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Skype is a software application allowing individuals and businesses to make free voice and video calls over the Internet and also enables users to make low cost calls to landlines and mobiles internationally. It was founded by Janus Friis from Denmark and Niklas Zennström from Sweden in 2003 (Johnson et al, 2008), Skype was acquired by Microsoft in 2011 for $8.5 billion, from eBay who had bought the company in 2006 (BBC News, 2011). Over its first 9 years Skype grew rapidly, with a turnover of $749 million in 2012 (Microsoft, 2013).
Skype is a clear example of a 'freemium' business model, with a small percentage (6%) of paying customers subsidising the free users. Skype mainly adopt Rappa's community model and the subscription model as these are applicable to Skype as it is a form of social networking service where users invest time and emotion, while their main source of revenue comes from the premium subscription service. The most important of a wide range of factors in the external environment, is that of Technology. Skype's strong resource base and ownership by Microsoft leaves it largely unaffected by supply issues (Mena Report, 2013), and their overwhelming market share gives protection against new entrants (Bilton, 2012). The merger with Microsoft will create opportunities for Skype to grow its users as Microsoft will close down Live Messenger service in 2013 to move on to Skype (Richmond, 2013). Moreover, a tie-up between Facebook and Skype could help Skype to grow its base (Liao, 2010). Finally, due to the globalization there will be more demand for international calls and also there will be increased Internet users in developing countries (Kende, 2012). Business model has been demonstrated (refer to appendix 1) to understand the overall picture of Skype .
Analysis of the current and future use of Internet Technologies of Skype, including:
Skype's marketing strategy can be partly derived initially by looking at their overall business strategy, that would be described as 'Hybrid'; a mixture of 'Cost Leadership' and 'Differentiation'. When considering the Targeting, Positioning and Segmentation of Skype's marketing strategy, Skype has designed its offering to appeal to the mass customer base (Chaffey, 2009). In order to achieve e-business strategy, Skype targets three main customer segments; users who want to make free Skype-to-Skype calls, people who are willing to pay for premium packages and businesses who are ready to adopt services provided by Skype.
To examine Skype's e-Marketing activities, appendix 2 demonstrates how they interlink with strategy under SOSTAC model.
From an e-Marketing perspective, Skype are highlighted in Promotion and Process as key elements:
Value Clarity (Promotion element - Consumer Attention, Interest, Desire)
User Perspective - (Process Element - Action & Satisfaction)
Seamless Process - (Process Element - Action & Satisfaction)
Using Existing Infrastructures - (All elements)
Skype gains a key advantage over its main direct competition through the 'process' element as their process is simple, fast, easy to use, reliable and free; compared to Vonage another VoIP provider, where set-up requires telephone calls to set-up, a new piece of hardware to install and extra fees. Moreover, Skype's poster advertising directly compares themselves to the well-established and world popular social networking sites like Facebook and Twitter to maintain their success (Facebook & Twitter, 2013). In fact, Skype is so easy to explain to another person gives great strengths for growth via 'Word of Mouth' marketing (Chaffey, 2011). Moreover, Skype's e-Marketing activities and its effectiveness has proven to be very strong as they have followed AIDA e-Marketing model (refer to appendix 3)
Web design analysis
Web design analysis is a tool to learn about the website and whether it is easy to direct by the users (Krug, 2000). If website designed well, it will meet the expectation of users using the website and therefore support the goals of the organisation behind the website (Mifsud, 2011). This section focuses on Skype's web layout, readability, accessibility, usability and functionality of the website.
Layout and Web Forms
Skype has constructed their website well as the headings are clearly shown under the Skype's logo with adequate amount of text under each categories section. The website has clearly displayed what features it offers along with information provided on each features (refer to appendix 4).
The figure illustrates Skype contains six components of web forms when users create an accounts and register to become a Skype users. The web forms include label, input field, actions, help, messages and validation.
Source: Smashing Magazine (2011)
It is essential to make sure that the site is easy to read and understandable. In Skype's website, many of its contents are mainly based on bold texts and large photo.
The figure above is obtained from the main page of Skype's website where it demonstrates that it is user friendly as the texts and backgrounds have enough contrast so that it is easier for users to read through.
This figure illustrates that Skype's website offers a wide range of languages and this is useful for users from across the world.
However, the site is difficult to manage by those eye disabled and older users. Thus, it could be argue that Skype might need to make some improvement in this area.
Sources: Skype (2013)
Skype is easy to set up and use as they just need to follow three main steps to become Skype's user (refer to appendix 5). As users just need to download and install from the website, and next search and add their family or friends to their account. Once these are completed, users can start to call or video with others Skype's users.
