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Can Skype make it up to eBay?

Posted in General, Digital, Mel Varley, Latest reporters' blogs October 29th, 2007 by Melinda Varley

It looks like Skype is staging a comeback by teaming up with mobile operator 3 UK, not too long after it was said to have wiped a mere £500 million off the value of its owner eBay.

It’s sometimes hard to tell the difference between what is hype and what is an actual revolutionary product.

When Skype first launched it did so with no marketing activity but managed to recruit 190 million users in its first four years. When I first heard of Skype I thought it was a trick and couldn’t believe it when it actually worked out to be ‘free’ as most things advertised as cost free often aren’t.

Skype is free to use and the software is also free to download. So how does Skype make money?

Skype doesn’t carry adverts and works in a similar way to MSN instant messenger, only with voice. Customers can use Skype everyday and never have to pay as long as they are only talking with other Skype users.

This is where the next opportunity lies. Users can use Skype to call any number they wish at a lower rate then they would if they used a traditional land line or mobile phone.

However, with the mobile operators having such a strong hold on the telecoms market and with increased competition, tariffs are now getting lower and lower with many operators offering fancy handsets, mobile TV and their own music stores. Plus, a mobile phone is something you take everywhere, most people wouldn’t be carrying around their laptops just for the sake of making free phone calls.

So Skype’s partnership with 3 UK, at the very least, is getting its name out there, again without having to advertise. But will it attract users to spend their money using other Skype services that will allow the VoIP provider to finally make some money?

Skype has previously teamed up with 3 UK when it launched its X-Series, a range of handsets that offer a number of ‘web’ services including Yahoo! Search, email and YouTube. So what is 3 getting out of the deal?

To be able to use Skype from a handset, users must first connect to the interent, which is often a costly exercise as it is, let alone how long you’re connected for. That money will go straight to 3, not Skype.

Perhaps Skype became a little complacent after eBay’s buy-out, but could also have been a little too young to have figured out its direction. Another one of Skype’s problems was that its hype was short lived due to Facebook’s massive success as a social network. However, the VoIP service has noticed this and plans to team up with Facebook are reportedly in the pipeline.

But will partnerships and viral marketing be a big enough push to take Skype to the next level and convince people to pay to use something they are already paying for separately? Does Skype’s future of success lie in partnerships such as its handset deal with 3 or in social networks?
 

To read the news story related to this blog, go to mad.co.uk