Challange

IT University of Copenhagen

Case analysis:

Skype

By Martynas Jusevicius

& Rokas Firantas

B1 Strategic and Tactical Tools for E-Business

The case we are analyzing comes from 2005, and quite a lot has happened to Skype

since then. Therefore our case summary will be followed immediately by the

description of the current situation. In such way we can refer to both sources while

going through later topics.

Summary

Skype was founded in 2003 by Niklas Zennström and Janus Friis, who were also

founders of KaZaA. They released VoIP software that was based on P2P architecture,

had no problems with firewalls, provided high voice quality, and, most importantly,

was free of charge. That way Skype quickly reached a critical mass of users and

became a market leader. Later on, they started providing premium SkypeIn/SkypeOut

services that generate most of the revenue as well as hardware products in

cooperation with partners.

B1 Strategic and Tactical Tools for E-Business

Current situation

The main event for Skype after the period that is covered in the case was the

acquisition by eBay for $2.6 billion in cash and eBay stock, plus potential

performance-based consideration.

Skype has about 136 million registered users and 8 million concurrent users at peak

time and handles 7% of world's long-distance minutes [Wikipedia]. Skype has

released new versions (3.0 just a few weeks ago) of its software including new

features such as video calling, voicemails, chat rooms, SMS messaging, and click-tocall. Recently the company has announced free SkypeOut in France.

Skype started offering business services including conferencing, e-mail integration etc,

with configuration over Skype Control Panel. It has opened its API specification to

public, at least to some extent. It has announced world's first WiFI-VoIP phone in

cooperation with NetGear and is investing into wireless FON community.

Skype has been banned in several universities. Although we could...