...of the most popular Swedish international companies is the well-known enterprise Skype. It allows users from all over the world to communicate with each other via the Internet from their computers, tablets and mobile devices making video and voice calls, sending instant messages and even sharing files. The company was founded in 2003 and its international headquarters are located in Luxembourg. Its annual revenue nearly amounted to $ 2 billion in 2013 and although it counted more than 560 million of registered users by the end of 2009 it has only between 1.000 and 5.000 employees. In fact, in one day in March 2013 Skype users spent more than 2 billion minutes connecting with each other and 300 million of users used Skype on a monthly basis in August 2015. Furthermore Skype is a software business model with very low fixed costs and hardly any capital requirements. Moreover the free Skype-to-Skype calls cost the company nothing to provide and the word-of-mouth advertising significantly reduces user acquisition costs. As the core features of Skype, namely the Skype-to-Skype calls, are for free, Skype makes money mainly through Skype credits or monthly subscriptions. These credits allow Skype users to make low cost calls to mobile phones or landline phones, send text messages or purchase a Skype number in order to receive calls from anywhere in the world on one’s Skype account. In addition Skype also made money through a few other channels, for example selling related products...
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...1. 2. Skype’s business model is illustrated in Business Model Generation (98-99), but the identification of customer segments and the value proposition are rather brief and generic. Prepare a more detailed Business Model Canvas for Skype based on the information provided in the case. Key Partners * Payment providers (Visa, Master, PayPal) * OS developers (Windows, Linux,) * Third party websites which provide downloadable software * Hardware manufacturers (Logitech, Plantronics) * Landline and mobile service providers * ISP’s Key Activities * Software Development * Skype.com maintenance and promotion * Service provisioning * Infrastructure Development Value Proposition * Free video and voice calls, IMs, and File sharing with other Skype users. * Cheap option to * Place calls to landlines and mobiles. * Receive calls from landlines and mobiles. * Do Group video calls Customer Segments * Anyone who wants to make free pc to pc calls. * Anyone who wants to communicate using video. * Anyone who want to access inbound phone calls from their pc. * Anyone who wants to make outbound calls to landlines or cell phone. * Businesses who want to incorporate VoIP into their own offering. “Click to Talk” * Anyone who wants a low cost additional phone line. Key Resources * Software Developers * Technical Architects * Servers * Client Software * Skype.com * CRM staff ...
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...Case Analysis: Skype v AT&T and the Future of Telecommunications Patrick LaCross MBA 710 General Skype was first released in 2003 by its designers, who had a vision of connecting the world with a simple, inexpensive form of communication via the Internet with no limitations on time of day or day of the week. Their original mission was “to enable the world’s conversation. This has changed over time as they try and achieve various objectives, such as continue to be the leader in the transfer of communication from hardware to software, and goals such as increase and maintain similar levels of revenue and company growth, all while maintaining their low rates or free-of-charge services. However, their mission is to preserve their status as “the fabric of real-time communication on the web. Corporate Governance Corporate Responsibility SWOT Analysis Strengths One of Skype’s greatest strengths is that it has always been a pioneer of international telecommunication. Weaknesses Opportunities In 2010, Skype only had 1% of VoIP industry market share in the United States, a huge area for growth opportunity. Threats SFAS Suggested Course of Action 1. As a personal adviser to Silverman and the rest of the Skype team, what would you recommend their next move be to continue the growth of Skype (collaborate with cell phone providers, restructure price, change advertising)? I would recommend that Skype collaborate, merge, or form a partnership with a major cellular...
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...Skype vs At&t Case Study 1. What are the dominant economic characteristics of the VoIP Industry? PSTN charges based on minutes or even seconds while VoIP charges based on data usage. VoIP services often charge a flat fee and in Skype’s example, they offer free talk between Skype users. VoIP is also inexpensive to operate as the infrastructure is already there. VoIP is also considered part of the information service industry and not the telecommunication service industry giving it an advantage politically against PTSN (compliance with telecom laws). Against PTSN, VoIP is expected to grow substantially and is eating away at the market share of PTSN. 2. What does the five forces analysis reveal about the chances for profitability in the VoIP industry? (Prepare a five forces analysis) Threat of Substitues: Substitute for VoIP is low – as it is a substitute for PSTN Threat of New Entrants: The threat of new entrants is high in this market. As a rule in economics, companies will enter this market until there is a profit to be earned. Companies like Microsoft, Google, and AOL are just a few that are planning to compete in the VoIP market. Bargaining power of Buyers: The bargaining power is moderate because of the ease of switching to other companies. Customers are “fought for” among competitors. Bargaining Power of Suppliers: Weak- Limited bargaining power – VoIP providers are widespread and infrastructure is readily available. Net neutrality laws...
