Skype was founded in 2003 and offers free voice calls over the internet using peer-to-peer software. It had over 100 million users by 2006 and revenue of $406 million in the first half of 2010. Skype allows free calls between users and paid calls to regular phones. It has faced challenges with network bandwidth usage, call quality, and lack of security reviews. However, partnerships with businesses and opportunities in mobility and bundled services could help it grow its enterprise and consumer business in the future.
2. A long time ago…
March 10th 1876
“Mr. Watson - come here - I want to see you.” -
Alexander Graham Bell made the first telephone
call to his assistant Thomas Watson
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4. Introduction
Founded in „03 by Swedish entrepreneur Niklas Zennstrom & the Dane Janus Friis
Software developed by Estonian developers who were initially part of P2P file
sharing software KaZaA
Offers Free, Unlimited, Superior Quality of Worldwide Calling via Next
Generation Peer-to-Peer Software
Revenue for 1st half of 2010 - $406.2 million
One of the biggest P2P success stories in the web 2.0 era
Skype is expected to be valued at $3 billion by the time it plans to launch its IPO
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5. The Skype story
Nov 2009: eBay
sells 70% stake in
Skype Jan 2008: Skype
available in
smartphones March 2007:
Paypal integration
into Skype client
April 2006: > 100
million users
Oct 2010: New Skype
for windows; with Dec 2005:
facebook news and Video
Phonebook telephony
launched
Oct 2005: eBay
purchased
July 2004: Skype
SkypeIN, SkypeOUT
, voicemail
Aug 2003: launched
Domain name
registered, s/w
Sept 2002: Initial released
VC investment in
Skype
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7. Product Offering…
SkypeOut
Place calls from PCs to any regular telephone
Charges as per call duration
Flat rate subscriptions
SkypeIn
Receive calls on PCs from regular phone subscribers
12-month subscription facility
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8. Product Offering
Skype for Business
Corporate use of Skype services
Business Control Panel (BCP)
Allocate credit to employees & monitor use
Skype for SIP & Skype for Asterisk
Connects VoIP based phone to Skype network
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9. Key strategies…
Low variable costs
No need of a large number of centralized servers
Users provided for bandwidth using their own internet connections
‘NO’ to overkill of advertisements
Lessons learnt from KaZaA
Viral marketing is the „in‟ thing
The long tail
Target end-to-end of the web by making its software available free on its website
35% of the business is generated from SMBs
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10. Key Strategies
SummitCircle.com
Focuses on Skype Phones and Add - Ons
150 products & communities
New Capabilities for VoIP App
One step ahead of Skype beta testing
Create an ecosystem similar to Apple‟s iPhone
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11. Key strategies
Skype Extras
Skype Developer Program
Skype Certified Third Party Applications made
available in Skype Shop
Skype Credit as payment
Third party developers working on hardware and
software compatible for Skype
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15. Business Model
Partnership
Acquirers
Telco Carriers
Relationship
Technology developers
Capabilities Community
Large user base
Create Value added service
Handle CC transactions
Connect to Telephone network Channel
Value Viral marketing
Proposition Skype Website
Free Skype Accessory partners
Activities VAS
Skype Out
Software development
Grow user base
Business Development
Customers
Private users global
Cost Structure
Developers Salaries
Revenue Structure
Success VAS subscription
Administration cost
Skype out payments
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16. ‘Free by itself is not a business model. But free coupled with a
compelling upgrade path to paid services, is!!’
19. VoIP services to Consumers & Small
Business
Categories Competitors Advantage over Skype
PC-to-PC • Standalone SIP-Based VoIP • Much smaller than Skype wrt
PC-to-Phone Providers Total Users
Providers (SIPphone, Deltathree’s • Savings on Long Distance
iConnectHere, Net2Phone) Phone Calls
• IM Services
(AOL’s AIM, MSN Messenger, Yahoo!
Messenger)
VoIP Services • StandAlone Players • Substitutes for Regular Fixed-
(Vonage) Line Telephony
• Cable System Operators • Cost Advantage
(Comcast, Cox) • Cox:
• Telecom Carriers Already owned networks
(Verizon, AT&T) End-to-End Managed Networks
Packets tagged for Priority
Transmission
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20. Distinguishing Factors of
VoIP Services
Interconnected calls to PSTN
Sent traffic over Public Internet
Savings on Long Distance Calls
Transmission Quality not reliable
Delays garbled the conversation
Solution
Private “managed” network carrying IP traffic
along protected paths
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22. VoIP : Critical Factors
• No of users
Network Bandwidth • Average Call length
• Average Call volume
Network Visibility • Applications using network
• Latency
Performance • Jitter
• Packet loss
• Timely response
Customer service • Proper account credit
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23. VoIP : Critical Factors
Regulations • Countries have different telecommunication laws
Security Issues • Use NAT
• CLEC and unregulated service providers
Notify Customers • Notify customers of limitations
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24. Industry Drivers
Customer Service
Cost reduction
satisfaction efficiency
• Reduction in • Service • Voice quality
phone costs connection time • Security level
• Reduction in • Network
bandwidth costs problems
resolution
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25. Hope for New Entrants
Facilities based competition
• Construct network using own facilities
• Install newest, most efficient technology
Unbundled network elements
• Own parts of network, eg. Local loop
Multi-level Precedence and Pre-emption (MLPP)
• Offer assured services
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26. Hope for New Entrants
Appease Governments
• Pay service tax, share revenue
• Follow regulations
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27. Challenges…
Technology related:
Skype‟s signaling protocols are closed and proprietary. Its code
has never been exposed to open source scrutiny
Initial reluctance to adopt the open SIP protocol, a standard in
