nokia N- and E-series. On the other hand, if the world economy sinks, then few people will be buying those new computers and mobile devices. Overall, this is not going to affect 2009 growth significantly.
  
• The overall quality and capability of Skype client software will improve marginally. Aside from bringing out client software for mobile platforms, upcoming improvements in the client (especially video and audio) will affect Skype growth only on the margins.
  
• Because Skype/Skype calling is free, and both SkypeIn and SkypeOut are very inexpensive, it is reasonable to assume that a poor economy is good for Skype in terms of its market share of communications. However, the overall market for communications may well decline in a bad economy. So while a declining economy is not good for Skype, it is less bad than for Skype's competitors.
  
• The availability of broadband is a very important factor in the growth of Skype's "real users".

Summary: Skype growth (as measured by "real users") will continue on its current trajectory (averaging around 830,000 new "real users" per month). That is a huge number by anyone's standard. As in prior years, growth will be strong in the first quarter, slack in the second and third quarters, and strong in the fourth quarter.

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Motley Fool Discusses The 2012 Annual Report of SkypePal Inc.

The Motley Fool has become a popular and widely respected investment community site since the origins of the commercial Internet in the mid-90's with the objective of helping people take control of their financial lives. It has evolved into a multi-media financial services operation; they have free and premium services; suggest portfolios and try to pick recommendations, host discussion forums amongst other activities. "The company's name was taken from Shakespeare, whose wise fools both instructed, amused, and could speak the truth to the king -- without getting their head cut off."

In a post yesterday about "5 Free Internet Winners" they discuss the five biggest winners if free WiFi comes to pass as a result of anticipated rules for forthcoming spectrum auctions in the U.S. Google, Logitech, Amazon, Nintendo and "eBay | SkypePal" are the selections. Why SkypePal?

Forget eBay.com itself. By the time free access hits the masses, PayPal and perhaps even Skype will be bigger parts of this portfolio of verbs. Heck, even the name eBay may be toast as you crack open the 2012 annual report of SkypePal Incorporated.

Skype and PayPal will be the biggest winners of blanketed coverage. Skype remains the global voice chat leader with 370 million users worldwide. If you don't think that Skype will replace a few landline telephone accounts once connectivity is pervasive, you may as well Skype me to tell me otherwise.

PayPal is already the leader in micro-payments. It will become an even bigger force in real world transactions under Martin's scenario of access for all.

Certainly an opinion contary to all those thinking that eBay is about to run out and sell Skype. And it reinforces my long held opinion that the new executive team has one primary goal - to drive up the value of Skype to the point where eBay can not only fully recover its over $3B total acquisition cost of Skype but also provide a reasonable return, whether as an ongoing operation or through an exit involving a sale or IPO. Motley Fool goes further and feels that Skype will become one of the primary value drivers of eBay shares going forward, given that eBay's online operation is struggling to find new ways to grow.

As for more reliable indicators of Skype's current growth than Skype's published number of accounts (not subscribers, not users), check out the peak number of users daily shown in the Skype client, Jean Mercier's note on the tripling of Skype downloads and Hudson Barton's "Real" User tracking showing that Skype is has returned to a growth rate comparable to its 2006 rate.

But in the background the new executive team has been working on the restructuring discussed in Skype Journal's interview with Skype President Josh Silverman. In a recent "Home Improvement" post, Josh gave an update on the the efforts required to "right the ship":

Excited as we are about bringing new colleagues aboard, there’s more to reorganizing our structure for continued growth. Back in the summer, we set out to be smart about it. And transparent. And fair.

Which is why we held numerous workshops to gain input from the team on how our structure and ways of working need to change. Change that we hope will lead to sustained growth, better products and an even more empowering work life at Skype. One of the things we’re doing is to create smaller “companies” within the company: consumer-, business-, mobility-, and developer-focused business units vaccinated against shackles that curb innovation and risk-taking. Each new business unit is designed to emulate the feel of a start-up and to cultivate a deeper sense of ownership.

This is just a low-resolution snapshot from what’s a continual journey of change. There’s much more to it, of course. Replotting our roles, responsibilities and accountability takes time. While we think that we’ve done most things right, some won’t come through as intended. Tweaking them for a few months should make life at Skype work well for everybody.

