Tuesday, January 19, 2010

Skype Users Now Ring Up 12% of All International Calling -- Profitable Yet?

Prior to running Sorenson Media, I spent several years running IP communications company SightSpeed (until we were acquired by Logitech in November 2008). So, IP communications continues to be near and dear to me.

SightSpeed, of course, was the David versus the Skype Goliath. We succeeded because we didn't try to do it all -- instead, we had a laser-sharp focus on one aspect of the IP communications business -- that is, video chat (that's why we were a perfect match for Logitech, which owns the lion's share of the global web cam market).

Skype, of course, has done "alright" (I say that with a grin). And now, hear this -- Skype now accounts for 12% of all global calling volume! When you think about it, that's an astounding number. Perhaps even more significant is Skype's growth rate compared to the traditional telecoms -- well over 50% annual growth rates for Skype as compared to an anemic 8% growth rate for the others. Skype now also claims that 22 million Skypers are online concurrently at any given time.

Impressive. Now, does that mean that Skype is profitable? (I am pleased to say that SightSpeed was profitable around the time of the Logitech acquisition). No, not necessarily. We will know more about its financial position when eBay holds its earnings call later today.

Separately, video chat company Tokbox -- which was a direct SightSpeed follower and competitor -- just announced that it has rolled out pay features in an attempt to establish a business model that works. Despite a fair amount of hype, the company to date has not really caught on in a very crowded space.