On Skype's website, there is an option of capturing code for using buttons on Skype's website (refer to appendix 6). After users install the code for the button on their web pages, user just needs to do is click, and Skype will rings to their computer and allows users to talk live (Dummies, 2013). The button can also show their availability on Skype such as: Call Me, Skype Me, Online but Not Available, Offline, or I'm Away.
In addition, users can always refer to 'Support or Contact Us' section if they need support or any enquiries (refer to appendix 7).
Functionality of the site
Sources: Slide Share (2007)
Skype's functionality through its web site is simple and provides clear indicators for users. Users will be able to choose its various functions. For example, if the users are not available, whoever is trying to reach can leave a voicemail. Not only that, users can choose to have Skype forward incoming calls to their home or mobile phone when they are away. It also indicates that credit amounts in user's account so that users will be aware of their credit used.
Nowadays, communications is essential for ecommerce and society (Skype, 2013). Skype began its Business-to-Business (B2B) with eBay and PayPal which created a supreme ecommerce and communications engine for buyers and seller around the world (refer to appendix 8 & 9). Through the larger market opportunity, it gives Skype a major opportunity to build its leadership in internet voice communications and introduce a new ways to communicate in worldwide online era.
Skype has improved communications between buyers and sellers as it is integrated into the eBay marketplace (Skype, 2013). It will be easier for buyers to communicate with sellers and obtain the information they need, whereas sellers can build relationships with their customers and achieve target sales easily. As a result, Skype can expand the trade and clientele on eBay, particularly in those categories that require more telecommunications involvement (Skype, 2013).
On the other hand, PayPal and Skype also make a powerful combination (Skype, 2013). For example, Skype Send Money, which enable buyers and sellers to send or receive money using PayPal through the Skype client from being able to communicate directly with each other anywhere and anytime. Also, PayPal wallet associated with each Skype account would be easier for users to pay for Skype fee-based services. Thus, the number of PayPal accounts increasing and rising payment volume which can also boost Skype's revenues overall (refer to appendix 10 & 11). Skype helps eBay and PayPal to develop global footprint by offering buyers and sellers in developing ecommerce marketplaces with a more personal way to communicate online (Skype, 2013).
Sanjay(2007) defined Mobile Commerce as cost efficient and also provides better flexibility and convenience to its users compared to landline. Nowadays, convenience and efficiency is what customers want.
Skype tried to move closer to mobile operators and had launched agreement with Three and Verizon Wireless that created an application known as 'Skype Mobile' that add value to smartphones and tablet users (VoIP Watch, 2013). It gives users the opportunity to make Skype-to-Skype voice calls and instant messages to any Skype contact worldwide and at the same time manage their Skype contact list directly from the mobile application (Mobile Marketer, 2010). Microsoft deal for Skype will impact mobile
On the other hand, Skype has announced the support for operator billing service for purchasing Skype Credits in Russia and the next will be US and Canada which is supported by MACH Direct Operator Billing (Microsoft News, 2013). This new payment options enable Skype users to buy Skype Credit by using mobile devices via a browser based transaction that is convenient and secure. It is a flexible, secure and reliable billing way for its users, so that it would be easier for users to pay their Skype Credit through mobile phone bill or pre-paid account balance. This will continue through 2013, which supporting Skype to generate new revenue streams by attracting new users of using Skype premium products (Microsoft News, 2013).
Overall, the mobile commerce of Skype identifies the idea of convenience is what customers wants as it is the market trend and customers behaviour. Most of the people reply on mobile and tablet most of the time during at work, school, or even having meals. Thus, the Skype Mobile application targets at convenience and flexibility for users to call and manage their Skype's account without the need of computer. Most importantly, this will continue to attract more potential users in the future as users can download the Skype Mobile application for free and enjoy the utilities it offers.
In conclusion, some improvements are needed in several areas for Skype business model.
Skype promote its products via social media like Facebook and Twitter to increase the awareness of publics. Skype should continue to make use of its resources on these social platforms not only spread the awareness of its brand but as a tool to public to express their opinions and feedbacks and also perform market research. In terms of its web design, users have been satisfying with their website as the usability, accessibility, functionality are mostly meeting their expectations. However, some findings show that there are some problems in accessibility especially to those who are disabled users find it difficult to access the website. It can be suggest that Skype could improve the accessibility to benefit those users with disabled eye such as colour blindness. Perhaps changing the button on the site where disabled person can click and change the site into bigger front size and options for changing the colours or contrast. On the other hand, the business-to-business with eBay and Paypal bring a powerful tool for ecommerce and communications, and helps Skype to boost their revenue and expand its market in internet voice communications. Last but not least, the development of Skype Mobile application was a right move for Skype as mobile commerce is essentially offer instant connectivity and ubiquity nowadays. It is recommend that updates and continuously improvements should be made in the future.