And he concludes with:

Our structural rethink isn’t about change for change’s sake. From day one, everything at Skype has boiled down to delighting the customer. With a bit of home improvement to support further growth and innovation, we’re just making sure it stays that way.

At least Motley Fool and the Skype executive team are in sync with respect to the primary goal at Skype. The next few months and the subtle indications of forthcoming new product and service announcements will tell if the foundation is being built to achieve these goals. From restructuring will now come the challenge of execution.

Tags: Motley Fool, eBay, Skype, PayPal, Josh Silverman

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Source of Skype Growth

Borderless Communicator Hudson Barton has spent the last few years as the "keeper of the 'real users' statistic", a measure of Skype usage that attempts to understand the demographics of Skype's user base and put it into some sort of perspective so that it can be compared with other communication services.

There are only five public statistics provided by Skype in their reporting. First is the number of users online in the lower right corner of the Skype client. With each eBay quarterly report we get to see gross revenue generated by Skype, the cumulative number of Skype accounts opened as well as minutes of Skype-to-Skype calls and minutes of SkypeOut calls.

I have posted a couple of times about the fallacy of the cumulative number of Skype accounts as it gives no indication of "active" Skype usage over, say, the last quarter or, expressed more succinctly, how many accounts were really used for a Skype call of any type in the previous quarter? It's based on stale data; this particular number ranks right up there with "how many hamburgers sold".

However, by tracking the number of users online several times per day over the past few years, Hudson feels he has gained some perspective on Skype's growth.

Sources of Skype Growth
by Hudson Barton

A question was raised the other day, in a Skype public chat forum, that the raw "real user" statistic could not adequately answer. That question was "Is Skype growth coming from new users or from changes in the pattern of Skype use?" So here is a deeper analysis that answers what the raw "real users" statistic fails to fully capture.

In 2005 and 2006, the amplitude of the daily usage wave was growing. That is to say, the daily highs were growing relative to the lows (after discounting regional distortions)... 10% per annum faster in fact. Skype usage was increasing in the middle of the workday relative to off-peak hours. People were not using Skype as a general communication utility for inbound and outbound calling and presence. Rather, they appear to have been using Skype for special work-related purposes like outbound long distance calling to save money.



In 2007 and 2008, the trend reversed. The amplitude of the daily usage wave started shrinking. The lows have been growing relative to the highs ... 20% per annum faster. It appears that people began using Skype for normal, essential and basic communication, staying online for longer stretches of time or even around the clock in order to receive inbound calls and to mark their presence. Although we don't know the precise motivation for this change in behavior, it could be related to the expanding availability of unmetered broadband. Electricity is the only variable cost associated with keeping your Skype device running 24/7. So the trend is mostly due to a broadening of American and European usage.... folks in industrialized countries are staying in the Skype cloud around the clock with either computers, mobile devices or proxies such as iSkoot.

Today, the peak of the Skype usage wave is at about 14.5 million and the trough is about 7.2 million (out of 36 million total "real users"). The comparable graph for a "phone" company (or a VOIP operator like Vonage) would show a usage wave with an amplitude of zero; all users are by definition online all the time. If Skype's usage trends continue, it will begin to look more and more like an indispensable communications utility and less like a mere disruption to the communications status quo.

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Twitter4Skype. Following Your Twitter Life within Skype

Borderless Communicator's Hudson Barton and I both follow our Twitter friends using a nifty third party Skype utility called Twitter4Skype. Basically you set up Twitter4Skype as a Skype Contact and enter your account information. Going forward, whenever you are logged onto Skype and a Tweet arrives from one of those whom you are "Following", it will pop up in a Twitter4Skype chat window. And, of course, your messages placed into a Twitter4Skype chat window become "Tweets" seen by all your Twitter Followers.

