Some Outbound Skype Calls Free Until 2007
In a bold gambit for a bigger North American audience, eBays Net phone division Skype is letting U.S. and Canadian customers make free PC-to-phone calls for the rest of the year.
It usually costs a few pennies to call a cell or landline telephone phone number from a personal computer using Skype or any other kind of VOIP (voice over IP) feature.
Skype must pay for all these phone calls it is giving away for free, so the deal is a classic "loss leader"when companies take a loss in order to sell more products in the future.
But a bigger piece of the U.S. market could be worth the potentially large Skype expense. Overall, Skype has 100 million registered users worldwide, yet theres just 6 million users in the United States.
Skype parent eBay recently estimated (see PDF) that in China there are 13 million Skypers and in Germany, a country with about a third of the U.S. population, there are 5 million registered Skype users.
The relatively slow going in the United States is anathema for Skype, which eBay purchased for $2.6 billion in September.
In fact, Skype now plays host to about 7 percent of all international phone calling, and sales of its premium services earns about at least $32 million each quarter.
As to the promotions loss-leader quality, Skype spokeswoman Kat James suggests that people consider how little Skype spends on marketing itself.
"Todays initiative has always been in our business plan for the U.S. and Canadian markets, and we see it as a fundamental part of raising awareness and driving the customer acquisition process," she wrote via instant message.
"Many businesses could have chosen to spend this money on traditional advertising campaigns. Skypes philosophy has always been to invest in its users first."
The hubbub is over VOIP, which is freely available software to make phone calls using an Internet connection. Calls between PCs that have downloaded the VOIP software are free, but it costs a few pennies a minute to make calls to and receive calls from cell phones or traditional landlines.
By this time in 2010, some analysts predict, a bevy of forces at work now will increase VOIP usage substantially, from its present-day 5 million or so users to about 20 million.
Skype is of the class of VOIP operators that gives away its software for making free PC-to-PC calls, and offers an array of premiums like SkypeOut, for calling cell phones or landlines.
Prominent VOIP providers Vonage Holdings and Comcast, plus any number of U.S. cable operators, all sell monthly calling plans, with unlimited calling to any phone number in North America usually costing about $25 a month.
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