Is Skype a Service, App or Feature?

According to Reuters,  Facebook and Google separately are considering some form of deals with Skype.


Facebook apparently has had preliminary discussions about buying Skype, while Google is said to be considering a joint venture. 


Not to be silly, but is Skype a "service," a "product" or a "feature?" To be sure, Skype generates something on the order of $900 million in revenue, the last time we had access to published information, in 2010. At that revenue run rate, Skype said it lost a bit of money, though, so it is a "revenue neutral" business, in a literal way, or at least used to be. 


That isn't to say all consumer "VoIP" services or business IP telephony services have similar issues. 

VoIP will continue to expand at double-digit rates in 2012 followed by high single-digit gains, averaging 9.4 percent on a compound annual basis for the forecast period to $18.9 billion, according to the Telecommunications Industry Association. 

Still, to keep matters in perspective, "legacy" circuit-switched voice revenue, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP.

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service. But the notable point is that VoIP does not represent all that much revenue, in an overall sense.

In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

In contrast, fixed network broadband access services will amount to about $46 billion in annual revenue by 2015. Entertainment video will contribute about $14 billion in annual revenue in 2015.

So VoIP will be a bigger revenue stream than entertainment television, but not by much. In 2015, legacy voice still will be the single most-important revenue stream for fixed-line service providers, by far, even though it is declining.

Skype revenue might or might not actually create earnings.