At&T vs Skype Essay

This analysis provides an overview of the current and prospective opportunities for Skype, a Voice-over Internet Protocol (VoIP) corporation. The pass over finds that Skypes revenue has hangd dramatically in the last trio years mainly due to the add in competition. Josh Silverman, chair of Skype, realizes some decisions must be made in order to outride an industry leader. The compeverys current issue jut out dodging implicates three phases. Phase 1 though already completed, was to become available on at least one platform, with one revenue system, and snap on one securities industry with one primary service.Phase 2 consist of developing many platforms, diversified revenue streams, many converse modes, many regions and market targets. Phase 3 encompasses multiple market segments, realized products, regional ubiquity, and mature target markets. Though Skype is surface developed in that respect atomic number 18 still potential ontogeny opportunities. These opportuni ties include expansion of brisk calling thinks and prices, incenting existing users to sell Skype to new users and collaborating with cell telephone providers. With the market growing rapidly the conterminous phase taken by Skype is polar in their development. By using the current opportunities Silverman can advance the company as well as attack other providers in the industry. compend OF CASE FACTSSkype is a software application that essentially allows users to use any telephone or video league go over any internet connection. This transmission is called VoIP (as shown in Appendix A) and because of the reasonable long-distance call and local call packages this selection has become an attractive economical alternative to landline or traditional cell phone mean. Josh Silverman, president of Skype, is faced with making the next strategic move that give put Skype in a remediate position to successfully compete in the telecommunications industry. In order for Silverman and his lead team to proceed with the next steps it is recommended that they first assess the economic environment.It is important to understand the economic environment that it currently has, as well as the predictions for growth within the industry. Finally, Skypes key success factors (KSFs) include cost, building relationships with quick operators, globalization and word of mouth promotion by existing users. If Skype can focus on one of these KSFs and be uniquely diametrical where it sets them apart from rivals then Skype will continue to look at growth in users and revenue. In terms of market size and growth rate, The VoIP market increased 66% from 2005-2006 with a projected continual increase of growth for decade upwards of 150%.This growth was due to the inclusion of an expansion to other ways of utilizing VoIP services. From internet to cell phone usage, the forecasts called for VoIP applications to make $32.2 billion in profit with over 270 million users. As of 2009, Skype would non be considered a major competitor within the VoIP Market. Comcast Corporation, which held 31.5% of the market, was the leader by 15.3%. Time Warner was in second with 16.2%, and Cox Enterprises, Inc. at 9.6% was only 1.3% forrader of Vontage Holdings Corp. with 8.3%. The rest of the market, which was considered as other, encompassed 34.4% in which Skype captured a small share. totally of the major competitors growth rates from 2005-2009 were declining rapidly. For Skype, this was good news because the projections in growth of U.S. and Europe users from 2005-2011 showed 17% increase in the U.S. and 37% increase in Europe.Although major players had a traditional stronghold on the telephone industry, Skype services created a important technological pull that provided a major change over in the macro environment for these majority companies. In addition, the transition from PTSN to VoIP technology also sparked regulatory and social conversations of change. And according to our textbook, since macroeconomic factors affect different industries in different waysit is important for managers to determine which these represent the most(prenominal) strategically relevant factors (Thompson, Peterraf, Gamble, Strickland, 2012). For Skype, this environment was ripe with opportunities for growth, and the company decided to strategically chart their progressive growth into diversification through a phased plan incorporating the one to any platform functionalities. In addition, Skype would need to be pertain about new technology which provided potential new entrants an opportunity to sort out market share. The VoIP industry is in the growth stage of the lifecycle process in 2009. The landline telephone market is in decline due to f the attractive and less expensive option of VoIP technology, which can utilize the change magnitude amount of cheaper internet connectivity. Other markets such as the cell phone market are starting to introduce technology that ba sed on current projections over half of the cell phone market will be VoIP based technologies by 2019. Skypes virtual market encompasses a global dodging due to the unlimited potential and increasing deployment of part optic networks internationally. The barriers to entry are reasonable because they already have achieved substantial growth and success within one platform. Additionally, gaining admission price to technologies through innovation, acquisitions, and mergers are ways to go from their one to any platform in the future. The club to work to establish itself in markets that are emerging, and where other players have not focused.STRATEGIC ISSUES AND KEY PROBLEMSSWOT analysis, see Appendix B was performed spotlight the positives and negatives within the company. Skype has succeeded in the market primarily due to aggressive pricing. However, the competitory pricing also puts Skype at a disadvantage. Although Skypes growth rime show a 47%, 72% and 61% increase in register ed users, Skype minutes and Skype out minutes, respectively, in fourth quarter of 2008, Skype witnesses a decrease in revenue growth, 46% to 26% from Q308 to Q408, respectively.The company uses a capacious differentiation strategy to appeal to buyers and offers agonistic pricing, suggesting that buyers can reduce fees associated with long-distance and local calls that are incurred with their current telephone provider. A defined specialisation is word of mouth advertising which has ultimately kept down operational costs. Everyone loves Skype because it is largely free. The executive team at Skype is faced with crafting a strategy that will put Skype in a position to compete with dull hitters in the market like Comcast (31.5% of the market share), Time Warner Cable, Cox Enterprises and Vonage Holdings. A key strategy for Comcast was the acquisition of AT&Ts argument operations. This move increased Comcasts membership by expanding argument geographically into 6 other states. Pl ease refer to Appendix C for competitive matrix.DRIVING FACTORS FOR RECOMMENDATIONSSkype has several driving factors for the recommended solutions. One, the fan base is instrumental in promoting the application. According to the executive outlook, Skype becomes more valuable as more muckle use it, thereby creating an incentive for existing users to encourage new users to cooperate (Thompson, Peterraf, Gamble, Strickland, 2012). Secondly, Skype offers competitive pricing and plans which has attracted many users but a slight accommodation of addendum to the plan would promote profitability. Finally, acquisitions of competitors have been successful for other rivals, stock-still it could be expensive and not something that Skype could afford to do now. An alternative would be to continue to collaborate with cell phone providers.RECOMMENDATIONSThe leadership team at Skype should focus on modifying and building out the calling plan to hike up revenues. Skype-to-Skype minutes has seen the greatest growth between Q307 and Q408, 72%, however this plan is free. The addition of a small fee to this service or go a prepaid bundled package could dramatically increase revenue in this area. Another strategy is to continue collaborating with cell phone providers making it easier for users to access Skype from mobile devices, not just desktops or laptops. Market penetration with mobile devices could increase membership and revenue. Also, Skye could partner with major W-Fi hotspot providers to have a Skype Here promotion where places like Starbucks would partner with Skype to encourage people to Skype from their stores.This would increase the time that a customer could spend in the store, and refresh the appraisal of Skyping from with a pleasure activity like getting a cup of coffee. This could lead to promotions with Skype as well. For example, if a member spends 300 minutes Skyping at a certain Starbucks then they would get a coupon for a free coffee at that location. With IM, Facetime, and other Communications applications the struggle is to make Skype in the consumers mind as the preferred method of making communication, as opposed to the other methods.Lastly, offer incentives to existing users to encourage new users to jointure Skype. The incentive payout would have to line-up with the price points of the calling plans. Another area that Skype should seek is the corporate or B2B communications, companies spend thousands each year using conference calls, or virtual meetings. Skype should design a simple method for business to offer a fixed price conference calling plan on a per employee basis. The corporate market is largely untapped and corporations typically have a robust IT infrastructure that lends itself well to Skype.