Skype Journal Interviews Josh Silverman: The Way Ahead – Markets

This is the fourth in a series of posts resulting from an interview a week ago Friday with Josh Silverman, Skype’s recently appointed President. In this post we talk about addressing the small-to-medium business market as well as various geographical markets.

Over its five years, Skype has built up, almost totally virally, a significant base of users who take advantage of Skype to not only reduce their business communications costs but also to communicate more effectively with colleagues and customers around the world. At the same time various Skype software partners have built offerings, such as Pamela, PamFax and Skylook, that either focus on Skype as a business communications tool or include Skype amongst their options for calling. Within Skype’s own offerings, the Business Control Panel provides the tools for a system administrator to handle both the deployment of Skype and the administration of Skype accounts within a business’s operations.OnState is a primary example of the latter. They have built up a call center offering that takes full advantage of both instant messaging chat and voice in dealing with both inbound and outbound calls; they also take advantage of the three founders’ combined over sixty years’ experience participating in the call center market. Yet, they encountered many opportunities where they had to go back to Skype for assistance since, for one reason or another, Skype’s program were insufficient to address business users’ requirement. The result is that today OnState offers their customers “one stop shopping” whereby, on acquiring a customer, OnState takes on responsibility for addressing Skype subscription needs, hardware requirements (headsets and handsets, implementation issues and first level technical support.

The Business Control Panel has had its limitations also; the main fear has been to mitigate potential for fraudulent or unauthorized activity through purchasing and licensing limits.

As for geographical markets, Skype met a much larger need for communications cost reductions in Europe and Asia than in North America. As a result over 80% of Skype’s revenues continue to come from outside the U.S. The two primary needs met in North America are for “Friends and Family” calling outside North America and small businesses who are working to grow internationally – both internally and with their suppliers and customers.

In growing internationally, there has been the challenge of building user bases in widely diverse markets; “free”, “easy-to-install” and a whole lot of viral marketing action have introduced significant adoption around the world. But this success has led to more business-oriented challenges in working out termination agreements, establishing effective multi-currency transaction systems (although being an eBay co-unit of PayPal certainly helps), multiple language versions of software (27 at last count) and providing multi-lingual, internationally available technical support. (We’ll talk about marketing and more about technical support in future posts in this series.)

We asked Josh about the Skype’s approach to the business market:

JS: Skype in the business market. There’s more that needs to be done. (you guys are smart, you’re asking all the right questions). Platform is a huge opportunity for us; business is another big opportunity for us. About half of the communications market is business; we have a great solution, especially for small-to-medium size businesses. We haven’t tailored that solution to businesses very much; we haven’t communicated to businesses that we have that solution. In the new organizational design one of the pieces of that will be to build out a business unit focused on small-to-medium size businesses where we’ll have some resources available to tailor our product and some sales and marketing resources to work … I don’t think that we’ll be directly selling to small-to-medium size businesses but we can work with VAR’s to help support them in bringing Skype to businesses.

(Note this interview occurred two weeks prior to last week’s announcement of Skype for Asterisk, a program that leverages Digium’s Asterisk reseller channel for sales, implementation and ongoing support requirements.)

We then moved on to ask about various geographical markets:

SJ: North America. (Thank God for Oprah!) Skype has become much more a household name this past year (with an acknowledgement to Don Albert, GM North America). What does it take to keep that business going forward in U.S. and Canada and what are the strategies for U.S. and Canada?

JS: We’re very aware that the number one way to grow Skype is to build products the users love. That is our first mandate always. Once you have a product users love, we can accelerate it by some smart marketing programs. (By the way if you don’t have a product that users love no amount of marketing on earth will save you, right?) So we do have a product that users love and I don’t think we have done as much as we could to communicate that.

Oprah is a great example. It is not our intention and people should not expect massive multi-million dollar marketing budgets from Skype. But there are some smart tactical things we can do working together with evangelists like Oprah to build awareness. It’s our belief that once you’ve grown awareness, people will try it; once they try it they’ll love it. and the rest takes care of itself. At the Democratic national convention we were quite happy to see many of the national broadcasters using Skype as a way to expand their coverage and you should be looking for more programs like that in the United States in the year to come.

SJ: China is your biggest market?

JS: In terms of total users it’s one of our top markets; the answer is yes.

SJ: QQ is still kicking butt in China? What strategy do you have in your existing partnership with Tom?

JS: We have a great partnership with Tom who knows the local market very well. Tom is also a very entrepreneurial, innovative, fast moving company. We’re very pleased to be partnering with them; they’re the right partner to continue building our presence in China.

SJ: Do you have your own people in Asia?

JS: A couple of people in Asia who work with our partners to make sure they’re getting the support they need and also giving us real feedback from the market on what we need to be doing on [our] core platform to be able to support Asia better.

SJ: How about India?

JS: We don’t have anyone working in India. We don’t have a partnership in India to announce but we are seeing good growth in India but we think it’s a terrific market and we are expecting to have more focus on that in 2009

My observation, five months in, [is that] markets where Skype has the most power are markets where you have high broadband connectivity, you have a large ex-pat population, and where the local telephony system is not as efficient as it could be. Many of the developing markets meet that profile so we think we have a huge opportunity in developing markets such as India and it’s our intention to focus more on that in the coming year.

SJ: To succeed in the mobile market place, mobile device manufacturers have had to build carrier relationships. What does Skype need to do with either handset manufacturers and/ or carriers to succeed in the mobile market?

JS: I don’t think the carriers should be able to dictate what software the users get to use. any company,. the smallest startup in the world, if it has really outstanding software ought to be able to take on the whole world and not have to hire 50 people to develop relationships with 300 carriers.

About Jim Courtney

Bringing over thirty years' experience in the sales, marketing and management of cutting edge technology businesses.

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