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...1. INTRODUCTION Skype is an eBay company founded in 2003 that created voice communications software that allows users to communicate with people around the world via the internet. (Skype Limited, 2007) “Their particular spin has been to create a business model in which the basic service is free.” (Gosling, 2006) 1.1 Problem The problem is that this is not new software or service as other phone service providers offer the same or similar service. They must show how their service will outdo the rest. 1.2 Purpose The purpose of this case study is to explore what makes Skype different from its competition by analyzing the strengths and weaknesses of the company and by determining the opportunities and threats they may face. 2. SWOT ANALYSIS 2.1 Strengths Skype has several advantages that place it above its competition. First is the cost advantage to users. It’s free. That is if the person you’re calling is a Skype user as well. But if they are not, then calls placed to normal phones or mobile phones are charged a very low price. Typically this cost is about $0.02 per minute for calls made in the USA. (HL7 Systems & Services, 2007) Second, Skype has no expenses associated with marketing and advertising. With more than 25 million registered users, Skype’s reputation was built mainly by word of mouth. (Gaskin, 2005) Therefore, unlike their competitors, they don’t have to spend money trying to find customers. Third would be the “user-friendly” set up and configuration...
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...Sheree Starr Strategic Management-5480 Florida Institute of Technology Dr. Uchenna Nwabueze April 07, 2013 Executive Summary Major Player’s in the U.S Voice-over Internet Protocol market namely Comcast Corporation, Time Warner Cable, Cox Enterprises and Vonage have embraced internet technology and wireless broadband making VOIP one of the most sought out service. Skype’s partnership with AT&T only fuels the boost usage of Voice- over Internet Protocol usage over land line usage. In the wake of these technology advancements, it became clear to entrepreneurs that offered voice traffic and internet service would be one of the next major applications to take full advantage of Voice-over Internet Protocol. There are more advances than innovations in the VOIP world. That’s because some of the most important developments had more to do with commercial and political maneuvers than with technical creativity. One of the most prominent developments was net net neutrality which enables user access to participating networks that advocates no restrictions to materials throughout the modes of communication allowed online ("The mobile World," 2011, para. 4). Further, this industry also have to consider pressures influenced by the government ( FCC) that could dismantle net neutrality by limited user access as well as decrease the power of big wireless communication giants like AT&T. Still, such maneuvers often helped spread the benefits of VOIP much more than technical innovation...
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...SKYPE In the hands of eBay, Silver Lake, and Microsoft Larry Fan, Aly Kassim-Lakha, Betty Liu, Cristina Peruyera, and Kimberly Yao December 12th, 2014 Professor Emilie Feldman MGMT 249 Fan, Kassim-Lahka, Liu, Peruyera & Yao | MGMT 249 Executive Summary Skype was founded to build and provide a telecommunications application, and despite many changes in ownership, its core business has not drastically changed over the years. Over the past decade, Skype has seemingly thrived to varying degrees under the leadership of eBay, Silver Lake Partners, and now Microsoft. The different visions each acquirer had for Skype and its integration made all the difference in Skype’s value at each stage. In the following paper, we will investigate how each of the three companies chose to acquire, integrate, oversee, and potentially divest Skype, and thus unlocking or creating value through the process. By analyzing information databases and news archives regarding Skype as well as utilizing course frameworks and scholarly papers discussing merger and acquisitions, we will argue that Microsoft has been more successful in integrating Skype than eBay has, though Skype’s long-term success in the hands of Microsoft remains uncertain. In addition, Silver Lake Partners was able to unlock value in Skype using a different set of perspectives as a financial acquirer. Throughout it all, Skype has continued to innovate and provide free services to millions of users globally. Introduction In 2002...
