Skype Case
Essay Preview: Skype Case
Report this essay
One characteristic of the VoIP (voice over IP networks) industry that stands out would be the way the industry charges for its services. Rather than charge by the minutes, like telephone calls, VoIP companies charge by the amount of data the customer uses. Services like Skype also charge a one-time flat rate fee, and this company allows users of Skype to talk to one another for free. Because VoIP is classified as information service industry, these companies do not have to adhere to any telecommunication laws, unlike their PSTN (public switched telephone network) competitors.
Threat of Substitutes: I believe that this is low for the VoIP industry, because this service is being used as an alternative to traditional telephone service.
Threat of New Entrants: Very high, because it is still a growing industry, and the computer powerhouses are now trying to become players in the industry.
Bargaining – Buyers: High, because it would be very easy to change from one free service provider to another.
Bargaining – Suppliers: Very low, because of the Internet Neutrality Laws
Rivalry: Very high, because Skype, for example, is challenging huge telecommunications suppliers and competing well, if not beating them.
Therefore, it is my opinion that this industry is currently profitable and will grow, because so many people are using computers and tables to communicate instead of phones. Companies need to mold to industry changes to stay competitive.
Some driving forces in this industry would be: consumer drive for the product, cost of the service, perks of being a member, ease of use, ease of communication.
Some key success factors are: embracing technology, keeping a loyal customer base, having a better product than competitors, focus on customers.
Skypes current strategy is to simplify its website for convenient and functionality for the end user. Skype also seeks to be a low-cost provider in the industry, and at the corporate level, they use an “accelerated growth plan” in the short term. This strategy helps them stay competitive in the industry.
In the short-term, I believe that Skype needs to improve their services and begin charging a small fee for their program to new users. This will allow them to profit off the many Skype to Skype calls that occur in todays global economy. In the long term, Skype needs to differentiate its product and continue to show customers how their internet communication is superior to phone communication and continue to improve its product.