management of technology task: skype business canvas

Management of Technology Final Assignment

Business Model Canvas

Sitti Alvina

1306393181

Skype Business Model Canvas

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Contents Company Profile ...................................................................................................................................................................................................................... 2

Skype Business Model Canvas ................................................................................................................................................................................................. 3

Relationship Matrix ................................................................................................................................................................................................................. 9

Patterns ................................................................................................................................................................................................................................ 11

Mapping Environtments ........................................................................................................................................................................................................ 12

Risk Mapping ......................................................................................................................................................................................................................... 15

New Alternative Future Business Model ................................................................................................................................................................................ 16

References ............................................................................................................................................................................................................................ 20

Appendix ............................................................................................................................................................................................................................... 21


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Company Profile

Skype is a global technology leader that enables real-time communication over the internet. It offers high-quality, easy-to-use tools for consumers and

businesses to communicate and collaborate globally through voice, video, and text message. 663 million users are registered, out of which 8,8 million are

paying users. It can be accesed by its website (www.skype.com) or its apps that can be downloaded on the web. Skype’s products are on multiple platforms

including iOS, Blackberry, Linux, Android, and Symbian. It is already integrated with Facebook. It is found on 2003 by Niklas Zennstrom and Janus Friis.

The software is invented by Ahti Heinla, Prliit Kasesalu, and Jaan Tallinn. On 2005, Skype was purchased by eBay, SkypeOut Services was banned in South

China, and the video call is introduced in late 2005/early 2006, and then the number of users reach 100 million. On 2007, users were unable to connect to the

network because of a Skype system wide crash. On 2008, Skype founders had conflicts with eBay and destabilized the company. Fortunately, Josh Silverman

becomes CEO and brings the stability to Skype. Since 2011, it becomes a part of Microsoft that has some Pros and Cons. The Pros are microsoft gains

Skype’s community of 100 million active members who log more than 100 million minutes each month, the technology will help a number of Microsoft’s

products like Windows Phone 7 become more competitive, and by purchasing Skype, Microsoft has gained a popular service and has denied its competitors

from acquiring it. The Cons are many worry if Microsoft will screw up the purchase consequently hurting Skype, Skype’s employees my move on to other

companies if they do not like working with Microsoft, and by paying nearly $ 1,000 for each Skype’s active users, many wonder if Microsoft overpaid.

Skype has many features that are offered to users worldwide, such as: send message, skype to skype, skype out, skype number, skype to go, skype

connect, video conferences, and conference calls. It is free to start using skype for several features like skype to skype, video call, and instant message with

other people on skype. But, you have to pay to get some extra services like call phones, access WiFi or send texts. You can pay as you go or buy a

subscription. Skype has marketing services, including advertising that allows businesses to market their products or services selectively to Skype’s user base.

Now Microsoft has the opportunity to put Skype into as many platforms as possible. We do not know for sure how the company will do that, but you can take

a look at the possibilities

http://www.skype.com/


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1. Customer segment

Skype has the “mass market” for the customer segment type. The distribution channels, value proposition, and customer relationship focus on one

large group of customers with similar needs & problems. The skype customers are internet users who want to communicate via internet. They can be

individual users or companies. A company can use Skype manager to manage their needs of Skype’s features for meeting and other business requirements.

2. Value Proposition

Value propositions that the customers get are some features like send message, skype to skype, skype out, skype number, skype to go, skype connect,

video conference, conference calls, and communicate easier and cheaper. The users can send message via Skype to skype, make calls to non-skype number

via Skype out, use Skype number to make phone calls, make international calls via skype to go, use skype connect, use video conferences and conference

calls and pay cheaper (especially for the international calls), even free for some features, like send message, and other skype to skype communication

3. Channels

Channel is something that delivers the value proposition to the customer. Skype has some distribution channels, like the website (www.skype.com), the

mobile application, hardware, and skype manager for companies. The users can use Skype via the website or download the application for pc and mobiles.

The hardware is one of the channel too, since it is the main media to distribute the value for the customers. The hardware can be personal computers, tablets,

and handphones. For companies, they can use Skype manager to have them manage the features for the company’s needs.

4. Customer Relationship

Skype has some customer relationships. They are personalized self service, payment of skype, skype subscription, and skype software download. The

personalized self service is a customer service that available to help you with your difficulties using Skype live online. Users also can pay for some extra

features and subscribe, and skype software that are downloaded by the users worldwide.



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5. Revenue stream

The revenue streams that Skype has are credits and subscription from the users. Users can pay credit and subscriptions for some features and finally can use

the feature. Most of the users, especially companies do not mind to pay for some features since the feature help them to grow their businesses. Skype can also

get the revenue streams from companies that advertise their products on Skype

6. Key Resources

Skype’s key resources are developers, skype brand, and software. The developers are important to Skype’s development, since it developed the software and

the other things that support Skype and make it usable for the users. The brand itself is one of the key resource because Skype has its loyal customer that

already comfortable using it than using the competitors’ products.

7. Key activities

Skype’s key activities are software development and customer service. Software development is one of the key activities because it is important to the

development of the company. Customer service is important too to mantain the relationship between the company and the customer and keep the the

customers’ loyalty.

