By every metric, Skype continues its midflight stall. Despite doing bunches of things right, Skype's core value is dying.

Skypers aren't calling any more now than they were before. SkypeOut minutes didn't change. Free Skype-to-Skype calling fell this quarter, back to where it was a year ago.

That's scary! Read it again:

• SkypeOut minutes didn't change.

• Free Skype-to-Skype calling fell this quarter, back to where it was a year ago.

Skype's brand is tied to talk.

Better, cheaper, more fun, less hassle.

Does "It just works" still work for word-of-mouth marketing?

Skype desperately needs word of mouth to keep the cost of customer acquisition low and to reach clusters of people that talk with each other.

Flat growth turns regional growth into a zero-sum game. With flat Skype-to-Skype growth, a minute gained in one market equals a minute lost elsewhere. In which markets is Skype losing ground? Where are defectors going? 

The signups aren't enough to cover churn. 24 million new user accounts in Q2 looks amazing, doesn't it? 183 signups a minute, 263k new accounts a day. But...

This growth is too small.

At 12% quarter over quarter growth, this can't be replacing people who leave the Skype network. People create accounts just to try Skype ("kicking the tires"), those who abandon VoIM for mobile or landlines, and defectors switching to broadband operators or other VoIP/VoIM providers.

If signups doesn't cover customers leaving, Skype is in danger. They have two choices: Regain virality (challenging) or Spend Money Wisely (costly). We'll learn more about Skype's strategies to turn this around over the coming weeks.

Is Skype's competition Jajah, Vonage or AT&T?

Here's a Blogpulse from last night. Skype and Vonage used to be in a dead heat for blogosphere mentions. Skype pulled itself out of that league in the last year without spending a Vonage-sized ad budget (great news). But Skype remains a far cry from Comcast or AT&T or BT. (Do you like AT&T's mid-July iPhone spike, below?) 

Zennström and Friis have their eyes on the whole telecom industry, not just VoIM. Skype now has 4% of all international minutes. In the short term, broadband providers have the marketing, billing and distribution to sell consumer VoIP and VoIM to hundreds of millions of existing customers. Skype is competing hard in North America. So the stalling of Skype-to-Skype calls, their word-of-mouth engine, is abominable timing.

A saving grace: Skype could be spinning off cash. Skype could be spending around US$50 million on personnel per year (more than 500 employees at $100K fully loaded), maybe $20 million quarterly if they've been hiring aggressively in Eastern European and Scandinavian development studios. That leaves $70 million for hard operations and marketing costs on $90 million revenue. A big chunk of that goes to wholesale telephony companies, but they were being paid even when revenues were lower.

See also:

• Cynthia Brumfield: Did eBay's Whitman Dig at Skype's Zennstrom, Friis? Quoting eBay CEO Meg Whitman, "Skype is not where we want it to be in terms of user activity. This will require increased activity and attention from the leadership team." Quoting eBay CFO Bob Swan: "“Activation levels are not where we want them to be."
• Kevin Kelleher: eBay: An Unwanted Bargain. "Good news, investors! eBay’s stock is trading at a value."
• Alec Saunders: Skype’s continued revenue growth. No surprises here. 

Below the fold:

• eBay's table of quarterly Skype accounts, Skype-to-Skype minutes, and SkypeOut minutes.
• eBay's bar chart showing quarterly Skype revenue
• eBay Q2-2007 Earnings Slides
• 2007 Annual Meeting of eBay Shareholders

the fold...