Microsoft to acquire Skype
microsoft.com
microsoft.com
"With 170 million connected users..."
Every article on Skype for the last 3 months has mentioned "600 million accounts". (http://www.google.com/search?q=skype+600+million+accounts) But I can't find an original source for that number; it seems everyone is quoting "industry estimates".
Were the estimates on Skype's userbase wildly wrong, or is a "connected account" somehow different?
* 663M registered accounts
* 145M connected users
* 8M paying users
The 170M number is the most recent update of the 145M connected users number. They define 'connected users' as active within a financial quarter
I have spent the past few hours reading through the SEC filing. Skype is still growing very strongly[3], especially in the key metrics of active (connected) users and paying users (both up 30%)
I think this is a great deal and will work out as well for Microsoft as PayPal did for eBay. See my comment in the other thread about that[2]
As I mentioned in that thread, Skype is not profitable only because they wrote down assets and acquisition costs to the tune of over $350M. Within Microsoft it will profit near $500M this year (my back-of-the-napkin sums by projecting out the old revenue figures with the new growth figures). A PE of 17-19 is not a bad buy, considering the strength of the brand and the large user base.
Skype is probably the largest non-browser web/net application, and likely the second largest social graph after Facebook.
What will be interesting now is the question of if Microsoft will work with Facebook on Skype, or use it as a platform to compete with Facebook.
[1] http://www.sec.gov/Archives/edgar/data/1498209/0001193125110...
[2] http://news.ycombinator.com/item?id=2531885
[3] From their filing: "We have significantly increased both our free and paying users, growing our average monthly connected users by 38% and average monthly paying users by 19%, from the three months ended December 31, 2009 to the three months ended December 31, 2010."
I recall reading a few articles on Facebook exploring a partnership with Skype - it certainly would be in Microsoft's best interests to harness Facebook's social graph through Skype. If Facebook decides to roll out its own Skype competitor, that would cause some serious dent to Microsoft's pocket.
not bad in terms of a freemium conversion rate and I think some of it can be explained with:
* credits now have a longer expiry date, so you can bulk purchase and hoard credit
* US and Canada calling became free
* negative network effect of more people using skype = less people that you require the dialout feature to reach
This number is inflated by the fact that Skype requires you to login periodically and use any credit you have in order to keep it from expiring.
170 million I can believe more readily. It could just be the difference between users and registered accounts (I know several people who've set up Skype 4-5 times over the years, using it rarely and then creating a new account on a new machine when they need to use it again).
Skype is 170M active (quarterly, Facebook is monthly), and 680M total registered.
A lot more people have given Skype their payment details than have Facebook - which results in Skype monetizing a lot better (but still not awesome monetization - yet, but it is improving).
Edit: Facebook has never published total registered, see
http://www.facebook.com/press/info.php?statistics
It is difficult to apples v apples with skype + facebook since their methodologies vary, but it seems that the fb active user base is ~3x Skype
perhaps they should adjust their terminology and refer to them as 'accounts' rather than 'users'
I remember reading a blog post where somebody tried to calculate it by enumerating user ID's, but he didn't come to a clear conclusion.
the FB key numbers are 650M active per month, 50% of that active per day. I wish other companies were as simple and transparent with their own stats PR - instead of nonsense like 'messages processed per fortnight', 'total logins', etc. etc.
Also, I think video chat works better and will pretty much always work better on computer than on smartphones. There's a much better screen, you don't have to hold it just right, and it's easier to sit down and make time for a video chat on a computer. If you're looking at the numerous failed attempts at video chat on phones, I can see how you'd see it as useless, but Skype is different.
Granted, there was an incredible mistake on eBay part not doing proper due-diligence, but pulling off what they did takes a lot of chutzpah for sure.
This most probably going as a case-study into modern economy text-books.
No dropped calls, good video quality, and simple integration.
I am one of these dreamer of a multiprotocol VOIP solution. Like emails actually.
It's a strategy Facebook could adopt without Skype, but with the two brands in unison they could rule the market. I don't see Microsoft being able to do the same.
