Red Skype LogoThis excerpt was published in an article appearing on IOL yesterday, VoIP Pioneers Stumble:

“In spite of its global popularity, Internet telephony (VoIP), which is almost free for users, has not become a gold mine for its pioneers such as Skype and Vonage.

Popular online auction firm eBay, which bought Skype two years ago for $2,6-billion (about R18-billion), affirmed that message in a costly way on Monday when it devalued the once-darling firm, knocking 1,43-billion off its value.”

One critical thing that I have never understood (since the beginning and it has never been rectified) is why it is so difficult to purchase pre-paid Skype credits. I have had two credit cards blocked (and the process of having them unblocked is so difficult it is in fact preventative).

Payement Options on Skype.comThe cards were not blocked because of bad credit or my bank being dodgy. In fact I have used those same credit cards to make numerous online purchases before and since they were blocked on Skype.com. On the company card we subscribe to BaseCamp, Harvest and MediaTemple and pay monthly fees. We have made various purchases from Kalahari.net, Amazon and DigitalPlanet. We frequently purchase flights on 1Time, Khulula, Mango, Singapore Air, SAA and others – yet we have never had problems with the card being verified before.

Speaking to others I have discovered that numerous people have had their cards blocked on Skype.com and for no good reason (these are just people I know personally).

In fact, I suspect that there are thousands, even hundreds of thousands of people who have the same problem. See these two posts on the Skype Forum:

Note the poor service these people seem to be getting and the fact that there is no resolution on either thread. 

Now we know that the theory of support is that only about 1 in 100 of consumers bothers to complain – the rest vote with their feet. Then consider that posting on a forum is a serious effort and only a select few special people even know how to, let alone care to. Let’s say one in 500.

Consider the lost sales that Skype has suffered because of this issue. Consider the lost referrals as a result of the lost sales. I can see the number of lost sales and referrals add up to 500,000 worldwide quickly as a result of this (I really do not think that is over-stating). Consider the revenue and the momentum an additional 500,000 paying clients would have given the company. That figure may just have been the company’s “tipping point” (read more). And all because of some over-zealous credit card security rules and a sub-standard support channel?

The irony of it is that Skype was bought out by eBay. eBay had the money to buy them because of its massive success facilitating online transactions through its auction software. I am sure eBay’s online credit card facilities and support work optimally?

Why buy a company if you are not planning to leverage your existing resources to make it better? And why not start with the basics – like how people pay you?

“Why did Skype fail?” Could it be as simple as “because they couldn’t facilitate an easy process for many of their new and potential clients to pay them?” I think it is very possible.

The more I think about it, the more absurd it seems. Perhaps I have missed something here?

What are your thoughts?
~ Peter Flynn

Peter Flynn is MD of White Wall Web and co-founder and director of Vocal Pulse. White Wall Web was awarded “Top 10 Most Promising Emerging ICT company in South Africa” in the 2006 TT100 awards and is a finalist in the 2007 awards. Peter is also a finalist in the “Young Enterprise Awards” in the 2007 Top Africa SMME Awards.
 
White Wall Web is a web application development consultancy. Vocal Pulse is a provider of VoIP PBX systems.

* This article expresses opinions and is intended to spark discussion and debate.