We both have had many requests for instruction on how to set up Twitter4Skkype. Hudson has authored for Skype Journal a review of Twitter4Skype with all the details:

Twitter4Skype: A Review
by Hudson Barton

One of my favorite online tools is "Twitter4Skype". Not very many people know about "T4S", but if you are a fan of both Skype and Twitter, your life will be made much happier and more productive if you use this little robot. It does not require you to download any software. There are no additional processes to clog up your computer. There are no additional windows for you to deal with. Everything runs within Skype as a normal Skype chat session. It could not be simpler.

• First, the robot posts your tweets directly into your twitter account from Skype. When you IM into your Twitter4Skype chat session, the message appears automatically in your Twitter feed.
• Second, the robot gathers tweets of everyone whom you are following and posts them to you in the same Skype chat session.

Installing twitter4skype:

1. Using "Add a Contact", search for and add "twitter4skype" as a Skype contact.
2. Open a chat session with "twitter4skype"
3. Type the following into the chat window (to tell the robot about your your Twitter account and give the robot permission to access it):
   
   1. /account (shift+return)
      
   2. twitteraccountname (shift+return)
      
   3. twitteraccountpassword (return)
      
4. The robot should return: "twitter4skype Registration complete!"

Running Twitter4Skype:

1. The next time you write a chat message to "twitter4skype", the entry will appear on your Twitter account and a confirmation of your posting will appear in the chat. Note that only the first 140 characters of your posting will be received by Twitter, so keep it short and sweet.
2. You will begin to receive your friends’ twitters in the one-to-one Skype chat session with T4S.
3. Try adding another Skype contact to the chat you are having with T4S. You have now established a one-way group Twitter feed. What you (and only you) post into that chat will be distributed to Twitter and to the other members of the chat. Incoming tweets will be distributed to all chat participants.
4. Try adding the T4S contact to another group chat: You have just established a special relationship between Twitter and yourself that distributes your posts (and only your posts) from that chat into your Twitter stream. Incoming tweets are not posted into this extra chat, but go to your main T4S chat only.

Tricks for keeping twitter4skype healthy and happy:

Twitter4skype is running on a server in Tokyo Japan. Its reliability and the stability of the server have been improving, but like everything in our technological world (especially free services), it sometimes disappoints. Although you might glean the following tips from the Twitter4Skype help screen (accessed by typing "#help" in the chat), here is how to avoid some common problems:

• Situation: T4S appears to be offline. Occasionally T4S will appear to be offline when it is actually online. You will not be able to receive your Twitter feed in this state and you will not be able to post your own twitter either. You can "wake up" T4S" by calling it. When you do, your queued incoming tweets will be posted to you immediately, and afterwards you will be able to post your own tweets. If this does not work, then T4S is actually offline rather than only appearing so.
  
• Situation: T4S appears to be online but is unresponsive. Occasionally T4S will "forget" its relationship with you. Although it is online, you are not receiving incoming tweets and it will not post your outgoing tweets. You can force T4S to reset your relationship by typing "#on" into the T4S chat window. T4S will respond with a "welcome back" message.

What the Robot can't do:

Twitter4Skype is a simple robot. It knows only the tricks outlined above. Here are some tricks I wish it could do additionally:

• My Twitter use is evolving toward two separate accounts; one for personal and one for business to reflect my multiple personalities. But I really want to run only one Skype account and have both twitter accounts feed into it. So, with my second twitter account I would like to create a second T4S account and run it inside the same Skype name with separate T4S chats. Unfortunately, that is impossible. One T4S account per Skype name is the limit.
  
• Twitter4Skype is all about following and being followed by Twitter users. Now imagine you could follow and be followed by Skype users in the same way (without sharing contact information). Skype users are already connected to a universe of some 36 million other active Skype users worldwide. So why can't Skype establish a network of followers within its own system. A percentage of those contacts will lead to shared Skype contact information, and those relationships will lead to increased Skype calling. A pseudo Skype chat established for this purpose would be one way to implement the concept.

Thanks, Hudson.

One additional point: If you have set up your Twitter feed to send tweets into your Facebook status message, then entering a message into a Twitter4Skype session will also pass it along to become your "current" Facebook status message. Same applies if you have linked Friend feed to your Twitter messages. (Unfortunately nobody has offered a means to pass your tweets along to your Skype Mood Message.)

