Sk(h)ype

Sk(h)ype

There I am, struggling for inspiration, when along comes the story I’ve been waiting for. My favourite type of story. The one that proves that I (and a lot of other people) were right all along: $2.6bn was rather too much to pay for a company that gives its product away free. eBay has taken a $900m hit to write down the value Skype, the VoIP company it acquired just two years ago.

I have been wrong about these things in the past: MySpace was very much worth the $580m that News International paid for it, if only for the $900m advertising deal that it scored with Google soon after. (Disposing of what will be a dead asset in a year or two might knock some of the gloss off that deal though).

But with Sk(h)ype (thanks to whichever wag first came up with that) it seems that all of us who looked incredulous at our screens on September 12th 2005 were more on the money than the management of eBay and the no-doubt numerous advisers they employed.

It’s not that I don’t like Skype. Though the appeal of the product has tarnished somewhat since its debut, I still use it on a daily basis. But for all the noise around it, and its success in penetrating the consciousness of the general public, it has not had the expected impact on the telecoms market. While it may have killed the prospects for a thousand small VoIP carrier startups (hello Vonage), the major telcos are still charging largely what they were beforehand. WiFi hotspots are not a morass of users skyping each other from mobile devices.

My biggest question over Skype was always its future. When the world’s largest telcos are already investing in a total VoIP infrastructure (with BT in the vanguard) that should decimate their cost base and enable them to roll out some very funky services, what is the need for a proprietary, software-based VoIP client with iffy quality and reliability? It had a very small window for success, and a very lofty target — to become a standard for voice communication to compete with GSM or SIP before the incumbent telcos completed their own VoIP infrastructure. Though I doubt it was ever put like this to the CEO of eBay, if it wasn’t portrayed as a potential world-beater, how on earth did they come up with such an enormous valuation?

Even with phenomenal marketing this was only ever a ‘good’ product. It was an incremental, rather than radical, change. And even with some of the most impressive marketing in recent times, that isn’t enough to change the face of a market.

You are at: Home » Sk(h)ype

This article is by Tom Cheesewright. This post forms part of the Future of Business series. For more posts on this subject, visit the Future of Business page.

Tom Cheesewright

https://tomcheesewright.com/futurist-speaker

Futurist speaker Tom Cheesewright is one of the UK's leading commentators on technology and tomorrow. Tom has worked with a huge range of organisations across a variety of markets, to help them to see a clear vision of tomorrow, share that vision and respond with agility. Tom draws on his experience to create original, compelling talks that are keyed to the experience of the audience but which surprise and shock with unexpected facts and examples.

Future News

Subscribe to my newsletter and get weekly stories plus other insight into tomorrow's world.

Latest Articles

Tom Cheesewright