A Blog by Jonathan Low

 

Oct 22, 2012

Dude, Can You Hear Me? Skype Users Swell to 280 Million

A sign of the times to some, of the apocalypse, to the disenchanted.

Microsoft, which paid $8.5 billion for Skype in a widely derided deal, has been anxious for some good news. Many believe MSFT will never receive a positive return on its Skype investment. But the fact that the VOIP service now has almost a third as many users as Facebook has some people re-evaluating their initial skepticism.

The biggest rap on Skype is the quality of the transmission which is infamous for providing poor sound quality. And combined with the fact that many users can not figure out how to focus the camera does lead to some precious YouTube moments.

But hey, haters, free is, well, free. And its not like international mobile phone quality is always crystal clear.

So the question inevitably becomes, how does Microsoft make a buck from this baby? The eternal lure of advertising sales to a vast audience is remains a constant if elusive proposition. Its glories have been oversold - see, Facebook, IPO - but we are nothing if not suckers for the promise of scale. The opportunity to make it up on volume never appears to lose its charm.

Ultimately, convergence and the need to provide solutions across platforms and channels seems most apt. By owning a legitimate telephonic option whose strategic presence threatens competitors, Microsoft has renewed relevance. Going mano a mano with Apple, Google and Amazon in the dueling tablets market hardly seems like Windows Redux. But a service that undercuts the revenue model of others? That could get interesting. JL

Jennifer van Grove reports in VentureBeat:
Even under new management, Skype has continued to pick up millions of fresh users. Today, Microsoft revealed that its voice-over-IP tool for video calls and chats, purchased for $8.5 billion last year, now has well over 280 million users.
The new number was included in Microsoft’s first quarter fiscal year 2013 earnings report. The Redmond company’s web and mobile software purchase has added more than 30 million users since late May. Microsoft, however, did not break out revenue generated from Skype in its earnings report.

In a call with analysts and media, Microsoft added that it counted 120 billion minutes of Skype calls in the quarter, which represents a year-over-year increase of 58 percent.

Since purchasing Skype, Microsoft has pushed to get it onto more platforms such as its own Xbox 360 console, Windows Phone mobile operating system, and new Windows 8 OS. Skype has also released upgraded applications for competing platforms such as Mac and iOS, thanks in part to the division maintaining its autonomy inside the corporate giant.

Despite Skype’s continued growth, there’s still little evidence to suggest that the buy was a wise one — yet. But as the company makes the Skype application more ubiquitous, it will have an opportunity to reach, and sell ads to, a larger base of consumers, some who may otherwise avoid Microsoft-branded services. And the company needs a hit or two with Windows revenue down 33 percent year-over-year.

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