Daiwa EuroTelcoblog No. 81: Friday, 1st October, 2004 - Skype's top 20

Skype has kindly given me a snapshot of their user breakdown by country, in percentage terms. It should be noted that this is not definitive, because the Skype network is a function of the people who download and use it at any given time - and the composition of this group has changed dramatically since the service launched a year ago. At the moment, I can see 750,000 users online, but my experience is that this number fluctuates from under 500k to well over 800k in any given 24-hour period. Given the kind of registered user numbers Skype has publicly claimed (c.10m users out of 25m downloads to date), it is difficult to get a clear reading from this breakdown as to precise total user numbers by country on any kind of consistent basis.

[Anecdotally, I use Skype on two different machines, so at any given time, I may appear as two users on the network, and other Skype users I know have said the same. If this were true of most of the 10m users, then a conservative estimate of Skype users would be more in the 5m+ range. However, a proportion of users may only use it when travelling or at work, so I would tend to think that the "true" base lies somewhere between 5m and 10m. If that is true, then the number of active users visible at any given time probably represents 10 - 15% of the total base.]
In any event, the breakdown is interesting and prompts many questions to which there may be no apparent answers:

• There seem to be few discernable correlations between population or broadband penetration rates. Tiny Israel and Denmark come out ahead of Japan, Poland punches well above its weight and broadband penetration, France looks to be almost double the user base size of the UK (despite identical population size and a broadband user base only 15% larger than that of the UK) and to my surprise South Korea is not even in the top 20, despite a rabid broadband market.
• Maybe the lack of consistency is price-driven, related to the large ex-pat, student and guest-worker diaspora. A caller in Brazil to the US on the Embratel network might expect to pay an undiscounted price of EUR0.21 per minute at current exchange rates. AT&T's discounted call plans show charges (for calls to fixed lines) of EUR0.14 per minute for Brazil (EUR0.11 for Rio and Sao Paolo). Both of these are fairly steep, and in this case there may be a good case to explain the Brazilian prominence in terms of toll-bypass. However, for AT&T users (for example), Germany is in the 10-cent band with the rest of Europe, and calls to Taiwan from the US on AT&T cost only 9 cents per minute (7 cents to Taipei). Denmark has some of the lowest calling rates in the world, and is an affluent society with a small ex-pat population. Its prominence in the rankings thus throws up more questions.
• Taiwan at No. 2 is also interesting, as it is the one market where Skype has a co-branding agreement with an ISP.
  

All of this is very intriguing, but it is probably fruitless at this point to look for common triggers across these cultures for Skype uptake. It's probably part curiosity, part convenience, part social/viral, part generational and part economic, to varying degrees in each country. This in itself is a worrying message for the telco community, as it suggests that perhaps something more complicated than simple price/feature comparison is at work in the mind of the consumer (interesting in light of the savage price war which has just broken out between Vonage and AT&T in the US).

[1] USA - 10.33%
[2] Taiwan - 9.24%
[3] Poland - 8.78%
[4] Brazil - 7.24%
[5] Germany - 6.18%
[6] China - 5.89%
[7] France - 5.53%
[8] Netherlands - 3.50%
[9] Denmark - 3.07%
[10] UK - 2.94%
[11] Israel - 2.94%
[12] Japan - 2.61%
[13] Canada - 2.46%
[14] Belgium - 2.10%
[15] Spain - 1.82%
[16] Sweden - 1.76%
[17] Australia - 1.46%
[18] Italy - 1.44%
[19] Switzerland - 1.22%
[20] Mexico - 1.07%