As a service, Skype generally defies direct comparison. The company has been in the news quite a bit recently, too. In August, the company announced plans for an IPO and also unveiled many new features, some geared specifically for enterprise customers. Even more exciting, however, was news that Cisco made introductions to acquire Skype pre-IPO. Negotiations are hopefully proceeding, as there is merit to the combination and its possibility is worth speculation.
The VoIP carrier is doing well for a free service, steadily growing its user base and revenue. Over the 12 months ending in June 2010, Skype’s registered users grew to 560 million, up 41 percent. In the second quarter of 2010, Skype’s connected user base grew 36 percent and monthly paying users increased 23 percent (figures from Skype’s S-1 filing in relation to its IPO). The growth tells a compelling story and Skype seems to be finally crossing from niche to mainstream.
But past performance is not necessarily indicative of future results. Skype’s freemium model is risky and the company’s continued growth is far from certain. The majority of Skype users do not pay anything yet consume the company’s resources. And competition is heating up: Google launched Skype-like services to its North American users and Skype increasingly needs to defend itself on multiple fronts including brand, regulation threats and its intellectual property