NTRODUCTION
Skype is a Voice over Internet Protocol service that was created by Niklas Zennström and Janus Friis in 2003 as a private company. EBay acquired the company in 2005, offering performance based earn-out payments. The annual report from eBay offers all of Skype’s financial information as a part of eBay Inc. With a combination of the skewed numbers from the earn-out agreements and the financial reviews meshed together will all other eBay businesses, accurate ongoing costs, operating costs, advertising and marketing costs and others were difficult to confirm.
SERVICES PROVIDED BY SKYPE
Free Skype Services:
- Making calls to other Skype contacts
- Transfer Skype calls to other Skype contacts
- Video calls on Skype
- One-to-one and group chats
- Conference calls with up to nine people
- Forwarding calls to other Skype contact names
Paid Skype Services:
In order to use any of Paid Skype services, a user has to purchase so called Skype Credit. Skype Credit is an amount of money that user sets up and which will be charged with according rates as soon as paid service would be used.
1. SkypeOut – making Internet calls from Skype installed computer to landline and mobile phones.
A. Unlimited nationwide calls - unlimited calls to any phone within the US and Canada for less than $3 per month
- $30 per year; $8.85 for 3 months
- No connection fees charged for calls to US or Canadian phones.
B. International calls – rates start from 2.1¢ per minute. Rates based on destination country.
- 2.1¢ per minute to over 30 global destinations.
- Connection fee of 3.9¢ charged for each call.
- Buy Skype Credit to pay per-minute. The credits are deducted as SkypeOut calls are made.
2. SkypeIn – $18 for 3 months or $60 for a year. (currently available with Free Skype Voicemail service.)
SkypeIn is a personal number feature which allows to receive calls on Skype from landline and mobile callers made from any location. SkypeIn number can be setup as local for call makers as well as for call receivers depending on user preferences.
- Calls on Skype are received from ordinary phones.
- Calls can be answered from any place in the world when user is connected to Skype.
- No extra fees or per-minute charges to receive the calls on Skype.
- Buy up to 10 SkypeIn numbers from most US area codes and many foreign countries.
3. Skype Voicemail – 12 month subscription is $23;
3 months subscription is $6.90.
Skype Voicemail allows to leave voice messages to offline Skype contacts.
4. Skype SMS – sending SMS messages from Skype. Rates for Skype SMS vary depending on a region and country.
5. Skype Pro – $3 per month.
Skype Pro is a subscription that gives Skype users exclusive discounts, access to new Skype products and great international calling benefits.
Skype Pro includes:
- $30 discount on the annual price of a SkypeIn number.
- Free Skype To Go number
- Call Transfer
- International traveler calling plans (Pay nothing per minute for calls to landlines when you travel within 28 specific countries).
- Free Skype Voicemail
- Exclusive discounts on selected phones, headsets and webcams.
HARDWARE AND ACCESSORIES AVAILABLE FOR SKYPE
In order to use Skype on a computer user need to have:
- Headset (optional with microphone) or computer speakers
- Microphone
- Web camera (optional for video calls)
Another option of using Skype is VoIP phones. Skype sells several IP phones from various vendors. The following is a table of Skype certified accessories that can be purchased for use in the United States of America from the Skype online shop:
Download file
BASIC FINANCIAL STRUCTURE OF SKYPE
Skype is owned by eBay and in 3rd Quarter 2007 posted a total of $98 million in revenues. Ebay’s communication, or Skype, segment has increased 93% since September 2006. 83% of the revenue is from international markets. Skype makes the majority of its money by providing users access to PSTN networks through VoIP technology.
SKYPE TECHNOLOGY
Skype licenses software from third parties that is does not have control over, including the technology underlying its peer-to-peer architecture and firewall traversal technology, and the video compression/decompression used to provide high video quality. Skype has contracts with these technology providers, but there is no assurance that the technology will be available on commercially reasonable terms. In the case of unavailable third party technologies, the cost associated with developing independent technology could be very high. (Quarterly Report, 2007, p. 49)
AFFECTS ON SERVICE PROVIDERS
Many traditional telecommunications carriers, Internet companies, and cable providers offer, or have indicated that they plan to offer, VoIP products or a service that compete with the software Skype provides. These competitors are offering bundled services such as various forms of wireless communications, voice and data services, Internet access, and cable television. This puts Skype at a competitive disadvantage. (Quarterly Report, 2007, p. 60) Service Providers with long operating histories with name recognition and greater financial, marketing, and technical resources are able to offer VoIP services at substantially lower prices, eroding some of the smaller VoIP provider’s cost advantage. Service providers are acquiring and offering VoIP as the service continues to succeed.
VOICE OVER INTERNET PROTOCOL REGULATIONS AND THE AFFECT ON SKYPE
Businesses setting up Voice over Internet Protocol must be prepared for changes in the regulatory environment. Skype is currently bounded by very few, if any, of the same regulations that apply to traditional telephony and VoIP-based telephone replacement services. If Skype changes the product offerings, it may become subject to telecommunications regulations. There are various emergency service requirements, disability access requirements, user protection requirements, number assignment and portability requirements, and interception or wiretapping requirements that Skype may be required to meet. Such regulations could erode Skype’s pricing advantage by causing Skype to pay fees and charges. Competitors, including the telephone companies, may devote substantial lobbying efforts to seek greater protection for their existing businesses and increased regulation of VoIP. “New rules and regulations with respect to VoIP are being considered in various countries around the world, and at least some of these rules and regulations are likely to increase our costs of doing business and could prevent us from delivering our products and offerings over the Internet, which could adversely affect Skype’s customer base, and thus its revenue.” (Quarterly Report, 2007, p. 46)
OPERATING DIFFICULTIES
Skype experienced a system failure in August 2007 where the majority of users were unable to access Skype for approximately two days. The trigger of this interruption was a Microsoft update that rebooted many computers at once, causing a high number of users to automatically sign onto Skype upon the restart of the computer. This prompted a chain reaction that had a large impact (The Microsoft Connection Clarified, 2007). These kinds of failures in service result in immediate, and possibly substantial, loss of revenue. Skype is not fully redundant and the disaster recovery planning is not sufficient for all eventualities. (Quarterly Report, 2007, p. 45)
REFERENCES
What is free and what costs you a little money by Skype. (2007) Retrieved October 24 2007, from http://www.skype.com/products/priceoverview/?currency=USD&vat=YES#paid
SkypeOut – call any phone, anywhere in the world by Skype. (2007) Retrieved October 24 2007, from http://www.skype.com/products/skypeout/
SkypeIn – your personal number by Skype. (2007) Retrieved October 24 2007, from http://www.skype.com/products/skypein/
Skype Voicemail by Skype. (2007) Retrieved October 24 2007, from http://www.skype.com/products/skypevoicemail/
Skype Pro by Skype. (2007) Retrieved October 24 2007, from http://www.skype.com/products/skypepro/
Phones by Skype. (2007) Retrieved October 24 2007, from http://us.accessories.skype.com/DRHM/servlet/ControllerServlet?Action=DisplayCategoryListPage&SiteID=skype&Locale=en_US&Env=BASE&categoryID=4141800
Form 10-Q Quarterly Report, eBay Investor Relations (October 29, 2009) Retrieved October 29, 2007, from http://investor.ebay.com/annuals.cfm
The Microsoft connection clarified, eBay (August 21, 2007) Retrieved October 29, 2007, from http://about.skype.com/news.html