And, when I am away from my office, I am able to follow my Twitter activity as a "twitter4skype" chat session in iSkoot on my BlackBerry.

Tags: Hudson Barton, Borderless Communicator, twitter4skype, Twitter, Facebook, BlackBerry, iSkoot

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GMail Voice and Video Chat: Threading Voice and Video Into Email Dialogues

Earlier this week the GMail weblog announced GMail voice and video chat; basically they are designed to add voice and video modes to an email thread; from the GMail blog post:

... today we're launching voice and video chat -- right inside Gmail. We've tried to make this an easy-to-use, seamless experience, with high-quality audio and video -- all for free. All you have to do is download and install the voice and video plugin and we take care of the rest. And in the spirit of open communications, we designed this feature using Internet standards such as XMPP, RTP, and H.264, which means that third-party applications and networks can choose to interoperate with Gmail voice and video chat.

This afternoon I had an opportunity to try it out with Hudson Barton; publisher of the Borderless Communicator weblog and tracker of "Real Skype Users". We had a 20 minute conversation using my Logitech QuickCam Pro for Notebooks on a Wiindows laptop and the webcam on Hudson's MacBook. There are two viewing sizes available: a 225 x 140 window inside the GMail tab of a Firefox (or other browser) session and an optional pop-up window that goes to 430 x 270. We were only able to determine that it provides a "letterbox" 1.6 width-to-height ratio (as opposed to the 1.33 ratio of "standard" video), but not the frame size or frame rate actually being transmitted over the Internet. As for CPU usage, the "googletalkplugi.exe" was using between 10% and 17% of my CPU. With no accessible statistics along the line of Skype's option to display call statistics, it was not possible to drill down further. Both audio and video quality were clear and crisp - quite acceptable for a basic one-to-one conversation. Echo cancellation was apparent; Hudson was using the native speakers and mic of his MacBook with no perceivable echo..

It's definitely not up to the feature set of Skype but here's where it fits in:

• GMail certainly has a large user base, same order of magnitude as Skype.
• It's easy to forward your standard POP/IMAP email account to GMail; I use this feature both for the resulting search capability and the available access to GMail on multiple devices, including smartphones.
• It provides real time conversation mode options for GMail threads being read on a PC. While reading an email and running the cursor over the sender's name, an option pops up to respond to the email message by email, Chat or Voice/Video based on the sender information as shown in the graphic above.

I would classify GMail Voice and Video Chat as a very mild competitor to Skype, suitable for basic "free" voice and video as a conversation enhancer. There's no way to establish or check audio and video settings; there's no access to the PSTN; we are not aware of the security level of the conversations. While the video is quite good, it certainly does not meet Skype's High Quality Video standards. It's a perfect example of embedding voice and video into an application as a feature but it's not a standalone real time conversation software application. When I consider the rejuvenation of Global IP Solutions and look at its customer base, I can foresee many other forthcoming instances of embedded voice and video as a feature within an application.

Note: as for the installation issues that Aliza encountered, I simply went to the URL suggested in the GMail weblog post and installed the plug-in (with the browser open). But then you have to restart your browser (in my case Firefox); initially the "video availability indicators" (as represented in the graphic above) were not present but I had to head out from my office at that point. When I came back to my PC four hours later, they had appeared. Chat pixel dust from the (Google) cloud in the interim is my only explanation. At the time of writing this post, its availability should have spread to many GMail accounts by the usual Google osmosis process.

Full disclosure; the author has had previous first hand experience with what was thought to be an application but turned out to be a feature. Quarterdeck's mid-90's effort at building a web browser as an application was thwarted when Microsoft decided to make its web browser (aka MS Internet Explorer) a feature within the Windows operating system.

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Measuring Freemium with Minutes is easier than with Money

Hudson asked me about using minutes instead of dollars and the trend of the Freemium Rate I described Monday.

Comparing apples to apples, minutes-talked is the only data I have on both sides of the free/fee equation.

Money as a measure is useful. It leads us to the lifetime value of a customer. How can we measure free in dollars?

We might value the free minutes at some averaged rate and compare that to Skype's overall revenue.