8. Key partnership

Skype partners with several companies such as Microsoft, Telecom companies, Hardware manufacturers, and payment providers. Microsoft buys Skype on

2011. Skype also partners with hardware manufacturers such as LG electronics and panasonic to produce monitors that are connected to Skype that displays

high quality picture. Skype partners with Telecom companies and payment providers to pay for credits for feature like Skype out.

9. Cost structure


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The cost structure is made of fixed cost and variable cost. The fixed cost is for building, machine,and the employees’ salary. The variable costs are software

development, marketing, customer service, partner fees, and telecom costs for the skype out features.

Relationship between value proposition keywords to the design of the map

Skype’s users will get some value propositions from the product such as sending messages, skype to skype, skype out, skype number, skype to go,

skype connect, video conferences, and conference calls. With these features, skype’s users can communicate easier and cheaper, especially for international

calls. To maintain the quality of the services that delivered to the users, the company must develop the software well and the customer service have to handle

the users’ complaints profesionally. Therefore, the company must recruit the best human resources for its development.

Relationship between target market characterisitic to your value proposition, and why you think you are better than competitor.

The Skype’s target market is internet users worldwide who want to communicate via internet. They can be individual users or companies. With

Skype, people do not need to meet to see each other and pay high to make international calls anymore. They can send messages via skype, make phone calls

via skype to skype, and make video calls for free and pay a little bit more for extra services such as phone calls via skype out, access WiFi, and send texts.

What makes Skype better than the competitors are Skype offers voice call, phone call, video call, instant messaging, desktop sharing, and file sharing while

the competitors only offer some of it. For example: Google voice only offers voice call, phone call, and video call. Apple FaceTime only offers phone call and

video call. Facebook chat only offers instant messaging. GoToMeeting only offers video calls, instant messaging, and desktop sharing. Cisco WebEx only

offers video call, instant message, desktop sharing, and file sharing.


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A table list on how key activities are derived from all activities needed to support customer relationships, channels and value propositions

No Key Activities Customer Relationship Channels Value Proposition

1 Software development - Skype software download

- Personalized self service

- Skype.com &

skype

application - Skype

manager for

companies

- Send message

- Skype to skype

- Skype out

- Skype number

- Skype to go

- Skype connect

- Video conferences - Conference calls

2 Customer service - Personalized self service - Skype.com &

skype

application

- Skype

manager for companies

- Send message

- Skype to skype

- Skype out

- Skype number

- Skype to go

- Skype connect

- Video conferences

- Conference calls

- Communicate easier and

cheaper

A table lists on how each key activities is related to key resources, cost structure, and key partners

No Key Activities Key Resources Cost Structure Key Partners

1 Software development - Software - Customer service

- Telecom costs

- Software

development

- Microsoft

- Telecom companies

- Payment providers


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2 Customer service - Developers

- Skype brand

- Software

- Software

development

- Marketing

- Customer service

- Payment providers

Other Possible Revenue Stream

1. Skype map

2. Develop paid membership content

3. Sell chat stickers, frame and themes for the application

4. Sell sound fiters to add more fun to the conversations

5. Skype games


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Relationship Matrix


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Patterns The pattern of Skype is Freemium. Fremium stands for business models, mainly Web-based, that blend free basic services with paid premium services. The

freemium model is characterized by a large user base benefiting from a free, no-strings-attached offer. Most of these users never become paying customers,

only a small portion, usually less than 10 percent of all users, subscribe to the paid premium services. Skype is categorized as a Freemium business model

pattern for several reasons, such as:

1. Skype enables users to make calls via Internet. Free calls are fully routed through the Internet vased on-so-called peer to peer technology that employs

user hardware and the Internet as communications infrastructure.

2. Users pay only for calling landlines and mobile phones through a premium service called SkypeOut, which offers very low rates.

Table 1. Relationship Matrix

Notes:

S : Strong Relationship

M : Moderate/Medium Relationship

W : Weak/Little/No Relationship


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Mapping Environtments

Market

Forces

Market segments Targeting people who communicate via Internet, for example: make international calls, chat, video calls, etc.

Indonesia’s increasing number of middle class income is a market growth potential. (+RS)

Market issues Users who want to make calls, send message, video calls, and the other features that Skype had and doesn’t want to

spend too much money (+VP)

Premium paid

services

FREE services


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Needs and demands People needs a high quality network so they can use the features well (+VP)

Switching cost Skype is free of charge for basic feature and you can pay for premium features, similar with the competitor. Switching

brand is very easy. (-CS)

Revenue attractiveness Skype has premium features that the customer must pay for it and Skype offers advertisement placement which gives

benefits to the revenue streams (+RS) but on the other hand is not pleasant for most customers. (-CS)

Industry

Forces

Supplier and other value

chain actors

The software development is developed by the software developer (+VP)

Hardware manufacturers that partners with Skype. (+KP)

Other content developer that develop the network, etc (+VP)

Stakeholders Microsoft owns Skype and make Skype as built-in apps (+KP)

Competitors (incumbent) Apple FaceTime application who already built-in in Apple devices so Apple users often prefer using it than other apps

