A snipe at eBay's Skype hype
VOIP watchers were looking forward to hearing about Skype's progress towards becoming a real business when eBay reported its latest quarter Wednesday night, but they were sorely disappointed. GigaOm did the math on Skype's $44 million in quarterly revenues and figured out that revenue per registered user rose a mere 5 percent over the previous quarter, from 37 cents to 39 cents. Skype Journal points out that at the current rate Skype is adding users -- 6 million a month -- it will miss its year-end target of 200 million users by miles, ending up with 149 million users instead.

And there's more competitive trouble ahead: VOIP software maker Gizmo Project announced that it will offer free VOIP calls in the U.S. to regular phones. Skype has a similar free-calling promotion that it has said will stop at year's end, but now it looks like Skype will have to continue to offer free calling in the U.S. indefinitely, a move which may win it more U.S. users but won't garner any revenue. In the U.S., Skype scraped together a mere $6 million in sales for the quarter by charging some Skype users to place international calls and to receive calls at a regular phone number that forwards calls to their computers. At this rate, it's not clear when Skype will ever pay off its bubbly $2.6 billion purchase price, or live up to the profit expectations eBay laid out when it acquired the company last year. What's next, a splashy TV ad with a sock puppet pushing free calls?

What do you think? Did eBay make a bad call in buying Skype? Leave a comment below.
Posted by Owen Thomas 11:14 AM 5 Comments comment | Add a Comment

I'd be a Skype customer now, but for some unknown reason, they wouldn't accept my credit card number.
Posted By Craig, Cranston, RI : 1:00 PM  

The deal was probably a smart way to pocket some change by the eBay management
Posted By Larry, SanJose, CA : 1:03 PM  

EBay has made mistakes, why it got into a VOIP is anyones guess. EBay should focus on the core business which is selling other peoples stuff and maybe own part of DHL, Fedex or UPS instead of a phone company. Hedging isn't always bad but time and time again Internet tools have the bottoms drop out when the "next kid on the block" offers the service for free. The Feds will put an end to free calls soon anyway so I'm not sure its valid argument. Skypes bigger threat is Vonage and the retail market in my view. I use Skype and love it but Vonage is the market for VOIP and once I can keep my phone number in Mason, OH I'll switch to Vonage and drop a good tool named Skype.
Posted By Steve @ Mason, OH : 1:53 PM  

How is it that a classic book like "In Search of Excellence" coins the phrase, "Stick to the knitting" meaning remain focused on your core business and yet eBay completely defies this by acquiring Skype. They have no business being in the VOIP segment - how will this help internet auctions??? Paypal was a no brainer - complete synergy there. The acquisition was a desperate attempt to a) beat out other bidders and b) try to diversify. In other words pride and blindness got the best of eBay
Posted By Pat, Playa del Rey, CA : 11:12 AM  

I use Skype daily, but I regret ever buying stock in eBay. Their purchase price was insane -- and as others have said, VOIP has nothing to do with internet auctions. They should have put that money into PayPal browser plug-ins or just ADVERTISEMENTS for PayPal -- it would have been much better spent.
Posted By Randy Tayler, Orem, Utah : 5:44 PM  

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