Skype Me! Calling over the Internet for free/disruptive technologies
(As published in GWB 1/2007)
Clayton Christensen, author of “The Innovator’s Dilemma”, defines disruptive technologies as initially inferior products launched by smaller companies that move up-market from a small niche into increasingly profitable customer segments, eventually overtaking the leading providers of that product. In English: think of the first automobiles in the early 1900’s as technology that disrupted the horse-drawn carriage.
He argues that it almost never makes sense for an existing category leader to move down-market and provide inferior products with lower profit-margins to less demanding consumers. This leaves the door open for the upstart company, devoid of old business models and infrastructures, to establish a toe-hold within this new underserved consumer segment.
Enter Skype. Skype, a small Luxembourg-based company formed in 2003, offers free phone calls over the internet using a microphone and speaker hooked into your personal computer. The disruptive technology in question here is called VOIP, short for Voice over Internet Protocol, and companies like Skype and Vonage threaten the dominance of existing telephone companies by allowing users to talk over internet lines for free or drastically reduced rates.
How are they going to compete with the established phone companies? Vonage charges a flat rate of $25/month for local and long distance calls between US, Canada and Europe, and connects your phone through your cable or DSL modem broadband connection. Vonage reportedly has about 2 million subscribers as of a 12/8/06 AP report and Skype has over 100 million registered users with 5 to 7 million active at any time. Customers in this VOIP category have doubled since last year.
Further, EBay bought Skype last year for a reported $2.6B to foster greater communication between sellers and buyers, increase transactions, and reduce fraud.
How do you use Skype? Go to http://Skype.Com and download the latest free version (2.5) onto your computer or palm device running Windows, Mac OS X, Pocket PC, or Linux. It is essentially an IM (Instant Messenger) application that allows you to chat, make phone calls, and, as of last year, video conference with other Skype users, all for free.
You can call landline or cell phones from your computer (a service called SkypeOut) from Skype for a few cents per minute. The SkypeOut Global package costs about 2 cents to make calls to the US, the UK and China, amongst other countries.
You can also sign up for a phone number (a service called SkypeIn) to receive phone calls from landlines or cell phones for about $4/month, a great way to setup an initial separate business line for cash-strapped small business owners. For international users, you can secure phone numbers in different countries so that when the people call you from, for example, a land-line in Taiwan, they are making a local call that is routed to you over the internet to your wireless laptop, while you are sitting on the coach. A 12 month subscription costs about $30.
Skype charges about $15 a year for voicemail, though it is bundled for free with your SkypeIn phone number. Also, the SMS (short message service) functionality allows you to send text messages from Skype to the cell phones of your business associates, customers or friends for 11 cents per message.
Finally, for business travelers taking an airplane flight that offers wireless internet, you can make phone calls from your laptop while in mid-flight. Also, and this is where the world really gets flat, you can teleconference with up to 5 other Skype users anywhere on the planet Earth, for free.
If you’d like to bypass the computer, there are several phones that allow you to make Skype calls over any available wireless internet connection using only your Skype username. The Sony Milo and the Belkin Wifi Phone are just two Skype phones available under the Skype.Com “Shop” link. Polycom Communicator is a USB Speakerphone that can be used to conduct conference calls using only your computer and an internet connection.
As I mentioned above, this disruptive technology is not yet perfected- at times, I’ve noticed that bandwidth issues might cause echoes on the line. Also, as a peer to peer application, Skype makes use of the existing internet bandwidth of logged-in users to help route phone calls and so some corporate and educational Information Technology Administrators might disallow use of Skype, despite the numerous advantages in productivity and communication. Skype 3.0 is in beta and has a Skype for Business package that will help IT Administrators manage this issue.
In the end, we have a nascent VOIP technology provider that is disrupting the existing business model and price structure, and gaining in customer acceptance every year. The inevitable growth of Skype and VOIP in public acceptance, dependability, and quality coupled with increased penetration of free high-speed wireless internet access, will surely challenge the current market leaders. Such creative destruction is the lifeblood that keeps entrepreneurship and innovation moving forward.
