[April 5, 2005]

Special Report: The Impact of Skype and Other Private VoIP Apps

BY JOHANNE TORRES

Research firm Research and Markets released today findings of a recent study titled Emerging Business Models in Voice: the Impact of Skype and Other Private VoIP Applications which explores the overall impact of VoIP-based calling service provider Skype and other private VoIP applications.

According to the firm, the launch of Skype's free telephony software download in August 2003 caught the industry's imagination as it rapidly overtook more established VoIP players to attain subscriber figures never before seen in this emerging segment. Analysts explained that the software, initially offered to the users of KaZaA's file sharing network, spread through word-of-mouth, with no traditional marketing, to claim over 7 million users in August 2004.

Since then, several of what the firm calls “copycat services” have been launched this year, all offering free on-net calls within their closed user groups and offering optional extras including voicemail, conferencing and termination services to the PSTN. The study claims that these all have minimal network infrastructure, relying as they do on 'peer-to-peer' topologies to support the services. Results of the study reveal that these private VoIP applications (PVAs) highlight the susceptibility of traditional voice service providers, both fixed and mobile, to new business models made possible by widespread broadband access.

This report assesses the potential impact on the Western European voice market of these PVAs. Research and Markets evaluates the underlying business models and quantifies their short-term impact on the core businesses of both fixed and mobile service providers. The study examines the longer-term potential for a 'critical-mass effect' of PVA users giving rise to a new market structure is also explored and the possible scale of its impact is determined. Additionally, the report explains how existing service providers can protect their revenues, and evaluates the strategic alternatives available to market participants.

Emerging Business Models in Voice: the impact of Skype and other private VoIP applications also includes the following topics:

• Voice markets face increasingly severe fragmentation
• PVAs are gaining acceptance in the market
• PVA business models are uncertain
• A PVA critical-mass effect is possible
• PVAs hasten the long-term restructuring of the voice market

Skype recently launched the Skype for Windows version 1.2 (v 1.2) with enhanced user benefits including a centralized Contacts list, which allows users access to their list of contacts from multiple devices from wherever they connect to Skype, and a new 'Getting Started Wizard,' which makes finding friends, importing contacts and making test calls even easier.

The company claims to be the leading VoIP-category product worldwide, with more than 31 million registered users growing by more than 160,000 new users per day. The VoIP provider says that more than 6 billion minutes of Skype calls have been made by users around the world.

Research and Markets
www.researchandmarkets.com