Skype's P2P architecture supports freemium
Skype can give away free video calling because customers pay for all the expensive marginal costs.
- With every account, Skype hosts account creation, account backup, and presence service on their servers. These are very lightweight, low cost services but they grow linearly with the user population.
- Skype also provides technical support, customer service, security and R&D, spread across all users, fee and free. The costs of these services grow slower than the user population.
- Skype's customers pay for their own microphones, cameras, computing, and P2P connectivity. So while this is a linear marginal cost, Skype doesn't pay.
Contrast this with Yahoo!, Microsoft, SightSpeed and other VoIM providers. They have Skype's fixed costs and more. They pipe all talk through hosted servers. So every additional free user requires them to pay for more server capacity, bandwidth, and server farm management.
Skype doesn't pay when customers
- speak more often
- to more people
- for longer times
- through more bandwidth-consuming media.
P2P's low marginal cost helps Skype scale and tweak their freemium rate.
tags: skype, p2p, architecture, free, freemium, business, yahoo, microsoft, sightspeed, voim
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Labels: architecture, business, competition, financials, freemium, microsoft, skype, strategy, technology, yahoo
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3 Comments:
Skype and the Skype p2p cloud users = the Ultimate freeloaders, who's motto is that every communication (voice, video, text) should be free. Except the bandwidth and your hardware of course. It is still the worst nightmare for every network operator who lives from pee per transaction... Unless they do a deal with Skype like Hutchison Whampoa did and put it into operations like www.three.co.uk. I wonder what the ratio is of the paid services to the amount of free usage.
When you lump "SightSpeed and other VoIM providers" with those who route voice (and video)through host servers, you are either extremely misinformed, or you are deliberately overgeneralizing in hopes of running down the significant competition along with the less capable. It is long past the point where Skype's peer-to-peer connection for data transfer is in any way unique or gives them an advantage over many others. The only thing unique in this regard about Skype is their "SuperNode" system, and since it is literally stealing resources from their customers, and is itself straining under the load that is being placed on it, I would hardly call it an advantage.
When you say "Skype also provides technical support, customer service...", you must be living in a different reality, and dealing with a different Skype, than the vast majority of Skype customers.
I did notice, by the way, that in the introduction to the "interview" with the Skype CEO you said that one of the topics to be covered was Skype support... but somehow that never made it into the parts of the "interview" which got posted... Not too surprising, as I wouldn't expect the Cheerleaders to embarrass the CEO.
Jaime, when a service pipes calls or other data through their servers, they pay twice for the bandwidth and 100% for the server farm. Skype doesn't have those expenses. So how much would you have to pay for each billion minutes of voice served? For each billion minutes of 1-to-1 video? It adds up.
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