Monday, May 09, 2005

Who's Wooing Skype?

Mark Evans

You know Skype has become legit when the scuttlebutt starts about an IPO or an acquisition. James Enck has an intriguing post on potential suitors for Skype. Not surprisingly, they include Google and Microsoft. Enck suggests Google because of its reach, brand and lack of an IM client, while Microsoft emerges as a buyer due to its mountain of cash, the poularity of its IM client and growing interest in P2P. The idea of a Google-Skype alliance somehow seems more natural than Microsoft-Skype. Maybe it's a cultural kind of thing given they both moved into markets with well-established players and managed to carve out a huge following based mostly on word of mouth. Google's dominance of the search market makes it a natural distribution channel for Skype software. I'm a firm believer Google needs another killer app. It has yet to happen with e-mail, social networking or comparative shopping so perhaps telephony will do the trick. A Google-Skype marriage also makes sense given Google's efforts to hire people with networking experience recently - a move that caused all kinds of speculation.
That said, I did not get the impression Skype is actively looking for a spouse or interested in an IPO after chatting with CEO Niklas Zennstrom recently in Toronto. I got the feeling Zennstrom is enjoying the ride as Skype evolves into a major VOIP service provider - SkypeIn and SkypeOut are key elements of this plan - so why sell out now when the going is just starting to get good. Skype also has the luxury of strong private equity support so there is no great urgency to attract money for growth. When the time is right - and when the offer is big enough - Skype will make its move.
Perhaps the most interesting part of Skype's new status is it is so different from a year ago when the company was dismissed as nothing more than a pesky telecom player with free software. It is going to be an interesting ride.
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