Wednesday, May 30, 2012

Skype Carries 100 Billion Minutes a Quarter

Cheap and free Internet calls have driven Skype usage in the first quarter of 2012, jumping 40 percent to 100 billion minutes of calls in the first quarter, up from the first quarter of 2011, according to Microsoft. Skype also has about 250 million registered users. 


What isn't so clear is how much gross revenue Skype makes, though it is reasonable to guess it now is in the low single-digit billions per quarter. Skype never has made much in the way of profit, and that probably hasn't changed.


Skype illustrates a major issue for service providers, namely that new Internet-enabled products displace traditional usage, but do not come close to generating the same level of revenue or profit as the older services. Essentially, the legacy market essentially becomes an important feature or capability, but not a "business" in the same sense. 


Mobile service providers now worry about the health of their messaging business, which in some markets is showing the same trend as was seen in the VoIP market: traffic shifts and revenue declines. As was the case with voice, the new messaging providers earn revenue that is an order of magnitude less than the legacy services they are displacing. 

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