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...Overview: Skype is a global player in the telecommunications industry. It offers its customers Voice-over Internet Protocol (VoIP) service, which is telephone via an Internet connection. These services include but are not limited to; instant messaging; voice calling; video calling’ short message services using a number of product platforms available at any time a user might want its services.. Skype uses the internet at its main platform leading the communication transition from hardware to software. VoIP calls are billed per amount of information sent over the Internet; Skype users communicate for free with other Skype users and pay only a small fee for long-distance calls to landlines. Key Issues and Assumptions: VoIP’s market share in the overall global telecommunications market is still minimal, which had a roughly 5% market share by the end of 2010. For Skype, the main issue internally is the mismatch in the relationship between revenue growth rate and company growth rate. Growth in revenue shrunk from 685% in 2006 to 37% in 2008. Skype executives have realized that the main reason for the flattening in revenue rates is the company’s cheap international calling rate and the free user-to-user calls and videos. Furthermore, VoIP is still a small competitor in the industry, but competition in the industry is increasing rapidly, and Skype needs to determine how to remain an industry leader. There is a question if consumers will begin to look at expanded VoIP services...
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...SKYPE Vs AT&T AT&T Overview The American Telephone and Telegraph Company (AT&T) was incorporated in New York in 1885 as a subsidiary of the American Bell Telephone Company. AT&T’s corporate charter laid out the firm’s mission: “Connect one or more points in each and every city, town or place in the State of New York with one or more points in every other city, town or place in said State and in each and every other of the United States, Canada and Mexico; and each and every of said cities, towns and places is to be connected with each and every other city, town or place in said states and countries, and also by cable and other appropriate means with the rest of the known world.” AT&T began building its network out from New York in several directions. The first line, to Philadelphia, opened in 1886. AT&T reached a major milestone in 1892, when it began telephone service between New York and Chicago. Keeping pace with the growing demands for telecommunications required continuous innovation, improvement and expansion in each area. Transmission media evolved from open wires to cable, coaxial cable, microwave relays and to fiber optics. Skype Overview Skype was built by Sharman Networks after they bought Kazaa, a file sharing program from Niklas Zennstrom of Sweden and Janus Friis of Denmark. Skype leveraged the same type of peer-to-peer networking idea that Kazaa was built upon, but applied it to voice transmission instead. The idea was that the more people that used Skype, the...
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...AT&T Vs. Skype Elmo Scuby DeVry University Keller School of Business Author’s note This analysis will identify the key issues revealed in the case study, “Skype vs. AT&T and the future of telecommunications” (Strickland et al 2011). The analysis will explore the current state of the telecommunications industry with the rapid emergence of the Voice-over Internet Protocol (VoIP) technology, wireless communications and the effects on traditional landline or what is known as Publicly Switched Telephone Network (PSTN). This effort will look into current problems and successes with increased focus on AT&T and Skype. Additionally, this paper will attempt to provide a perspective on the key issues with assumptions of what some of the causal factors may have been. Finally, what the companies’ leadership may consider for the future. Prior to examining the key issues of Skype and AT&T, what is Skype vs. AT&T? Skype was currently one of the industry leaders in VoIP and desired to challenge AT&T and other large phone companies. The telecommunication business is certainly going through a technological revolution with increased demands for faster speeds and services. Additionally the infrastructure is in demand to grow with the customer needs. AT&T along with several other landline based companies owned a major portion of the Internet infrastructure. Skype requires access to the Internet by way of Internet Service Providers (ISPs) in order for Skype to provide...
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...network providers. Skype is a pioneer in the voice over communication network. It is the most popular voice communication service in the world. I am interested in learning what Skype is and the many function it has to offer. Skype was built by the designers of Kazaa person to person network and is based on the fast track network that underlies the Kazaa network (3). It was founded in 2003 and based in Luxembourg. In 2005 Skype was acquired by EBay and in 2009 an investment group led by Silver Lakes purchased the company. Microsoft the worldwide leader in software purchased Skype in May 2011 with hopes to take it to a new level (2). Over the past few years I’ve heard a lot of people talking about this new way of communicating with friends and family via the internet, phone, or tablet. What really caught my attention was when they told me that you are able to see the person that you are talking to and it’s in real time. I thought that was fascinating. But, what really drew me in was when I was informed that the service was free! I intend to give a brief explanation of how Skype works and the different option that are offered to the costumer. In doing this I will go over the advantages and disadvantages of this technology and what’s being done to correct the deficiencies. The major questions that will be address is can Skype eliminate the two major issues that come up when operating a VoIP program? This is network performance and information security. Skype is a technology...
