Tuesday, January 17, 2006

My Prediction for 2006

Jeffrey McManus from Yahoo (headshot from from his eBay days) blogged about Robert Cringely predictions for 2006, including a reference to eBay and Skype. He then rolls out the red carpet for me to respond ;) Being as highly objective and unbiased as possible, below was my response.

"Wow the red carpet :) Thanks Jeffrey! I think its interesting Cringely states "Skype won't contribute much to the company in 2006/2007". That's like predicting "Jeffrey McManus will do a better job this year"... completely ambiguous. (And in this case you and I know Jeffrey it's not true ;))

When your contribution margin is over a billion growing at ~30%, a $50-$100MM impact could be viewed as 'not much'. So I call foul. What I predict is that Skype will maintain global leadership in VOIP and VOIP will become the predominant form of communication for C2C, B2C, B2B. The last two companies my wife and I started enabled VOIP services, so I do know a little about this.

"Ultimately, what Skype does enabling its platform will drive its success (which is already fairly massive). Consider how many companies have 60MM users? I bet even Yahoo wouldn't mind figuring out how to monetize that community. It's this user community which will drive a large, thriving developer community (all of which are figuring out interesting new ways of monetizing said community over and above SkypeOut/SkypeIn). I also recall people wondering how the heck to monetize online search (which is a free service folks). Hmm. What eBay/Paypal does with Skype is great for eBay/Paypal, but ultimately just the cherry on top for the opportunity at Skype. So even if Cringely comes close to whatever his prediction even means, I predict he'll be dead wrong when it comes to the ultimate success Skype as a market leader in VOIP. Was it worth $2.7-$4B dollars? Absolutely. Waiting for your counter Jeffrey ;)"

When I pressed 'Post' on Jeffrey's blog, I realized a second later that the Yahoo Ads to the right of my commentary proved my point. There were Skype ads from four different developers advertising to the Skype community. :) To add to the commentary above, becoming the VOIP platform of choice is the endgame. Monetizing via SkypeOut should be only the very base of revenue for Skype. With 60+MM users, either by partnering, acquiring or emulating concepts driven by the developer community, other revenue streams will naturally surface. Paypal is a great example of this. Paypal's original service for consumers was absolutely free. It's business/enterprise service was not however. Could Skype introduce an enterprise-level or premium service once it's taken outright leadership in the VOIP space with a low-cost or free consumer service? Could that be worth billions of dollars in revenue? The answer for both is unequivocally yes. It happened with eBay, with Paypal and soon with Skype...


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