Talk is cheap
Most users of Skype – the free, online consumer voice company – will have been impressed by the ease of use and zero to low cost. But some might have been surprised to see that eBay thinks it is worth up to $4,1-bn.
The potential transaction, announced earlier this week, comes among other moves by major US online companies like Google and Yahoo to offer their users the ability to talk to each other over the Internet using their platforms. They illustrate the increasing importance and pervasiveness of Voice over Internet Protocol (VoIP) and the threat increasingly competitive free offerings online could pose to the income streams of traditional telecommunications companies.
Moneyweb published an article on Skype, called Skype’s no hype, in February and the response from readers was big – in terms of the number of impressions the story fetched; a key measure of any story’s popularity.
The subject of Skype and other internet-based phone services has also increasingly been commanding column centimeters in publications around the world.
This month’s Bloomberg Markets magazine carried a seven-page feature on Skype, detailing how the founders, the same men that pioneered file-sharing platform Kazaa, Niklas Zennstrom and Janus Friis started Skype and have managed to attract 40-m “converts”.
The statistics and views of some of the analysts, like those quoted in the Bloomberg Markets article must be causing many telecoms execs to lose sleep. The article quotes Marc Vollenweider from Bermuda-based research firm Evalueserve saying in a January note: “The cost of a basic telephone call will disappear.” Another, London-based James Enck from Daiwa Securities, is quoted as saying: Skype is like a meteor heading for earth…. The loss of voice revenue is happening much faster than many people expected, and the big telcos have no choice but to respond.”
A recent article in the Wall Street Journal Europe, headlined: “Profit is a tougher call as more providers offer internet phone services”, told of a company called Vonage that started offering internet-based phone services in 2002 and has grown so quickly that it plans to list. It reportedly hopes to raise as much as $600-m. It then went on to say that this service is not unique, however, with big phone companies like Verizon and AT&T having started their own internet-based phone operations. "Now, using the internet, companies don’t even need to own, or even lease a telephone network to sell telephone services, a market that is governed by virtually no regulations. As a result, competition is flooding in like never before, driving prices to their lowest possible levels and threatening to send profits to near zero.”
Read the entire article here: http://www.moneyweb.co.za/news/tech_stocks/485544.htm
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