Magazine article Marketing

Skype's Dollars 1bn Ambition

Magazine article Marketing

Skype's Dollars 1bn Ambition

Article excerpt

The internet call firm aims to boost revenue by targeting family and mobile users.

Skype is slowly moving into the mainstream. The service, which enables users to make free phone and video calls over the internet, has grown rapidly since it was bought by eBay for dollars 2.6bn in 2005. Last week, the auction site announced it is to float Skype as a standalone company next year, leading to speculation over the direction of the service.

From 55m early-adopters four years ago, the number of registered users has grown to more than 405m - mostly by word-of-mouth. It expects to pull in dollars 1bn (pounds 700m) of revenue in 2011, from paid-for calls to people who are not on Skype.

At the time of its purchase, eBay said it had acquired Skype to boost trade on its auction site. It wanted to let buyers talk directly to sellers about products that can be tricky to buy online, such as used cars or antiques. Then, the site said the deal offered 'significant new monetisation opportunities'; last week, however, it admitted that Skype 'has limited synergies with eBay'.

The price of eBay shares rose on the announcement; investors had seen Skype as an unnecessary distraction that was tying up the auction site's cash. Analysts expect a private deal with Google or Microsoft to emerge before an IPO, and Skype's Scandinavian founders are also rumoured to be trying to buy back the business with private equity.

A change in ownership does not mark the beginning of the end for Skype, however. As broadband internet grows yet further in popularity, online telephony has a rosy future. Skype is also looking at recruiting new mobile users - its new iPhone application was downloaded more than 1m times in the first 36 hours after it became available. Skype will soon be coming to BlackBerry devices, too.

'A kick-arse iPhone application has been a big investment,' says Jason Goodman, managing director of Skype's ad agency, Albion London. 'They have been developing Skype on the move for some years now. While only some people are willing to talk via their PCs, a lot of people use mobile phones.'

Dominic Stinton, partner at VCCP and former marketing director at TalkTalk, agrees. 'When I was at TalkTalk I was surprised how many ethnic groups used Skype to call families abroad,' he says. 'But there are so many free call packages from companies like TalkTalk, how does it compete? …

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