Why did Skype really fail?
This excerpt was published in an article appearing on IOL yesterday, VoIP Pioneers Stumble:
“In spite of its global popularity, Internet telephony (VoIP), which is almost free for users, has not become a gold mine for its pioneers such as Skype and Vonage.
Popular online auction firm eBay, which bought Skype two years ago for $2,6-billion (about R18-billion), affirmed that message in a costly way on Monday when it devalued the once-darling firm, knocking 1,43-billion off its value.”
One critical thing that I have never understood (since the beginning and it has never been rectified) is why it is so difficult to purchase pre-paid Skype credits. I have had two credit cards blocked (and the process of having them unblocked is so difficult it is in fact preventative).
The cards were not blocked because of bad credit or my bank being dodgy. In fact I have used those same credit cards to make numerous online purchases before and since they were blocked on Skype.com. On the company card we subscribe to BaseCamp, Harvest and MediaTemple and pay monthly fees. We have made various purchases from Kalahari.net, Amazon and DigitalPlanet. We frequently purchase flights on 1Time, Khulula, Mango, Singapore Air, SAA and others – yet we have never had problems with the card being verified before.
Speaking to others I have discovered that numerous people have had their cards blocked on Skype.com and for no good reason (these are just people I know personally).
In fact, I suspect that there are thousands, even hundreds of thousands of people who have the same problem. See these two posts on the Skype Forum:
- “Account blocked”: http://forum.skype.com/lofiversion/index.php/t96246.html
- “My Blocked Account”: http://forum.skype.com/index.php?showtopic=66107&hl
- This one is particularly awesome, where the support guy freaks out at the end and tells the client to use another VoIP provider
Note the poor service these people seem to be getting and the fact that there is no resolution on either thread.
Now we know that the theory of support is that only about 1 in 100 of consumers bothers to complain – the rest vote with their feet. Then consider that posting on a forum is a serious effort and only a select few special people even know how to, let alone care to. Let’s say one in 500.
Consider the lost sales that Skype has suffered because of this issue. Consider the lost referrals as a result of the lost sales. I can see the number of lost sales and referrals add up to 500,000 worldwide quickly as a result of this (I really do not think that is over-stating). Consider the revenue and the momentum an additional 500,000 paying clients would have given the company. That figure may just have been the company’s “tipping point” (read more). And all because of some over-zealous credit card security rules and a sub-standard support channel?
The irony of it is that Skype was bought out by eBay. eBay had the money to buy them because of its massive success facilitating online transactions through its auction software. I am sure eBay’s online credit card facilities and support work optimally?
Why buy a company if you are not planning to leverage your existing resources to make it better? And why not start with the basics – like how people pay you?
“Why did Skype fail?” Could it be as simple as “because they couldn’t facilitate an easy process for many of their new and potential clients to pay them?” I think it is very possible.
The more I think about it, the more absurd it seems. Perhaps I have missed something here?
What are your thoughts?
~ Peter Flynn
Peter Flynn is MD of White Wall Web and co-founder and director of Vocal Pulse. White Wall Web was awarded “Top 10 Most Promising Emerging ICT company in South Africa” in the 2006 TT100 awards and is a finalist in the 2007 awards. Peter is also a finalist in the “Young Enterprise Awards” in the 2007 Top Africa SMME Awards.
White Wall Web is a web application development consultancy. Vocal Pulse is a provider of VoIP PBX systems.
* This article expresses opinions and is intended to spark discussion and debate.
Category: Office Stuff, WWW Site
I too very nearly gave up on Skype some four years ago over the problems of getting Skype to recognise my gold card and make the $10 deduction that would make skypeout operative.
I didn’t know about Voipstunt in those days or Vp hadn’t got onto anybody’s radar screen.
EVEN TODAY, it can be a major headache to get Skype to accept money OR even worse they try to take the same money two or three times. Right now I have a large credit in Skypeout but as it is much more expensive than voupstuntout it becomes hard to justify using it except to call friends who haven’t got or don’t want Voipstunt as well.
According to a friend in the UK Pando interferes with Skype and it could only get resolved by removing Pando. I find that when Voipstunt is running, access to Skype becomes problematical unless I close down Voipstunt first.
Nevertheless I do have both on my computer. Skype also balked on one of my computers at a specific version which locked itself for the duration. Short of wiping C drive and starting all over again I have not found a solution as this specific version of Skype won’t uninstall or allow a later version to update over it.
In spite of these problems I keep Skype on board because I never know when I may have to contact relatives or children abroad in a hurry.
The bottom line here I live with Skype but wish it was easier to use and cheaper when you do have to pay for calling mobile numbers.
[...] Peter Flynn wrote a fantastic post today on “Why did Skype really fail?”Here’s ONLY a quick extracteBay had the money to buy them because of its massive success facilitating online transactions through its auction software. I am sure eBay’s online credit card facilities and support work optimally? … [...]
Funny what you stumble across when you google “skype blocked account”. I’ve just experienced this wonderful piece of customer service myself. I signed up for Skype Unlimited, had it a week, woke up one morning. “BLOCKED ACCOUNT” when i tried to dial out. Open a ticket, post on the blocked account thread on the forums and moderator says minimum 4 days for customer service response. Sofar nothing and tomorrow 11/8 will be day 3. I guess i should have done my homework before paying for Skype.
I ran across this article while researching Niklas Zennstrom’s business history. But, even back when you wrote this, it seemed obvious to me that Skype was going to make it. They didn’t “fail” then and they are not “failing” now either.
Yeah – saying they “failed” was on over statement – not on my part, but on the part of the original author I referred to (http://www.ioltechnology.co.za/article_page.php?iArticleId=5021262)
I however was making a point. Their credit card facilities still seem to be stricter than necessary and the amount of resultant lost revenue over the past few years must be huge.