Skype's Sale As Media Feint

ansak writes "Bob Cringely's latest article shows evidence that some aspects of the 90s bubble are indeed back: Why would Rupert Murdoch think of paying $3billion for a mostly free online service like Skype? But his last line shows a keen understanding of Murdoch's skills and methods: 'By putting Skype in play, he distracts for no money at all most of the major media companies. And while they try to figure out how to respond to VoIP, old Rupert will be attacking them on some completely other front. He'll be stealing their shoes.'"

Comments

Bubble Spinners *Heart* Feint

[Doc Ruby]

I watched that Bubble blowhard, Kudlow, yelling into the camera yesterday about how Skype (not VoIP itself) "destroys the Baby Bells". Even though he mentioned that Skype is free only among Skype PCs, and they charge for connections to the PSTN - which can't scale. Murdoch's already got Kudlow fainting.

Ditch the landlines...

[Anonymous Coward]

I've been thinking about VOIP as a way of ditching my landline. Switch from

$80/mo for landline, local calls, and DSL/ISP

to

$20/mo for cable modem
$16/mo for most basic cable
$16/mo for Vonage VOIP
Total $52/mo, and I get more TV than I got before,
have a phone line in the house (I use my cell more anyway), and prepare myself for the next great thing....Netflix trickle download to TiVO in about 6 months.

Really, I've paid WAY too much for DSL for the last 5 years, in about a week I'm gonna tell the bells I don't need their landline. Its gonna be an interesting phone call to say the least.

But this comes back to the value of Skype...my Italian colleague here in the states talks to his Dad for free every morning at 5AM (our time). That is an unreal technology. Now, he wouldn't talk to his old man so much if it was not free, but it is, and his phone usage would be over $100/mo on landlines, free on Skype.

My other colleague (a Canadian/Israeli double citizen) uses Skype as her landline. Her laptop goes everywhere with her, and she is on broadband about 3/4 of the time, reachable on her Skype phone line.

The phone company landlines are challengeable by VOIP, for a tiny fraction of the cost since the user provides the "last mile" access over broadband. Its a great business model, and I expect Vonage and Skype to make a mint - those two Scandanavians that started Skype are gonna be even richer....

Niklas Zennström 7 weeks ago

[TheUnknownCoder]

The guy behind Skype on an interview on June 17:

"And now we're also very much focussing on moving away from the computer into mobile devices, so you can use Skype for free wirelessly."

They (Murdoch and Zennström) were already talking back then. Deals worth 3 Gigadollars are very well studied by both parties, and they've done their homework. Murdoch sees the niche that he can jump into after leaving News Corp. and Zennström makes it just plain clear that he's talking with wireless carriers that already has the customer base and infrastructure to support such Skype over your wireless phone...

Re:This goes much further back than the 90's

[new-black-hand]

This sector is really interesting and heating up. Skype is not a standard, so Skype can only talk to Skype and they are trying to create their own version of what they consider internet telephony to be, a bit like MSN in the early days of the net. What the potential valuations of Skype do not look into are what they actually offer. Some here have already pointed out that free messenger services such as MSN and Yahoo! already offer voice, at better quality, so what is it that skype does other than link phone numbers to skype usernames? This is a perfect scenario for an open source application to make use of an open standard such as SIP (Which is compatible with a lot of hardware, and existing voip networks) and to create a multi-platform consumer product that provides zero lock-in (as skype does).

These telephony apps are the browsers for the voice internet, so nothing less than a full browser war would be expected. Hence the reason why incompatible applications such as skype will die away as newer and better open source applications that can inter-operate are released and taken up. I would even speculate that a voip client ('browser') would be much easier to develop than an open source web browser, and I think it is high time that the open source crowds jumps in to promote and develop the alternatives to these nasty commercial applications.

Skype is bottoming out

[afarhan]

Skype needs revenues to get anywhere. Those revenues will primarily come from either SkypeOut or SkypeIn. Unlike the virally and self-spreading nature of a the original Skype (which is a pure IP play), these services require charging, billing and customer support. certainly not something that can be done by clever marketing and adding a codec to kazaa. they will need to re-orient themselves to be customer responsive, regulation compliant, service oriented business. which is going to be difficult for zenstorm to pull off.

if i really need a cheap internet calling card (essentially what skypeout is), i will hunt around for the best deal, keeping my skype id aside, there is no stickiness in calling phone numbers from a particular VoIP provider. Subscribers will switch to the best deal of the day. Skype will not be able to milk this unless they are the cheapest in the market. For that, they already have the volumes to negotiate. Their problem is a lack of customer relationship management. I seriously doubt thier ability to scale in that sense. Think India and Phillipines and process outsourcing.

Probably, they can charge the telcos that send their traffic to skype users. this is called the inter-connect fee. However, given the low reliability of skype and it's reliance on unsuspecting computers being turned into unwilling proxies, they call completion rates are going to be abysmal. as a result, the telcos might not agree to the standard inter-connect fees at all.

Earlier acquisitions like ICQ and Hotmail were relevant to microsoft and aol because they needed the userids. At the moment, there are far far many more MSN and AOL instant messenger ids than skype. (quick: how many contacts do you have on your AOL/MSN vs Skyp contacts? i have 200 on my msn and 5 on my skype).

Skype will need to become a regular telco to go anywhere. They will need to hire people and build a great world class customer support and e-commerce experience. I would suggest they hire Jakob Neilson and Patricia Seybold and get working instead of looking for a kerb side deal with the shady murdochs.