I don't personnaly use Skype for various reasons, but for the people who do, let's hope that's true.
If I were Microsoft I would even look at buying out Pandora/Spotify/Slacker/Last.fm, Netflix, and remove the file limit on their Windows Live online storage to compete more directly with Dropbox and others--then there'd actually be incentive to use a Hotmail/Live account again and with a plethora of subscription services they could set up their own app store that would compete a bit better with iTunes and sync with Xbox Live. Something else powerful is it would be one bill for your Xbox live, online storage, email, movie rentals, games rentals (potentially), apps, music subscription, and VoIP calls.
Look at the modern smartphones. The lesson I take from iPhone and Android is that if you build a device that has a fair amount of memory, a modern processor, and an array of interesting sensors and input devices, developers will build for you amazing applications, killer apps even, in ways you're not able to imagine.
I imagine a next-gen xbox. It has kinect built in. Great APIs for that. It has Skype and Xbox Live and the various Windows Live services all built-in, with great API's for those, treating them as services.
You push the appstore model via xbox live on that device and I bet $10 that developers produce some amazing things for that platform. Perhaps even game changers. It revolutionizes computing in your living room the way that the iPhone revolutionzed computing in your pocket.
I also think... you'd have a very powerful remote control and connection ability to that device using every new Nokia phone (and any new phone on WP7).
Final thought along those lines is that WP7 is really a great mobile OS. I bought a new phone just last week. I'm on Sprint, so the HTC Arrive was available to me which is a new WP7 phone. I had to decide against it and went for an Android device but that was begrudgingly because there's no 4G WP7 phones in Sprint's line-up. (Ended up going Evo).
Here's the thing... WP7 just FEELS good to use. Way moreso than Android and also moreso than iOS. It's very snappy. It uses screen space well. And the Arrive has a GREAT physical keyboard, the best I've ever used on a phone.
No 4G killed it. Also, no removable SD card. And finally there was the Apps issue but they've put out some great dev tools for WP7. I think it's only a matter of time before they catch up.
Also I'm skeptical that the voice UI works as good as it does on Android.
Sorry for taking this slightly off topic but to bring it back around it's this: Microsoft could really do some great value-adds with Skype on a number of their platforms.
Strength in brand. Most common-folk users have no idea what voip is. You can't compete with Skype by just doing a voip client - if that were true then you would see Google Talk, Facetime etc. eating into Skype market share, and not Skype growing 30% per quarter.
For many people, Skype is online communication and messaging. It has become a verb and one of the most recognizable online brands alongside Google, Facebook etc.
My understanding is that their competitors don't (can't?) do this. For example, SIP runs through a central server (e.g., Google's). This allows Skype to run their service more cheaply, and its cheaper to provide service for each marginal user. Its a pretty strong network effect.
So, in addition to their brand and userbase, they do have some tech MS might want and can't get elsewhere.
SIP is a lot like SMTP. When you make a SIP call, you talk to your local SIP server, which talks to N intermediaries (usually 0) before going out to the public internet. After passing off to the destination server, the connection can go through N intermediaries on the remote side before being delivered to a final user agent. This connection isn't for delivering audio and video, though, it's for coordinating a direct RTP connection to use for audio and video. Once the two endpoints are communicating, they send information about their real network location, work out details about NAT, and set up a direct RTP connection, possibly using STUN to deal with NAT issues. In a normal SIP environment, neither party's SIP server ever sees any of the actual media.
This is all fairly similar to what skype does, except skype has additional infrastructure for routing media through other clients, in cases where two endpoints can't find a way to communicate directly, as I understand it. I'm not actually authoritatively-informed about skype, though, so don't rely on this last bit.
This maybe the case for those small VoIP startups, but for big Internet Co. such as Google, Microsoft and other portals who already have big datacenters, this should not be an issue.
Are they the only one sharing that vision? Are they software companies with a vision of dumping obsolete software and products to their customers ?
Big fan of stuffing fluffy meaningless statements into each PR. This one is a keeper.
Grab a piece of (someone else's) software innovation and products and sell those to our customers.