Could Skype join Yahoo and Microsoft alliance?

Stan Beer
Friday, 14 July 2006 07:46

IT Industry - Strategy

Over at The Motley Fool, it has been suggested that the Microsoft and Yahoo messaging alliance is aimed squarely at killing Google Talk rather than Skype. That makes sense given that Skype owner eBay and Yahoo are as thick as thieves with their alliances these days. However, it also raises the question as to whether there is a place for Skype in the Microsoft and Yahoo alliance.

Microsoft and Yahoo are now pressing ahead with voice interoperability and together claim a user base approaching 350 million. In April, Skype, which is growing faster than a well-fertilised weed, passed the 100 million accounts mark, with much of its user base outside the US.

To boost its US customer count, Skype now offers free SkypeOut calls to ordinary telephones and mobiles. With that sort of incentive on offer plus its growth track record, we fully expect to hear an announcement soon that Skype has passed another milestone very soon - perhaps 150 million customers.

Thus the addition of Skype to a Microsoft and Yahoo interoperability alliance would create an online messaging community of more than half a billion users. That would be a pretty much unassailable global alliance. AOL and Google would have little hope of gaining any further traction in the online messaging space faced with such a powerful bloc of users.

However, there would be at least one major issue for both Microsoft and Yahoo if they invited Skype to enter their club. With SkypeOut free to North American customers until at least the end of 2006, both Microsoft and Yahoo could face considerable defections from their US customer bases. Those could be customers lost forever. However, if Skype drops its free service come 2007 then this problem goes away.

Skype no doubt would have little objection joining an interoperability alliance with Microsoft and Yahoo. However, it probably doesn't need to yet. The product is so easy to install and operate that it is still gaining customers by the bucket load. From eBay's point of view, however, the company has to make the product pay to justify its US$2.6 billion investment in it plus all the free public switched and mobile phone calls it's been giving away to North American users.

In the long run, however, interoperability is what the market wants and providers can never afford to ignore the market.