Describe the environment in which Skype competes based on the three characteristics of high-tech markets (Chapter 1).
High technology market is filled with both promise and peril (Mohr, Sengupta, & Slater, 2010, p.4). There are three main characteristics of the high-tech environment, namely (1) market uncertainty, (2) technological uncertainty, and (3) competitive volatility (Mohr, Sengupta, & Slater, 2010, p.11) Analyzing the Skype case, it is clear that company’s greatest uncertainty is competitive volatility, as there emerged a wide range of companies that provide VoIP call services. The other threat the company faced is market uncertainty, as it was reported that only about 20% of the registered customers use their accoutns actively. Thus, charging new fees may not increase the revenues as expected.
Given the technological uncertainty present in the VoIP mobile market, would Skype be likely to emerge as the leader? Explain your reasoning.
Technological uncertainty refers to the main challenges a new product may face in the market. On the one hand, VoIP allows Skype users to make free Skype-to-Skype calls via the Internet, or even call to any landline or mobile phone for some fee. This option to connect people all over the world is a great advantage. But on the other hand, it is a disadvantage, as VoIP works only when connected to the Internet. Not everyone has an access to the internet; moreover, this service is not always free of charge (IPSmarx, n.d.). Thus, cellular connection still has its advantage against the Skype.
Would VoIP be considered a disruptive technology by wireless carriers? Explain.
Voice-over-Internet Protocol (VoIP) is used to allow people easily communicate with each other at any place in the world. This technology is comparatively cheap, as calls via internet are free and others are relatively low. Thus, the VoIP high technologies were considered to be disruptive for regular telecommunications (“How the internet killed the phone business”, 2005). Nevertheless, they did not end the era of landlines or cellphones but rather boosted their development.
Collect current statistics regarding the number of VoIP users. At what stage of the adoption-and-diffusion process is this technology?
As it is shown on the graph below, the total number of the VoIP users all over the world increases.
Graph 1. Total number of VoIP users.
Source: http://www.statista.com/statistics/267183/forecast-for-the-worldwide-voip-traffic/
After its introduction, VoIP was considered to become a technology of the future and most experts expected the transition from analogue and paging to VoIP-based systems (Davies, 2015). Currently, this technology still remains on its early majority stage of adoption, as more and more companies implement it for their services.
What would be an ideal beachhead for Skype to focus its efforts on?
Considering all the challenges mentioned in the case, there were offered three options for the further Skype business models. They were a New pricing model, that suggests to start charging for the most commonly used skype-to- skype internet calls; a Mobile Model, that advised to produce a unique Skype cell phone with a hot button for one-click calls via Skype program; and a Business model, which suggested to focus on advertising (Mohr, Sengupta, & Slater, 2010, pp.486-487). I believe, the most beneficial for the company, will be a Business model, as it will bring extra earnings for placing commercial adds in the Skype accounts. Taking into account constantly increasing number of the firm’s clients, lots of companies will be interested in placing their adds with Skype. This will also protect the company from loosing its loyal clients because of possible fees charged.
What are the elements of a whole product solution for VoIP? What are the implications for Skype in terms of crossing the chasm?
At its earliest stages, VoIP technologies of the Skype company were demanded due their ability to provide a comparatively cheap cross national connection. However, rapid development of the IT technologies and necessity to share the information made the Skype services more desirable for an average customer, which helped the company to cross the chasm. Thus, a whole product solution for a VoIP in Skype lies on the following: easy accessed internet, high quality video and telephone connection, cheap pricing, easy in access and use.
What are the pros and cons of Skype’s selection of a proprietary Voice-over-Internet Protocol?
For many years Skype remains the world largest VoIP provider, thus any similar technologies are mainly associated with the company itself (Davies, 2015). Hereby, it provides the company with numerous advantages and disadvantages. Choosing a proprietary VoPI technology may serve a good advertisement and increase company’s value, but at the same time any failure in the quality of the technology adopted (as it was when a glitch with Microsoft programs occurred in 2007) may have negative consequences or Skype as well (Mohr, Sengupta, & Slater, 2010, p.486).
What are the characteristics of a business that can successfully implement an advertising-based business model? Does Skype possess those characteristics?
As it was reported previously, the number of Skype clients increases from year to year. Similarly to any other social networks, Skype is called to satisfy the need to share the information and to communicate. Hereby, the company has an access to a large audience, which is important in case its management will implement an advertising-based business model. However, Skype lacks some options, which other socials enjoy (i.e. online selling\purchasing), hence it cannot expect the same large revenues from advertising. Still, eBay as a PayPal owner may later develop this feature.
a. Analyze the pros and cons of the three alternatives discussed in the case for Skype to generate revenue.
b. What other strategies are available to Skype to generate revenue? Assess their pros and cons as well.
c. Make a recommendation for a viable business model for Skype to succeed.
a) Price based model would allow the company to increase its revenues in short period, but in long perspective Skype could have lost a large number of its customers, as competitors would still offer free internet calls. A mobile model could give the company a great advantage against its rivals, as no other similar company could offer any gadget. However, expenses on the producing of the mobile phone, its regular upgrading, Internet fees would have eaten all the profits. A Business model might bring new income without large costs spent on its implementation, but the number of active account users is too small.
b)Skype may also use some referral (affiliate) model so that to increase the number of its clients. On the one side, it will cost the company to pay the bonus for each referral brough. But on the other side, the more clients use the service, the higher incomes and new possibilities are expected, like implementing the aforementioned business model.
c)The company should also consider an ability to cooperate with PayPal on implementing the opportunity for on-line purchases via Skype.
Is Skype likely to become the moneymaking machine that eBay envisioned? Why/Why not?
Considering the fast developing technologies and their popularity among average customer, VoIP will remain highly demanded for the next few years. Therefore, it is an opportunity to be seized by the Skype, as it is now the largest company associated with VoIP technologies. There are lots of business models, which may be implemented within a company for its further success in the market. However, the firm should develop in a line with the modern tendencies, otherwise it may not survive the competition.
References
Mohr, J., Sengupta, S., and Slater, S. (2010) Marketing of High-Technology Products and Innovations. 3rd ed. Upper Saddle River, NJ: Pearson Education, Inc. ISBN-13: 978-0-13-604996-8
IPSmarx (n.d.)9 Reasons why Skype, WhatsApp and Viber Do Not Undermine Your International Calling Service. Available at: http://www.ipsmarx.com/blog/9-reasons-why-skype-whatsapp-and-viber-do-not-undermine-your-international-calling-service/
How the internet killed the phone business (2005) The Economist. Available at: http://www.economist.com/node/4401594
Total number of VoIP users. (2016) Available at: http://www.statista.com/statistics/267183/forecast-for-the-worldwide-voip-traffic/
Davies, D. (2015) The rise of VoIP: standalone vs. integrated. Available at: http://www.installation-international.com/rise-voip-standalone-vs-integrated/
