Meg Whitman, the CEO of Ebay (EBAY) was not very subtle: "Skype … is not where we want it to be in terms of user activity. This will require increased attention and focus from the leadership team," she told investors (from Reuters).
But, the odds are, there is not much Skype can do. Getting consumers to go from "free" to "paid" is sometimes beyond difficult. It is impossible. The world’s largest VoIP service does have a yellow page operation that can market ads and its paid service for calling directly from telephones. But, there is little sign that these are chipping in loads of revenue.
In the most recent quarter, Skype’s revenue was about $90 million. Free users are hanging around 220 million users. But, that figure is no longer growing at a rapid pace. That means the number of people who can be solicited for paid services is not rising.
Skype also probably has a hard core of users who are on the service everyday. They are the most likely to be used to using a PC for calls. And, they probably save a lot of money. It may be the core group, but it is also probably the "free" group.
Consumers who want use VoIP from their phones will continue to get it as part of cable packages.
Wall St. should not count on Skype being a big business. The customer dynamics are all wrong.
Douglas A. McIntyre
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