A Skype-like voice-over IP solution is the next logical offering for Facebook and could bring the giant social network as much as another $800 million a year, according to a new report from the Copenhagen-based research firm Strand Consult.
Facebook's investors would be pleased to see a few more dollars in its coffers, and a Skype-like solution could offer that and more, said the report, which reviews the "paradigm shift" for voice traffic, and beyond, that Skype created.
In the past, VOIP solutions such as Google Talk and MSN, as well as mobile virtual network operators (MVNOs)- subletters of the telecom industry-like Lyca Mobile and Lebara Mobile, tried to compete against Skype. Then Microsoft, knowing it couldn't compete with Skype, purchased it in May 2011 for $8.5 billion-a tricky sum, Strand points out, since Skype doesn't collect the cash flow that it disrupts. The dollars saved on VOIP aren't redirected, they're just not spent.
Still, "Skype's revenue is nothing to sneeze at, especially for an Internet company struggling to show a profit on advertising revenue. Facebook is scrambling to please investors, and $300 million to $800 million from VOIP would be welcome on the income statement," stated the report.
It continued, "We think not of the question of whether Facebook will enter the VOIP market, but rather whether Facebook [will] succeed where Google and Microsoft have failed. Indeed, Facebook has more likelihood than any platform to be the Skype killer."
Facebook is nearing 1 billion users, and on Aug. 23 it introduced an update to its iOS app for iPhones and iPads, trying to encourage more of those users to interact with the site through their mobile devices. (Strand said Facebook wants to engage users through every screen, including their televisions.) The company dramatically sped up the app, making it faster to load, faster to scroll through and quicker to click through to content.
With more users on smartphones, Facebook could further benefit, and it already has the resources to support a VOIP app, Strand pointed out.
"Facebook already has the payment collection facility developed for its multiplayer games, so it would be no problem to charge individual users for VOIP services," Strand analysts wrote. "Our analysis shows that Facebook could have a remarkable potential in the area of VOIP. It could create a communication experience far richer than what is available today."
With such an app, Strand also said Facebook could bring in revenue equal to what Skype currently makes.
"The premium model of Skype has proven more profitable per user than Facebook's advertising model," the consulting firm said. Skype's paying users-who number about 8.8 million of its 668 million total users-"spend an average of approximately $100 per year on Skype Out and other services. Facebook's advertiser revenue when apportioned for users in Europe and North America ... is less than $10 per user."
Facebook isn't exactly hurting. During its first quarter as a public company, it saw profits of $992 million on revenue of $1.18 billion. But since its tremendously hyped initial public offering (IPO)-at the end of its first day of trading on the Nasdaq exchange, Wall Street put the value of the company near $104 billion-its stock price has taken a tumble. After its earnings announcement, the stock's price per share fell by roughly 10 percent.
With a Skype-like offering, Facebook could further its agenda of entwining itself with users, while also offering a richer user experience.
"If Skype is a black-and-white film," wrote Strand Consult, "then Facebook's VOIP would be a 3D interactive movie."