Skype's slowing growth

Buried in eBay's fourth quarter 2008 numbers are signs that Skype's rapid growth is slowing down. Not stopped, but slowing.

Digging through eBay's reporting numbers, Om Malik finds that Skype had sales of $145 million in the quarter, up 26 percent from the same quarter last year, but only $2 million ($143 million) higher than last quarter.  And this is after adding 35 million new users for a sum total of 405 million registered users. SkypeOut (i.e. paid minutes) minutes went up from 2.2 billion in 3Q08 to 2.6 billion in 4Q08.  Meanwhile, Skype-to-Skype (i.e. free and video) calls went from 16.5 billion to 20.5 billion minutes.

If Vonage has a customer acquisition cost problem, it looks like Skype may have an ARPPU (average revenue per paying user) problem; 400 million more minutes in the quarter for $2 million more in sales. The math ain't pretty. Per subscriber, per-year for 2008 revenues declined a penny, from $1.36 last year to $1.35 this year. Crunching the numbers, each registered user only generates 6.4 minutes of SkypeOut paid minutes on average, as only a fraction of total users pay for the SkypeOut service.

Om says that mobile Skype/Skype Lite is a temporary fix to bring in more customers and revenue and continue growth.

Looking at it from another angle coming out of FierceVoIP's continuing coverage of the company, we can now more fully understand why the company wants to push the bar up into the business space where companies will pay for services, so long as the services are saving them money as compared to "conventional" voice options. There's also a greater opportunity to raise ARPPU with business accounts with whistles like local phone numbers in other countries, faxing and all kinds of other value-added services.

A more interesting question: If video is the wave of the future, how does Skype make money off that wave?

For more:
- GigaOm looks at Skype's 4Q08 numbers. Post [1].

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