Skype vs. AT&T
Competitive Intelligence Project Paper Guided by Prof. John E. Prescott Submitted on 30th March 2011
the Fate of Firms and Industries
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Table of Contents
By Anil Pal Anupam Banerjee J. Venkatesan Karan Chatrath Shrawan Kharkia
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Voice over internet is increasingly becoming the preferred mode of communication with the advent of broadband internet and springing up of Wireless LAN’s and Wi-Fi spaces, thus posing a threat to Telecom companies.
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Voice over Internet Protocol (Voice over IP, VoIP) is one of a family of internet technologies, communication protocols, and transmission technologies for delivery of voice communications and multimedia sessions over Internet Protocol (IP) networks, such as the Internet. With the advent of broadband internet, increased speed of data transfer and superior quality of service, VOIP has become a cost-effective and reliable source of communication. The technology is of particular use for the corporates since they can unify all communications channels –email, phone, fax etc. into one. As it aims to provide a delivery mechanism of all these different forms of data – audio, video, text into one medium –the cellphone, it can pose a challenge to the incumbent telecom companies such as AT&T and Verizon. VoIP devices have simple, intuitive user interfaces, so users can often make simple system configuration changes. Dual-mode cell phones enable users to continue their conversations as they move between an outside cellular service and an internal Wi-Fi network, so that it is no longer necessary to carry both a desktop phone and a cellphone. However with the technology coming of age, it could be possible that the cellphone mode is concentrated only with the internet provider and do away with the telecom. Maintenance becomes simpler as there are fewer devices to oversee. Skype, which originally marketed itself as a service among friends, has begun to cater to businesses, providing free-of-charge connections between any users on the Skype network and connecting to and from ordinary PSTN telephones for a charge. Thus it is one of the firms with the potential of a disruptor in the communication market. For our comparison Page 5 of 25
and analysis we have taken AT&T as the pronounced incumbent in telecom industry.
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Signals of Change
Fields on which both the incumbent and disruptor were operating were Telecommunication, teleconferencing, video-conferencing, music downloads, gaming etc
Types of Signals
Below are discussed few of the signals that resulted from the various initiatives and activities of Skype, which should be observable by the incumbents (here AT&T). •
Skype obtained a proprietary Internet telephony (VoIP) network called the Skype protocol. In April 2003, Skype.com and Skype.net domain names were registered. In August 2003, the first public beta version was released.
In October of the same year, eBay purchased Skype and in fall of 2009 sold a majority stake to an investor group. In December 2005, video telephony was introduced by Skype. In April 2006, the number of registered users reached 100 million. In October 2006, Skype 2.0 for Mac was released, the first full release of Skype with video for Macintosh. In December 2006, Skype announced a new pricing structure, with connection fees for all SkypeOut calls. Skype 3.0 for Windows was released.
Skype released an updated client for the Apple iPhone which allowed Skype calls to be made over a 3G network. Page 7 of 25
On 9 August 2010, Skype filed with the SEC to raise up to $100 million in an initial public offering. In October 2010, Tony Bates, who had been a senior VP at Cisco and responsible for its...