Case 15: Skype vs. AT&T and the Future of Telecommunications
1. As a personal adviser to Silverman and the rest of the Skype team, what would you recommend their next move be to continue the growth of Skype (collaborate with cell phone providers, restructure price, change advertising)?
I would recommend that Skype collaborate, merge, or form a partnership with a major cellular phone provider company to expand its services and products throughout the U.S. Skype also needs to be build more advertising for their VoIP services. Many U.S. consumers are unaware of the services provided by Skype or their advantages and saving costs they can provide due to minimal advertising. Skype’s minimal advertising campaign (only relying on network effects and word-of-mouth advertising) has cost them the ability to build an even stronger clientele of users in the U.S. than what they already have. They need to capitalize on exploiting their innovative concepts as well as their simple, cheap, and convenient service that they provide. I would also recommend that they remain competitive in pricing to be able to draw in new consumers of their services and offering package deals.
2. Has poor strategy or poor execution of strategy led the company to their predicament of slowing revenue growth? Give positive and negative examples of both strategy and execution.
The biggest concern and execution of Skype’s strategy was the decision not to advertise and market their services aggressively. With VoIP market growing and at the time Skype having a chance to gain valuable market share, there was no push to implement any type of advertising campaign or sales pitch. Relying on network effects and word-of-mouth advertising was perhaps one of their biggest contributors to having a slowing revenue growth for their business today. One positive example of strategy was the decision on being purchased by eBay which generated additional revenue and allowed Skype the additional...
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