Competition, Expansion Problems Plague Skype
BusinessWeek, Friday, September 29, 2006 11:30 AM
Voice over IP provider Skype, an eBay entity, is having mobility problems. In an interview with a Finnish newspaper, Skype CEO Niklass Zennstrom was quoted as saying the company is having real problems making Skype service available on cell phones. It's been trying to expand its VoIP service onto mobile phones for two years now, yet there is no timetable for when service will be available. That's bad news for the Web's most-popular VoIP service provider, especially since rival Jajah just released a new software program this week that lets mobile users make inexpensive calls using its PC-to-phone technology. Over at eBay, management is keen for Skype to generate higher sales and wider margins.
The online auctioneer, curiously, bought Skype for a whopping $2.6 billion last year--although the company generated just $44 million in sales in the second quarter, compared with eBay's $1.41 billion. Part of the problem is that Skype's technology needs to be embedded into the mobile-phone's operating system. Currently, its technology is compatible with Microsoft's Windows Mobile operating system, and should soon be available on a different OS called Symbian. However, these operating systems will only make it onto less than 10 percent of cell phones. Then there's the problem of Skype having to secure agreements with phone makers and carriers, which will be reluctant to carry anything that could potentially cannibalize their subscription services. Jajah's software should be supported by all cell phone models by year's end.
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The online auctioneer, curiously, bought Skype for a whopping $2.6 billion last year--although the company generated just $44 million in sales in the second quarter, compared with eBay's $1.41 billion. Part of the problem is that Skype's technology needs to be embedded into the mobile-phone's operating system. Currently, its technology is compatible with Microsoft's Windows Mobile operating system, and should soon be available on a different OS called Symbian. However, these operating systems will only make it onto less than 10 percent of cell phones. Then there's the problem of Skype having to secure agreements with phone makers and carriers, which will be reluctant to carry anything that could potentially cannibalize their subscription services. Jajah's software should be supported by all cell phone models by year's end.
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