Entries tagged with “arpu” from Paul Lopez Unwired
I believe there will be a continued demand for unlimited service rate plans in the $40-$60 per month range such as those being offered by providers like MetroPCS, Tracfone and Boost Mobile. The low-end market of pre-paid plans as grown to over 22% of the total market vs. 16% three years ago, according to Sanford Bernstein. Martin Peers from the WSJ picked up on my idea that we could see the Google Nexus show up heavily discounted to compete in this prepaid space. Meanwhile the major carriers struggle to grow ARPU in spite of increased costs due to bandwidth "hogs." Even Verizon's CTO, Dick Lynch says metered billing would benefit most consumers because they would not be subsidizing others. With plans to move to LTE by AT&T and Verizon, I see that exacerbating the problem. You provide faster water through the spigot; the users want to drink more water. Carriers and handset makers have created an addiction for what will become an expensive habit. The question is will users trade down-market for cheaper service instead of staying top-shelf at pure 4G.
Janus Friis acknowledges that they are happy with the settlement in their earn-out which would have been as much as $1.7 billion, now they only get 1/3 of that amount or $530 million. Not too bad for two years (eBay acquired Skype in September of 2005). Back then, Skype had 52 million users and only about $60 million in revenue. eBay should sell the rest of it, the reduced earn-out means eBay did not see the results they were looking for. Friis and Zennstrom are talking up Joost and want to move on from Kazza and now Skype. I don't blame them; they are entrepreneurs to the core. I didn't understand why eBay bought Skype in the first place; it seemed like a stretch valuation at the time. Skype has a loyal following and strong base of users, the only problem is attaining profitability in a venture designed to provide cheap computer-based phone service. Even with 220 million registered users, the add-on services eBay introduced have been unable to generate profits. Skype is more of a supplemental service rather than a replacement for fixed line telephony. According to Forrester, Internet phone usage only makes up 10% of the total retail phone market. Even though the usage is growing, the ARPU is declining rapidly. That makes for a flawed business model. I've said before, Zuckerman should take the money, Microsoft may mull over their $500 million investment in Facebook.
About Paul Lopez
Paul Lopez is a 25-year technology veteran whose career has spanned multiple disciplines such as product management, software development, engineering, marketing, business development and operations... read more
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