David vs Goliath

How can you sell 45% cheaper than Skype?
Why doesn't Skype just lower their rates?

I get those two questions all the time. Everyone is surprised to learn how low our rates are.

Both questions are related. I started using Skype in 2005. Their rates have not decreased since. Even worse, they added a connection fee in 2007. Skype is not a startup anymore. They have become a giant. They are bigger than all the other VoIP companies combined. They got big because they were competing with the giant telcos with very low rates. But now, in the VoIP world, they have become the giant. Their snowball got too big, it just stopped.

Skype's goal is now to go for an IPO. They won't lower their rates because they cannot afford to. A company that goes for an IPO needs to show steady increases in revenue. They cannot suddenly cut their revenue by 50% to have a successful IPO. Since the people making the decisions are the ones that want to make the big bucks, they will never even consider lowering their rates unless they can prove it will attract more users to compensate. Skype won't lower their rates for exactly the same reasons the big telcos aren't lowering theirs. It's because they are making more money by keeping their rates high even if they do loose a few users.

Tribair represents the next generation in VoIP companies. It's actually the start of a new generation of companies in all sectors of the economy. In the old days, companies were getting bigger and bigger because it was cheaper to do the work in house than to outsource it. Companies like GM became as big and diverse as small countries, offering all kinds of services and producing all kinds of goods having nothing to do with their core business. Big companies are now turning around, as soon as they can outsource something for less money, they do. Companies are now shrinking. Some companies like Coca-Cola don't even produce and bottle their own product, it's all outsourced. They only have marketing left. Where will it stop?

Tribair can offer rates 45% cheaper than Skype because it's smaller and because it takes a much smaller investment to launch an international telco in 2010 than it did a decade earlier. Goods are going to continue to get cheaper, because the Internet makes it cheaper to produce, market and distribute. The new generation of companies can quickly take advantage of the Internet to undersell big companies and quickly gain significant market share. There will be more and more small and aggressive companies, the future will look a lot more diversified.