Skype created huge waves when it first appeared online in August of 2003. In September of 2005, Skype was bought by eBay for 2.6 billion dollars.  The software based telephone service was a big draw for many Internet users since it allowed users to call other Skype users anywhere in the world for FREE. There were other VOIP services around but Skype at the time offered the clearest audio quality and the least amount of audio lag. Ever since eBay bought the company, the subscriber base and usage of the paid features has not really increased to offset the original purchase price of the company. Apparently, Skype generated 126 million dollars in the first quarter of 2009 with 309 million users world wide.

This revenue is a drop in the bucket when you consider the huge investment made by eBay in 2005. Recently, Skype released a new version of software that allows easier access to features like video conferencing with a larger video, better quality audio and the ability to juggle multiple conversations easily. Unfortunately, there is some competition from other services like Windows Live Messenger and direct VOIP services like Vonage that replaces your standard phone service. Services like Vonage which does not require you to start up a computer and load software also offers FREE calls to other Vonage users. Vonage does have a monthly fee like a regular phone service but long distance anywhere in Canada and the US are FREE. If a user has something like Vonage, it is hard to use Skype to place calls to a landline which is charged on a per minute bases in North America and elsewhere.

Other VOIP services that do not require a PC and software are becoming commonplace with low rates Internationally and FREE calls within North America. Making the use of a charged service through Skype is becoming less and less attractive I feel especially with the recession. There are other lower cost services like even phones cards that offer really low rates Internationally. Skype does have cell phones and cordless phones that also take advantage of the FREE skype to Skype feature but I feel these are not as popular as they could be.

For Skype to truly forge ahead, they need to think about a new marketing strategy that concentrates on low internatonal rates, FREE Skype to Skype calls and downplay the VOIP feature I feel. Companies like comwave are taking advantage of the VOIP feature without mentioning VOIP in their advertising campaigns. It will be interesting to see where Skype is in the fall of 2009.

Sources: Wiki The New York Post