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Wednesday, July 28, 2010

Skype Guns for Corporate Telecoms Market

The name of the Estonian start-up, Skype, has already become synonymous with free or very cheap phone and video calls over the internet. By being the first into the market, it has monopolised it and is reaping the rewards. By connecting 520 million people worldwide, it generated revenues of US$705 million in 2009.

Now it is planning to team up with Cisco Systems and ShoreTel to enter the US$203 billion corporate telecommunications market. By doubling its sales and support team to deal with technical difficulties and by perhaps offering commissions to Cisco and ShoreTel to recommend its services, Skype hopes to gain a slice of that market.

Entering the market would give Skype much greater revenues (especially from the 'per-call' point of view) and would go some way to making the brand Skype more respectable. Indeed, one of the toughest barriers to entry the firm will face is convincing potential clients that its service is reliable as it has somewhat infamous for poor call quality.

Whether Skype is successful or not remains to be seen but its attempt to expand into other, more cash-rich markets follows a trend. Previously free websites are now charging as are a host of other online services that used to be free. Even Google is now expanding into the mobile phone industry (eg. its Android operating platform). Perhaps these firms are realising that, with so many new websites out there, all keen to emulate their success, free or low cost services don't make that much sense when compared with traditional markets?

Labels: corporate telecoms, skype

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