Why Skype might help, not hurt, Windows Phone and Nokia with carriers
May 9th, 2012
There’s been plenty of talk that Microsoft’s purchase of Skype is hurting Windows Phone’s acceptance with carriers because they view Skype as a threat to their business. Recently, Nokia CEO Stephen Elop was quoted as saying that. But that’s only part of the story — Elop went on to say that Microsoft’s ownership of Skype will help Windows Phone, not hurt it.
The to-do about Skype hurting Windows Phone came about last week because of a blog post by Tomi Ahonen about the recent Nokia shareholder meeting. Ahonen said that a shareholder told Nokia CEO Elop that “Nokia seems to be having a problem with the distribution channel due to Skype,” and then asked what Nokia planned to do about it. Ahonen say that Elop admitted that carriers were reluctant to carry Nokia’s Windows Phone devices because of Microsoft’s ownership of Skype. Ahonen then quotes Elop as saying:
“If the operator doesn’t want us, it doesn’t want us. We will appeal to them with other arguments. We have more to offer to them. It is a good point to start the discussion from Skype.”
Why would carriers care about Skype? It’s because Skype could potentially eat into their bottom lines. When you make Skype calls, you’re using your carrier’s data plan, not its voice plan. Carriers charge more for voice minutes than for data, and so the more that people use Skype, the less revenue they get.
That’s the theory, anyway. But there are plenty of holes in the theory. Skype isn’t just available for Windows Phone; it’s also available for iOS and for Android. That clearly means that carriers wouldn’t discriminate against Windows Phone because it has Skype on it — all the big ones run Skype.
In fact, Elop went on to point out, Microsoft’s ownership of Skype could help Windows Phone with carriers, not hurt it. The MyNokia blog has a more complete transcript of what Elop said about Skype. Read the transcript, and you’ll see that Elop views Microsoft’s ownership of Skype as a competitive advantage, because Microsoft could work with carriers to ensure that Skype enhances revenue, rather than cut into revenue:
(Skype is) “on all Android devices, it’s on iPhone devices, it’s on iPad, it’s on all of those devices. So in fact what we’re doing with the operators is turning it around into an advantage. Instead of them just complaining about Skype on Android or Skype on iPhone, with Microsoft and Nokia, we can have a conversation that says “OK there, is this Skype thing, is there a different type of partnership we can do that recognizes that voice over IP like Skype is coming no matter what, but maybe we can do something creative that generates incremental revenue for you.”
In that case, carriers would favor Windows Phone over other smartphones because it would be the only operating system that generates revenue from Skype, rather than having Skype take away carrier revenue.
Although this might help Windows Phone, I don’t think it will make a dramatic difference. Windows Phone is still struggling to gain market share, and is around 2% or less in the U.S. Microsoft will need much more than Skype to make it a success.

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