* Skype lowers prices by a gazillion percent
Skype continues to confound us from time to time with its business model – or what seems to be the lack thereof. It’s kind of like the old joke about the company that plans to lose money on each transaction but will make it up in volume.
This confounding behavior was exemplified recently when Skype became the first VoIP service (to our knowledge) to cease charging for domestic (U.S. and Canada) calls from Skype to both landlines and cell phones. And when we say “stopped charging,” that’s exactly it. The calls are free.
It wasn’t exactly like the price was outrageous up until now. Calls were 1.7 Euro-cents per minute, which equates to about 2.1 cents per minute. Of course, with the abundance of bundles for “all you can eat” services, both from traditional telephony service providers and from cellular providers, many of us already found ourselves using Skype only for international calls or when special services were needed. And, by the way, Skype does still charge for its international services.
We can offer some speculation as to why the calls are becoming free. First, by offering the service for free, the cost of processing the charges can be avoided. (So far as we know, the detail reporting will still be available.) Second, the free calling will help get users in the habit of using Skype on a more regular basis, thereby increasing the use of ancillary services (like voice mail). And as a related issue, this may increase the uptake of “Skype-In” inbound services. The bottom line is that Skype is taking the view that traditional telephony service providers have quietly admitted for years: the profits come from added-value services, not from the services themselves.
As a footnote, Skype finally added one of the most-needed features for international calls: translation service. For many of us, the problem with making international calls is quite fundamental. We don’t speak the language. Skype and Language Line Services recently announced a translation service for $2.99 per minute for more than 150 languages. Go to the Skype Web site for details on this service.
