Skype Readies Itself for IPO and Business Market

"Skype me" isn't as off-color as it sounds. Now part of the everyday vernacular among consumers, it may refer to asking someone to make a corporate phone or video conference call using the Web ... if Skype has its way, that is.

Created in Europe and headquartered in Luxembourg, the seven-year-old VoIP brand has been largely focused to date on consumers. Remarkably, over 93% of its 124 million users get a free ride, paying nothing for calling other Skype users, anywhere in the world.

Now, it's expanding focus to enterprise customers as it ramps up for a long-anticipated IPO.

Seeing the promise of a service that could expedite communications between buyers and sellers, eBay acquired Skype five years ago for $2.5 billion. But things didn't work out that way — eBay's constituents were happy with e-mail — so the giant online auctioneer sold 70 percent of Skype last year.

But now, Skype is looking to grow a different way. It is on the verge of offering stock, and needs to goose its business by penetrating the business market.

Tony Bates, Skype's CEO, joined the company in Octobe from Cisco, itself a world leader in networking and teleconferencing. According to a New York Times report, he's considering corporate phone systems and mobile devices new sources of revenue.

To be sure, Skype has already made some advances in the business space; it is partnering with corporate phone system company Avaya, bundling its video and instant messaging services with Internet-based phone systems next year. And it has just partnered with the United Nations High Commissioner for Refugees, using a "bespoke" low-bandwidth version of Skype to connect its personnel in 120 hardship locations.

Still, Skype faces challenges in the consumer-to-business migration. Skype isn't necessarily taken seriously as a provider of Internet-based corporate phone service; other competitors are better known. As for its IPO, while Skype hopes to raise some $100 million, its revenue model could be a problem.

Forrester analyst Charles Golvin tells the Times, "I find it hard to understand why an investor would feel enthusiastic about owning that stock when the prospects for revenue growth are dim. They may be growing revenue, but it's not like its growing to billions of dollars."

Bates, however, is appropriately optimistic. Skype, he says, is "universal, and useful and wonderful" and what the service does is "not easy to do on a global scale." It remains to be seen, however, how many business executives will be comfortable with the phrase, "Skype me."