Case Study

Paul Dawson

Agenda

Business Model Background Core Technology Revenue Stream Performance Competitive Advantage & Marketing Competition Growth Strategy Questions

Business Model

Service that allows for calling through the internet.

B2C Pure Digital Model for Core Service

Background

Founded in 2003 by Niklas Zennström and Janus Friis.

Goal was global change in the way calls are made

Core Technology

VoIP– First transmissions in 1973– Internet phone software offered to the public by

Vocaltec in 1995– Broadband infrastructure not available or widely used at that time

• Peer-to-Peer– Utilized by other file sharing services– Software combination allowed for clear, reliable

calling

Revenue Stream

Freemium– SkypeIn– SkypeOut – SkypePlus

Hardware– Webcams– Headsets

Performance

Nine million registered users in the first year Over one billion registered users in 2013 280 million active daily users on average Two billion call minutes per day on average Acquired by Microsoft for $8.5 billion in 2011

Users

Competitive Advantage and Marketing

Superior call quality– Sophisticated routing– Quality Servers

Marketing Strategy– Customers refer the service to their friends– Metcalfe’s law of network value

Competition

Disruptive Technology– As of September 2013 telecommunications operators were

losing roughly $100 million per day in revenue due to Skype and other similar services.

Traditional phone providers have reduced fees and bundled phone service with cable and internet.

Google Voice offers free VoIP to non VoIP calling for US inbound calling

Market Share

Growth Strategy

In 2011 Skype partnered with Comcast to allow subscribers to do videoconferencing through their Television sets.

In 2013 Skype offers free video messaging service for Windows and Mac OS, iOS, Android and BlackBerry

Question 1

Skype’s success can be attributed mainly to:

a. Aggressive Marketing

b. Superior call quality

c. Being the first provider of VoIP calling

d. Competitive pricing

Question 2

Skype’s core business model is best described as:

a. Bricks and clicks

b. Brick and mortar

c. Cloud computing

d. Pure digital

Question 3

Skype benefits from which law?

a. Network value

b. Law of attraction

c. Moore’s law

d. 5 second rule

References

http://gigaom.com/2011/06/13/comcast-skype-video-chat/ http://www.emory.edu/BUSINESS/readings/skype/eBay-Skype.pdf http://www.engadget.com/2013/06/17/skype-video-messaging-launches-free-

unlimited/ http://www.inferse.com/8940/microsoft-skype-serious-threat-telephone-operator

s/ http://www.nytimes.com/2009/09/02/technology/companies/02ebay.html?

scp=8&sq=silver+lake++skype&st=nyt&_r=0 http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Metcalfe_s_law.html http://www.techbusiness.me/files1/skype.case.pdf http://www.voipinsights.com/voip_history.html http://online.wsj.com/news/articles/

SB10001424052748703730804576314854222820260?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052748703730804576314854222820260.html