Skype earns money from licensing its brand, the rental of SkypeIn phone numbers, from its online store, ads in Skype’s yellow page directory services. Sadly, I don’t have access to revenue data broken out by source.

We might include costs with dollars, seeking profitability or net value of customers. Costs for fee-based services are higher (transaction costs, higher security, admin, sales costs, customer service, technical support, business development) than for free. 

Meanwhile, we have customer behavior in the form of minutes. And the simple freemium rate comparing free to fee. It will suffice.

tags: skype, freemium, metrics, business, strategy, free, skypeout, directory, yp, yellowpages, skypein, revenue, costs

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Skype is tweaking the freemium model

Following up Monday's post about the Freemium Rate, Hudson Barton wrote "in a normal 'freemium' relationship, it is the higher valued services that have a fee attached to them."

Most freemium services offer free but limp, shallow versions of their paid products. I show that on the chart below by the boxed "0" (free, few features) and the upgrade path to the boxed "$" (high cost, more features).

In Skype's case, that's not how it works. SkypeOut users call a voice line and pay for it by the minute or with a subscription. Skype-to-Skype users get free multi-modal talk (persistent IM, voice, video), file transfers, voice conferencing, public chats, audio fidelity far better than mobiles and landlines.

So Skype is making the free experience rich and sophisticated and full. On the chart, users start in the bottom-right quadrant (free, full features) and ADD SkypeOut (costs, simple features).

Skype has a pricing advantage in their freemium model. A year's national SkypeOut subscription can cost less than 10% of what people spend on land lines. So even Skype's premium charges are cheaper than many alternatives.

tags: skype, freemium, business, strategy, free, skypeout

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Fall-Winter-Summer growth

Jean Mercier is the Skype Numerologist and a regular contributor to Skype Journal.

As usual after a Northern Hemisphere Summer, the growth of Skype users is again visible. Not that there is no growth in summer but

• less people are working,
• more people switch their computers off while they are in the garden, or
• they are traveling and have less access to Internet.

Therefore, fewer users are online at the same time.

Those summers are very visible on the "million milestones" graph that I published last week. In all the past years, excluding the first year, the dots representing the "million milestones" are quite close to each other (see the brown left braces), except when there is a July-August period in the middle (see the red "summer" arrows).

So, what for 2008-2009? I would guess that Skype will as usual add two more "million dots' to its graph before July 2009 (see the Sky(pe) Blue extrapolated dots), going well over the 15 million people online. And I predict also that Skype will reach 16 million concurrent users somewhere around September 2009. But it is only a guess :-)

About growth speed

Each time that I pretend that the growth of Skype isn’t exponential, but linear or even slowing down, fellow blogger Hudson Barton tries to refute it. See his comment on my last post for instance (yes, aaytch, is Hudson himself)!

Perhaps I was a bit too fast and too rude to answer (I apologize for this), because indeed the last 12 months were much better, than the previous 12 months. But anyway, let me analyze the table above, to explain why I still feel I am right. The table shows the top or record concurrent users online at several dates in the past.

The third column is the mean daily (rounded) number of additional concurrent users online at “peak time” for a certain time span. For instance:

• The last two weeks (before September 22), the mean increase was 35000 additional concurrent users online.
• The last year it was 9800 additional concurrent users online.
• And so on.

How do we predict the future? Based on the last two weeks (+35000)? Or on the last 6 months (only +5300!), or on the last year? We can’t predict the future of course, we only can make guesses.

Choosing periods smaller than a year is often wrong for predicting long term growth. Changes in speed in smaller periods can however teach us something about temporary effects (the success of the launch of new Skype features, or the seasonal “Northern Hemisphere summer” effect).

For the long term past growth, we the see that the 2007-2008 season (+9800 users/per day) was very much better than the previous season (+6500). Does this mean that the growth is much faster? Is Hudson right? Could be, but in my opinion, the season 2006-2007 (+6500) was a very bad one compared with the two previous ones (+8300 and +10000), and last year (+9800) was just catching up again.

Only the future will tell, and some signs are very promising: Asterisk, Client version 4.0, Skype for iPhone, perhaps even multiparty videoconferencing, …

tags: skype, trends, stats, statistics, seasonality

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