Will Skype Follow In Jajah’s Footsteps?
Posted on December 22, 2009 |
Traditional telcos are showing healthy appetite for Web calling start-ups. On Dec. 23, European carrier Telefonica acquired Jajah for $207 million. The acquisition comes on the heels of Google's November acquisition of Gizmo5 and British Telecom's 2008 purchase of Ribbit for $105 million. So, what does this mean for Skype?
The recent slew of deals may offer insight into where the largest Web-calling outfit in the world, Skype, is heading. Earlier this fall, Skype regained its independence from eBay, and is now the largest stand-alone Web-calling provider. While its private equity investors have told me in the past that they are in no hurry to offload Skype, they'll need to exit their investment at some point, either through an Initial Public Offering, or a sale. The Jajah deal indicates that the world's traditional telecom players want in on the Web-calling game. One of these telcos may want to acquire Skype in the future.
By purchasing Skype, a telco would gain the service's 521 million registered users as well as global presence: Anyone, anywhere with an Internet connection can make Skype calls. A U.S. telco may be able to compete with carriers in Europe and Asia. It may also be able to expand its portfolio of services, and to provide them for less. Telefonica, for instance, plans to market Jajah's services under its O2 brand in the countries where Telefonica's carrier O2 sells its services, Jajah CEO Trevor Healy told me this morning. The charges will be added to O2 subscribers' wireless bills.
The new owner may help Jajah expand quicker. The start-up will be able to market its services, under O2 and Jajah brands, to more than 268 million Telefonica customer access lines worldwide. With Jajah in its holster, Telefonica may, in fact, be hoping to build up a major competitor to Skype.
Jajah expects to remain based in Silicon Valley and Israel, and to expand its 100-person staff under the new ownership, says Healy, who will continue to head Jajah as it becomes a wholly-owned subsidiary of Telefonica.
That said, Skype's value is in the billions, so not many telcos will be able to afford to take it on. BT and Telefonica are less likely to be in the running now that they have acquired their own Web-calling businesses. Still, there are lots of other service providers out there with deep pockets.
Vonage Loses More Subscribers
Posted on August 5, 2009 |
Web-calling service provider Vonage lost more subscribers in the second quarter, the company reported on Aug. 5. Vonage lost 89,000 customer lines, and ended the quarter with 2.5 million lines. Its user turnover rose both sequentially and year over year.
Why is Vonage losing subscribers? The company's management blamed poor economy and wireless substitution. Personally, I don't think the economy has anything to do with it: In tough economic times, consumers look to slash their expenses, including phone bills, and Web-calling providers, which offer a way to do just that, tend to flourish. Just look at Comcast: The company's Web-calling subscriber base grew 33% in the first quarter year over year (results for the second quarter are yet to be released), to 6.8 million people. Vonage lost subscribers in the first quarter as well. Clearly, Comcast is doing a better job drawing in and retaining customers.
Wireless substitution, though, can have had a serious impact on Vonage's business. More than 25% of the U.S. population has already axed home phone services, and uses cell phones for all calls. And that percentage is still growing. Instead of signing up for Vonage, or another Web-calling service, many users simply buy additional wireless minutes and go all-wireless.
Vonage is doing many of the right things to address this changing marketplace. It's planning to release cell-phone apps, which could potentially dramatically expand the service's user base. The company is also doing a fairly good job controlling costs. It just eeked out its first quarterly net income, of $2 million.
