Recent news out of eBay is that skype hasn’t turned out to be the goldmine that they hoped. Skype co-founder and CEO Niklas Zennstrom stepped down as CEO and eBay wrote off $1.4 billion of the original $2.6 billion Skype investment. You really have to feel for Zennstrom and his co-founders. Instead of walking away with $1.7 billion (per the incentives in the original buy out deal), they now only receive $530 million. I guess they’ll be anxiously awaiting the next Wal-Mart circular. This recent news adds to the mounting bad news surrounding stand alone VoIP players like Vonage and SunRocket. Is this recent example proof positive that VoIP will only flourish within the walls of established status quo companies like Comcast and Verizon? Or is this more a case of eBay “fumbling” with the jewel that skype could have become?
The troubles that stand alone VoIP companies have faced over the past year or so are, well, “troubling.” Vonage, clearly seen as a threat by traditional telecom carriers, has seen their legal bills increase exponentially as they fight multiple patent infringement suits. SunRocket could not generate enough cash flow to sustain itself. And now skype’s parent is admitting that their original vision of integrating skype’s technology and subscriber base into their active “community” has not materialized. At least not in an adequate return on investment sense. Perhaps there is a hard lesson to be learned here by all involved, including VoIP start ups. The lesson may be that beyond those of us that work in the communications industry, meaning your average consumer, VoIP is simply viewed as cheap long distance. Not as some revolutionary new way to communicate with potentially life changing experiences. I think we in the communications industry are guilty at times of believing our own “powerpointware” (or maybe drinking our own “kool aid”). If VoIP is indeed viewed as merely cheap long distance, then it will be very difficult to build a sustainable business around it alone. It may only survive as a part of something larger. I am certainly not discounting the tremendous value that IP brings to a service provider. But I am questioning whether companies can put VoIP at the center of their value proposition and survive over the long term.