Wharton Knowledge focuses on Skype and asks the question of what kind of business it can build.
Although Skype, which provides Voice over Internet Protocol (VoIP) telephony services and PC-to-PC calling, turns two years old on August 29, it remains unclear what kind of business this relative newcomer will turn out to be. Skype could remain a mere fad for techies, become a next-generation communications platform or evolve into the next eBay or Google.
This is what analyst and commentators have been wondering while the Skype users get on with using it and spreading the news.
Skype has gone from 100,000 users to 47 million in less than two years, largely because of viral marketing. Since starting to use Skype a few weeks ago, Kahn [Barbara Kahn, a Wharton marketing professor and Skype user] has already encouraged six friends to download the software.
Regardless of the business side and the challenges of making Skype mainstream Kevin Werbach considers Skype to be an "underappreciated phenomenon in telecom".
The fact that Skype has grown its usage by so much in such a short period of time without marketing is extraordinary.
There are some interesting points about potential business model, from hooking user on free service and then make them pay small amounts for extra services… It seems to work for Skype at least in my case. I am happy to pay for SkypeOut, a Skype number and voicemail to Skype rather than other VoIP because Skype has already delivered significant value for free and I want them to stick around.
Skype is also looking at video-conferencing to companies and individuals and other services with a high margin. One challenge may be the quality.
Until service is as reliable as regular phone lines, Faulhaber predicts that Skype will be used as a supplement to existing telecommunication services. Werbach, however, suggests that Skype will become part of a stable of services used by customers. And for international travel calls, he adds, Skype may be the leading choice.
I often use Skype for conference calls, it keeps my hands free to look up information on internet while talking to people. Usually, I come across as clearest and loudest of all the participants who are using normal landlines. This makes people wonder and ask what I am using. So the network effect continues…
Michael Jennings
on Aug 11th, 2005
@ 10:55 am:
Well, I have Skype running on a WiFi enabled PDA. One thing I can do is find myself a hotspot in some obscure foreign location, and I can make calls to anyone from the PDA either for nothing or a small Skype Out fee. Compared with the cost of roaming on my mobile, this is a huge saving. I’d kind of like to hope that in the medium term this will lead to downwards pressure on the cost of calls while roaming. (Let’s face it – it could do with some). It may take a while though.
lkbts
on Feb 16th, 2006
@ 2:18 am:
From what I have recently heard about 4G which is already starting – the power of broadband will be totally wireless and further more it will be offering real time uncompressed video to your PDA for conferencing. There are some little known bigwigs in that world all of whom seem to be Brits but nearly all their work is overseas.
Some guy called Heath and another called Wilshire (I think) are the people building the first system of its type offering a min 8mb to a handset, laptop or anything else that’s WiFi.
This means VOIP will take over from nearly all other types of telecommunication in a very short space of time except obviously places that are remote.