Will postponing the IPO make Skype more profitable?

The Skype IPO is an interesting study in how a disruptive free service must struggle to grow more profitable. The IPO was put on hold recently as the company's new CEO works on the VoIP provider's business model ahead of taking the company public.

Andy Abramson in his VoIP Watch column breaks down the hurdles the company faces before a truly successfully IPO can take place. An interesting point he makes is that even with Skype's massive user base, only about 8 percent pay for its services. The company faces a dilemma at its core since by offering free Skype-to-Skype calls, every new user is one less reason for Skype users to make a pay-call through the Skype service. The companies other pay services like multi-user video calls are still a little ahead of the consumer market with many people just experimenting with the idea of video chat.

Targeting the business market more aggressively would be a serious way to bring more paying users onto Skype's platform, but as Abramson points out that market is closing in fast. Cheap calling is being replaced by free calling and cable operators are getting in on the action targeting small businesses which would be Skype's most likely customers. In the end, its a good idea to keep Skype private while they work out these kinks in strategy and target the markets they need to target to get more bang for their giant service providing buck.

For more:
- read the VoIP Watch post

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