Skype Won't Stop With The Inflated User Numbers... But It Might Not Be Helping

from the skhype dept

Mon, Jul 2nd 2007 1:24pm — Carlo Longino

After paying $4 billion or so for Skype, eBay has floundered a bit in search of a strategy for the unit. While Skype's revenues are growing pretty decently -- up 119% year-on-year in the first quarter -- they still don't make a huge impact in real terms ($77 million in the quarter) when compared to the huge price tag of the acquisition. Meanwhile, Skype execs continue to act as if everything is going to plan by ignoring meaningful metrics when discussing the company's fortunes, and choosing to keep hyping up the number of times Skype software has been downloaded, and how many user names have been registered, instead of focusing on how many active users or paying customers it has. It's at it again in an article about its slow growth in the US, which accounts for just 13% of its revenues, with an exec claiming to now have a user base of 196 million (via Broadband Reports). As the article notes -- for once -- Skype still refuses to disclose how many active users it has, using the meaningless metrics of downloads and registered user names. What's sort of amusing about all of this is that, in some sense, Skype's insistence on the inflated user figures actually makes it look worse than if it disclosed more accurate figures. After all, if the company keeps claiming that its user base is exploding (when going by the downloads number), but its revenues, and more importantly, profits aren't keeping pace, eBay investors aren't likely to look too favorably upon Skype, or the billions eBay paid for it.

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9 Comments

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Matt Bennett, 2 Jul 2007 @ 1:44pm

lose a thought?
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Carlo, 2 Jul 2007 @ 2:36pm

Re:
Hmm, not sure what happened there, but fixed all the same.
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sonofdot, 2 Jul 2007 @ 3:01pm

eBay is run by idiots
I'm not an ebay shareholder, but if I was, I'd sure want to know exactly what plan the eBay executives actually had for Skype? The only thing I see is I can use it to contact a buyer if they bid on my auction items -- if only both of us had the service, and what are the odds of that?

The execs at ebay should stick to what they know best -- auctions (and the truth is, they keep shooting themselves in the foot there, too).
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Michael A. Banks, 2 Jul 2007 @ 3:45pm

Floundering
Hm ... they never seem to get it: the bigger you are, the eaiser (and more likely) it is to flounder.

Anyway, they're not disclosing the number of active users because that would be embarrassing. And probably anger a lot of stockholders.
--Mike
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Mitch the Bitch, 2 Jul 2007 @ 4:25pm

Eventually all the rest of the dot com bubble Corporations that offer nothing of value to the user or the investor are going the way of the do-do bird. The ONLY thing most have going for them is being first to market and a dot com bubble residue that is quickly wearing thin.
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youtalkie, 2 Jul 2007 @ 4:37pm

about skype
I didn't do so many research on this topic. But I feel Skype is on the right track. The main purpose of the acquisition is to facilitate the ebay transaction between buyers and sellers. Ebay was not really intended to general much revenue from IP phone.
The recent local listing within skype is also a very smart move to support ebay's core biz.
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hansmoleman, 2 Jul 2007 @ 4:50pm

inexact
not to mention, I work for ebay owned company, they make every one use skype thus adding to more numbers of users, honestly....skype is great if you make long distance phone calls...otherwise i just IM....AOL, Yahoo and MSN work just fine for that...ebay refused to acknowledge that their skype is just a overblown IM with VoIP-like capabilites....zzZZZZzZZZz next please...
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Lawrence D'Oliveiro, 2 Jul 2007 @ 6:18pm

Avoid Closed Systems
That's the trouble with a closed, proprietary system like Skype: there's going to be a lot of very angry and upset users when the business finally collapses. Stick with open standards, people!
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agodel, 3 Jul 2007 @ 5:50am

Skype
When I heard that eBay was "looking at" Skype, I sold all my shares at 46, after aquisition if fell to almost 20 and hasn't left low 30s since. Skype was one of the worst mistakes that eBay has made, 6 billion for a glorified IM client? VOIP wars will be won by those that have the infrastructure and technical presence (installers, support staff, etc) to do it (cable primarily and phone to a minor degree). Time Warner VOIP is painless and transparent (compared to vonage/at&t/etc), so that is where the VOIP will lean towards. Skype will be a non-issue in 5 years in my opinion, that is a lot of money to squander away.
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