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...Nowadays, it is crucial to adapt to new changes. Innovations have an important impact on our life. I really believe that Skype is a very useful innovation. In fact, it is a new way to communicate for free anywhere in the world. I am an international student and I like talking to my family or friends anytime for free. According to Rogers, there are five attributes of innovation: Relative Advantage, “is the degree to which an innovation is perceived better than the idea”. It is the possibility to stay connected to people anywhere in the world for free. We can keep in touch with our family and friends and is very important when we are far away. Compatibility, “is the degree to which an innovation is perceived as being consistent with the existing values, past expectations and needs of potential adopters”. Skype is compatible with societal norms and standards. People become more independent and travel a lot. That is why Skype is the perfect solution to stay connected to people around us. Complexity, “is the degree to which an innovation is perceived as difficult to understand and use”. It is easy to use Skype. People can download the software for free on the Internet and use it immediately anytime, anywhere. They only need to create an account and have great Internet connection. Trialability, “is the degree to which an innovation may be experimented with on a limited basis”. The free software and talk influence the trialability. It is so much easier for people to use it because...
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...Executive Summary This report was written to analyze the competition among the Voice-over Internet Protocol (VoIP) industry segment, especially as it relates to the relationship between Skype and AT&T and the competition between the VoIP market and the land line market. In analyzing this segment we found that VoIP is a growing industry in what has historically been predominately a land line telecommunication company such as AT&T. The industry segment is faced with a rivalry type competitive market that is currently being influenced by federal government through the Federal Communications Commission (FCC). This agency is considering a new law (Network Neutrality) on the websites that would decrease the power of big telecommunications companies like AT&T. The segment may feel continued pressure from substitutes in the form of other retail segments, but this should not have a strong effect on the over-all competition within the industry. The biggest difference between the competitors was that AT&T used traditional telephone, is run through a public switched telephone network (PSTN) and was much more expensive. Skype offered its customers VoIP, which, defined simply, was the transmission of voice traffic over IP-based networks. In other words, it was telephone via an Internet connection. VoIP is expected to show constantly increasing growth rates in the near future. According to a report by Infonetics Research, the global VoIP services market had reached $15.8 billion in 2006...
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...Case Analysis Paper AT&T Vs. Skype Author’s note This analysis will identify the key issues revealed in the case study, “Skype vs. AT&T and the future of telecommunications” (Strickland et al 2011). The analysis will explore the current state of the telecommunications industry with the rapid emergence of the Voice-over Internet Protocol (VoIP) technology, wireless communications and the effects on traditional landline or what is known as Publicly Switched Telephone Network (PSTN). This effort will look into current problems and successes with increased focus on AT&T and Skype. Additionally, this paper will attempt to provide a perspective on the key issues with assumptions of what some of the causal factors may have been. Finally, what the companies’ leadership may consider for the future. Prior to examining the key issues of Skype and AT&T, what is Skype vs. AT&T? Skype was currently one of the industry leaders in VoIP and desired to challenge AT&T and other large phone companies. The telecommunication business is certainly going through a technological revolution with increased demands for faster speeds and services. Additionally the infrastructure is in demand to grow with the customer needs. AT&T along with several other landline based companies owned a major portion of the Internet infrastructure. Skype requires access to the Internet by way of Internet Service Providers (ISPs) in order for Skype to provide their VoIP service. ...
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... the plan for competing successfully in only a single industry environment is deemed the business strategy. On the other hand, top executives at a diversified company are required to employ a companywide corporate strategy to help improve “the attractiveness and performance of the company’s overall business lineup and for making a rational whole out of its diversified collection of individual businesses.” It can be said that Skype entered the market as a new entrant at the most opportune moment. Venture capitalists provided Skype with an estimated $18.8 million to fund the company aiming to create a global product, provide a well-needed technological service, and deliver scalability. One of their main success factors was their method of penetrating the market. Skype decided to simplify its website with the goal of functionality and convenience. Furthermore, Skype’s’ advertising and promotion strategy depended on the users to spread the word of the product. This was an important aspect of their strategy as it minimized their operating costs. Skype current strategy involves being a low-lost provider. Their current strategy employs an “accelerated growth plan” for the short term. The following table shows the 3 phases involved: Table 1: Skype’s Accelerated Growth Plan PHASE | STATUS | STRATEGY | Phase 1 | COMPLETED | Become operational on at least one platform (PC’s), at least one revenue stream (SkypeOut), focus on one market segment...
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