the VoIP industry
P2P architecture puts a huge burden on users without NAT,
consuming network bandwidth even when idle
Automatic designation of Skype „supernodes‟ can saturate high
speed networks University site bans
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28. Challenges…
Service related:
Sound and video quality are not consistently good
Remote routing and low bandwidth often led to time
lags, dropouts and „fizz‟
Poor Customer support for premium commercial services
Troubleshooting solely depended on customer feedback
resulting in impractical workarounds
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29. Challenges
Privacy & Security related
Lack of peer review prohibits external security code verification
Skype creates a file called 1.com in the temp directory which is
capable of reading all BIOS data from a PC. It is used in the
identification of computers
By default, Skype also records data about calls (but not the
message contents) in a "History" file saved on the user's
computer
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30. Challenges
VoIP Regulations
China
Qatar Mexico
Oman
UAE USA India
Panama USA
Traditional international long distance calls is a major source of tax and foreign exchange
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31. Worst Fears
Coming under the purview of FCC and adhering to
traditional telephony regulation
Meet obligations to support law enforcement agencies
Wiretapping needs
Emergency services
Contribute to the Universal Service Fund
Pay access fees to ILECs @ 0.5cent/minute
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32. THE Tech Daily
www.thetechdaily.spj THE WORLD’S FAVOURITE NEWSPAPER - Since 1901
United Nations High Commissioner for Refugees Partners with Skype(Dec 2010)
KDDI and Skype Partner to bring a New Communications Experience to
Japanese Consumers (Oct 2010)
The New Skype brings people together like never
before (Oct 2010)
33. Skype + eBay = Disruptive
Technology?
Sept 2005 – eBay acquired Skype for $2.6 billion
Ease of communication
Pay-per-call
International expansion
Nov 2009 – eBay sold 70% stake of Skype for $2.025 billion
Buyers: Marc Andreesen‟s group, Silver Lake, Joltid ltd
Lack of synergies between Skype and eBay‟s e-commerce and online
payment business
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34. How is Skype a Web 2.0?
Software above the
Get better with more
The Long Tail level of a single
users
device
• Captured the • Skype did not need • Skype can operate
Consumer and a large number of everywhere from
Small Business centralized servers. the
Groups by offering Users provided Internet, mobile
free Worldwide bandwidth for the devices and
calls from PC-to-PC calls through their Televisions
own internet
connections
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35. Our Take…
Skype can develop enterprise focused business to compete with
companies like Cisco & others using its own technology
Desktop Sharing
Video Client
Conferencing communication
B2B-B2C
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36. Our Take…
Skype can provide Bundled Services such as cable television and
internet access to compete directly with companies like Vonage
Partnership
with Cable
TV
providers
Tie Up with
Internet
Service
providers
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37. Our Take
Mobility is the last anchor to the old way!
The next 10 years:
The Era of Rich Mobile Internet communications
Multi modal communications (original SIP vision)
Real time HD video, Data, Presence, Text, Wideband
Audio
Mash ups of web based communications
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38. Industry Reactions
Cisco with its inorganic growth strategy might
look to go for an aggressive acquisition of Skype
Google is already in the VoIP segment with
Google chat. It might look to acquire Skype
Vonage and companies in the sector will try to
make its services less expensive
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39. Thank You
Arunabh Sinha
Balaji Ramamurthy
Jemi Verughese
Johnson Chacko
Rucha Khale
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Notes de l'éditeur
The strategy has transformed Skype from an upstart rival into an ally of the major telecommunications players. In February, Skype unveiled a mobile application for use on devices carried by Verizon Wireless, the top U.S. mobile company by subscribers. The company has also developed programs for Apple Inc.'s iPhone and other devices as it more aggressively moves into the mobile world. In addition, it has signed deals with television manufacturers LG, Panasonic and Samsung Electronics to embed Skype technology in their products.
For example, if there were only 3 Skype users in the world and 2 were communicating, the 3rd computer would be taxed to support the application, even if not using Skype at the time. The large number of Skype computers means that this activity is diffuse, it can lead to performance issues on standby Skype users, and presents a conduit for security breaches
Managing customer relationship at Skype’s neck breaking global growth is an important challengeand may hinder its ability to attract mainstream customer segments. For example, on Skype’scompany-owned customer forums several threads discuss the firm’s ability to guarantee after-salessupport of credit-card-based purchases. Understanding and adapting to customer demand will be amajor issue if Skype wants to succeed in disrupting incumbents.
Several Middle Eastern countries had blocked VoIP traffic, including Oman, Qatar, and UnitedArab Emirates.Other countries, including Panama, had made special provisions to tax VoIP calls.20In late 2005, China Telecom was experimenting with systems to block PC-to-PC calling in majorurban centers.21 Likewise, Skype had been blocked by the leading Mexican telecommunicationscarrier, Telmex.22 In the U.S., a rural telecommunications carrier was fined in March 2005 by theFederal Communications Commission for blocking VoIP calls.23In what seems to be a blast from the pastthe Indian Government has once again set it’s eyes on BlackBerry maker RIM’s services for security reasons. What’s more is that this time it has pulled in Skype and Google too. The DoT has said that it will approach the companies and ask them to ensure that data transferred through their services is available to Indian Security Agencies. While RIM and Skype will be given a 15-day deadline to comply, Google will also be contacted to ensure that Gmail follows suit. They have not been given