Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean?

Published 25 Feb 2013
Reference 5949
Topic Strategy
Region North America
Summary

This case focuses on Skype in the voice-over-IP (VoIP) industry. Its offering created such exceptional utility for users around the world that Skype has become a verb – to “skype” someone means to call someone using the Skype application. Yet despite explosive growth in demand, the company was not profitable in four out of the five years prior to its acquisition by Microsoft in 2011. The case allows participants to deepen their understanding of Blue Ocean Strategy by applying first-hand the concepts and tools of the Blue Ocean strategy sequence.

Teaching objectives

The case illustrates the importance of alignment across the BOS sequence, with an emphasis on the first two steps, namely: 1) How to test a new business idea for exceptional utility and 2) How a new idea can be priced strategically even when there is no obvious precedent.

Keywords
  • Skype
  • e-commerce
  • voice over IP
  • video over IP
  • blue ocean strategy
  • strategic pricing
  • profit proposition
  • business model
  • Q21213