Tuesday, August 10, 2010

The Skype Brand Disconnect


I must confess, I've never used Skype and know very little about it. However, despite my lack of familiarity with the service, I know what it means to "Skype" with someone. Skype owns the idea of live video chats and that's the most significant victory in any branding challenge.

But Skype has a major problem. The concept they own- its brand essence- is totally free. The only revenue is generated from users who make traditional phone calls to landlines and mobile phones- something they could do with their phone.

That disconnect between its brand essence and its revenue should be a major problem for any potential investor as it set out to go public yesterday.

I believe, the IPO is a clear signal that the private equity investors recognize the problem and are looking to cash out while they still can.

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