Clayton Christensen, author of “The Innovator’s Dilemma”, defines disruptive technologies as initially inferior products launched by smaller companies that move up-market from a small niche into increasingly profitable customer segments, eventually overtaking the leading providers of that product. In English: think of the first automobiles in the early 1900’s as technology that disrupted the horse-drawn carriage.
He argues that it almost never makes sense for an existing category leader to move down-market and provide inferior products with lower profit-margins to less demanding consumers. This leaves the door open for the upstart company, devoid of old business models and infrastructures, to establish a toe-hold within this new underserved consumer segment.
Enter Skype. Skype, a small Luxembourg-based company formed in 2003, offers free phone calls over the internet using a microphone and speaker hooked into your personal computer. The disruptive technology in question here is called VOIP, short for Voice over Internet Protocol, and companies like Skype and Vonage threaten the dominance of existing telephone companies by allowing users to talk over internet lines for free or drastically reduced rates.
How are they going to compete with the established phone companies? Vonage charges a flat rate of $25/month for local and long distance calls between US, Canada and Europe, and connects your phone through your cable or DSL modem broadband connection. Vonage reportedly has about 2 million subscribers as of a 12/8/06 AP report and Skype has over 100 million registered users with 5 to 7 million active at any time. Customers in this VOIP category have doubled since last year.
Further, EBay bought Skype last year for a reported $2.6B to foster greater communication between sellers and buyers, increase transactions, and reduce fraud.
How do you use Skype? Go to http://Skype.Com and download the latest free version (2.5) onto your computer or palm device running Windows, Mac OS X, Pocket PC, or Linux. It is essentially an IM (Instant Messenger) application that allows you to chat, make phone calls, and, as of last year, video conference with other Skype users, all for free.
You can call landline or cell phones from your computer (a service called SkypeOut) from Skype for a few cents per minute. The SkypeOut Global package costs about 2 cents to make calls to the US, the UK and China, amongst other countries.
You can also sign up for a phone number (a service called SkypeIn) to receive phone calls from landlines or cell phones for about $4/month, a great way to setup an initial separate business line for cash-strapped small business owners. For international users, you can secure phone numbers in different countries so that when the people call you from, for example, a land-line in Taiwan, they are making a local call that is routed to you over the internet to your wireless laptop, while you are sitting on the coach. A 12 month subscription costs about $30.
Skype charges about $15 a year for voicemail, though it is bundled for free with your SkypeIn phone number. Also, the SMS (short message service) functionality allows you to send text messages from Skype to the cell phones of your business associates, customers or friends for 11 cents per message.
Finally, for business travelers taking an airplane flight that offers wireless internet, you can make phone calls from your laptop while in mid-flight. Also, and this is where the world really gets flat, you can teleconference with up to 5 other Skype users anywhere on the planet Earth, for free.
If you’d like to bypass the computer, there are several phones that allow you to make Skype calls over any available wireless internet connection using only your Skype username. The Sony Milo and the Belkin Wifi Phone are just two Skype phones available under the Skype.Com “Shop” link. Polycom Communicator is a USB Speakerphone that can be used to conduct conference calls using only your computer and an internet connection.
As I mentioned above, this disruptive technology is not yet perfected- at times, I’ve noticed that bandwidth issues might cause echoes on the line. Also, as a peer to peer application, Skype makes use of the existing internet bandwidth of logged-in users to help route phone calls and so some corporate and educational Information Technology Administrators might disallow use of Skype, despite the numerous advantages in productivity and communication. Skype 3.0 is in beta and has a Skype for Business package that will help IT Administrators manage this issue.
In the end, we have a nascent VOIP technology provider that is disrupting the existing business model and price structure, and gaining in customer acceptance every year. The inevitable growth of Skype and VOIP in public acceptance, dependability, and quality coupled with increased penetration of free high-speed wireless internet access, will surely challenge the current market leaders. Such creative destruction is the lifeblood that keeps entrepreneurship and innovation moving forward.
posted by slidesage at 2:22 PM
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