The Q!-2007 Skype-related numbers reported by eBay Wednesday raise some interesting questions. Start by looking at my updated tracking spreadsheet based on reported numbers:
Note that I use the term "Accounts" instead of "Users" as we know there is a significant % of Users with multiple Accounts for a wide variety of reasons.
One other number I measure is ARPU (or maybe should be ARPA): Average revenue per user/account: Last quarter was a record $0.40; however, it has more or less remained constant over the past year between $0.37 and $0.40 even as number of registered accounts increases.
Of most significance is that, while the numbers are only an indicator due to the assumption made, the growth in the U.S has slowed down significantly. It certainly backs up statements made to the effect that termination of the North American "Free" promotion last year has had an impact. But Skype remains largely a non-North American business with more attraction to Europeans and Asians probably due to the different economics associated with their local telephony costs.
But other questions remain:
- Why did SkypeOut minutes remain flat quarter-to-quarter? Was there not significant enough pickup of the Unlimited North American plan when the "Free" promotion ended. At C$35 per year, it is still significantly lower than my costs would be on Rogers or Bell Canada services (min. C$5 per month).
- Does Skype need to look beyond viral marketing to promote these phones and their features?
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More troubling as an indicator of demand is the flattening number of Skype-to-Skype minutes. Here we have a "no charge" service, with a widely recognized, simple user interface, and with a growing number of accounts, that is largely not affected by pricing promotional plans, yet no growth in usage minutes.
- Are we communicating more via mobile devices?
- Are we communicating more via text messaging? (or, going forward is Twittering replacing the need for voice calls <gr>?)
- Are users tiring of using their PC’s as a "clumsy" primary voice communications device?
- Is there an increasing use of alternative free VoIP services such as GTalk or Gizmo Project? Switching costs to the user are nonexistent.
- Has Skype saturated the "geek" and "adolescent" (student) market?
- Or, are we simply spending less time on voice communications?
What action can Skype take to address these issues?
- Expand Skype’s marketing activity beyond viral. The geek and student markets are getting saturated when it comes to Skype; at this point Skype needs to build awareness with a much broader consumer public (especially in North America).
- Skype hardware can lock more users into Skype. But, building on the broader awareness issue above, Skype needs to develop more traditional distribution channels to get product into physical stores where "point-of-sale" purchase. decisions are made. Just the products’ existence in physical stores will drive demand on virtual stores. But retail distribution runs on a different business model involving market development funds, reseller training and building appropriate distributor relationships.
- Focus on promoting Skype PC-Free Cordless phones that allow consumers to continue to use their current landline service but also gradually transition to Skype where appropriate and beneficial.
- Launch a mobile strategy that uses current mobile technology to at least get a presence onto mobile devices (with at least IM, including chat and presence) beyond simply Windows Mobile devices. Did I say Nokia and Blackberry, both of whom have just reported record quarters?
Fodder for future posts. In the meantime what are your thoughts on these issues?
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