Recent is that skype hasn’t turned out to be the goldmine that they hoped. co-founder and CEO Niklas Zennstrom stepped down as CEO and 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 and . 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.

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3 thoughts on “Skype Shakeup Adds to Stand Alone VoIP Uncertainty

  1. I think you have to be careful. I look at VoIP as a movement, not a business model or technology. Companies like Skype and Vonage realized that VoIP is a tool to empower subscribers. It empowers them to do a variety of things, including thumb their nose at the phone company. Phone companies have to be careful not too misunderstand VoIP – sure, it’s cheap long distance, but it’s also a way to give subs more power/control. Think of web based call managers as an example. If phone companies think VoIP is a diffent way to do the same thing, they’ll miss the boat.

  2. Every disruptive technology goes through this stage. New entrants to a market take the lead by leveraging technology far better than the entrenched traditionalists. Soon the traditionalist wakes up when there’s enough noise and either taps their deep pockets to catch up or acquires some of the early entrants. It’s a common cycle. VoIP is no different. We need companies like Skype and Vonage and the entrepreneurs who launch them. It keeps everybody honest.

  3. The skype example is just a classic case of a leading company being absorbed by a larger company, and then losing its edge. Companies like skype have to be on their own to truly innovate. Once a larger company takes them over, the original founder/innovators either get stifled or lose interest because their so rich. In skype’s case, I suspect it was a little of both. Zennstrom has turned his attention to Joost now. Probably gave hime the innovation outlet he needed. How long before someone buys them.

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