(-CS)

Other competitors, like Google Voice, Facebook chat, GoToMeeting, and Cisco WebEx don’t offer as much feature as

Skype does (+CS)

Skype brand (+CS)

New entrants (insurgents)

Other competitors that offers new features that Skype doesn’t have (-RS)

Substitute products and

services

Cisco WebEx can be a substitute products since it offers almost all of Skype’s features like video call, instant

messaging, desktop sharing, file sharing but they don’t offer voice call and phone call (-RS)

Key

Trends

Technology trends Trends in using internet to communicate is very promising. Event companies use it for video conference, etc. (+VP)

Regulatory trends Information, technology, and communication regulation in Indonesia. (+VP)


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Societal and cultural trends The number of people connected to the internet is increasing. Indonesian are using the internet more than ever and still

growing. (+VP)

Socioeconomic trends The user can be any age category who want to make calls via internet (+CS)

Macro-

economic

forces

Global market condition Recently at the first and second quarter of 2015, Indonesia’s economic growth is slowing down. (-RS)

Capital market condition Rupiah is weakening against the US Dollar. (-RS)

Skype already has loyal users (+CS)

Economic infrastructures The number of people who use internet is increasing and the internet infrastructure development is on progress in

Indonesia, mostly on area near Jakarta (+CS)

Internet infrastructure development on rural areas is still limited. (-CS)

Commodities and other

resources

PCs, smartphones, webcams, earphones continue to have positive sales growth. (+VP)


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Risk Mapping

From the risk map, we can conclude that:

Risk caused by new entrants (insurgent) has high impact and high probability, so Skype company should take immediate action to mitigate and

control the risk by developing features and make some trial promo for the premium features for example. Skype must keep update for the new

technologies too.

Risk caused by substitute products and services has high impact and high probability. This is a high risk problem, so Skype must mitigate and control

this risk by doing innovations for their features so the users will stick to them and won’t use the other products.

Risk by Substitute products and services (-RS)

Risk by New entrants (Insurgent) (-RS)

Risk by Global market condition (-RS)

Risk by Capital market condition (-RS)

Key


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Risk caused by Global market condition has low impact and high probability so it is a medium risk problem. Skype must control this risk by making

strategies to overcome some global market conditions.

Risk caused by Capital market condition has low impact and high probability so it is a medium risk problem. Skype must control this risk by making

strategies that can reduce the effect from capital market condition problem.

New Alternative Future Business Model Every company has to develop new alternative future business models. New alternative future business models are needed to develop the business in order to

solve the environment risk. Revenue stream can be reduced by these environmental risks. There are three drivers to be considered, there are customer-driven,

finance-diven, and multiple-epicenter driven. Customer-driven innovation is a innovation that based on customer needs, facilitated access, or increased

convenience. Finance-driven innovation is a innovation that driven by revenue stream, pricing mechanism, or reduced cost structures that affect other

business model building blocks. Multiple-epicenter driven is a innovation that is driven by multiple epicenters.

1. Customer-driven innovation

Alternative Future Business Model Canvas 1 explanation (Customer-Driven Innovation)

New business alternatives need to be developed to solve the problems that come from the environmental risks. The problems that come from the risks can

affect the revenue stream. It can decrease the users’ loyalty and reduce the revenue streams that the company get. The innovation that Skype plans to do is a

new feature called Skype translator. For more than one decade, Skype succesfully break geographical barrier to people who want to communicate and see

each other’s face. But there is another problem. Sometimes people can’t communicate well because they still have a barrier. They are restricted by languages

that they don’t understand from another country’s user. Using innovations from Microsoft Research, Skype will remove another barrier to make it possible for

people to communicate irrespective of what language they speak. Skype brings people together to make progress on what matters to them. Skype Translator

will open up endless possibilities for people around the world to connect, communicate and collaborate; people will no longer be hindered by geography and

language. They just have to say what they mean with their own language and Skype will translate it to be the other user’s language via text that appears on the

conversation bar.This innovation affects the revenue streams and key activities. For the revenue streams, if Skype put this feature on the premium feature,

Skype will get new source of revenue streams or if this feature is free and bulit-in in every feature of Skype , like you can use it while you make phone calls,

video calls, conference calls, etc, Skype will still get the revenue stream because some feature like make call to non-skype users (SkypeOut) is one of the

premium features which is not free.


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2. Finance-driven innovation

Alternative Future Business Model Canvas 2 explanation (Finance-Driven Innovation)

Plain chat message that only contains texts is so boring. There are many competitors that already did the innovation to add stickers features for chatting

features. More stickers that are available, more expressive the chat will be. To affect the revenue streams, Skype does not only offer free stickers but also sell

stickers to be purchased. The price doesn’t have to be expensive. Maybe just around 1$-2$ for a pack of stickers. Also add celebritiy edition stickers or other

seasonal stickers that suit the situation that is happening that time. For example if it is World Cup time, sell Football players stickers edition. This innovation

affect many aspect on business model canvas, such as: key activities, cost structure, key resources, and revenue streams. On key activities, it affects the

software development. On cost structure, it add one more point, it is stickers designers that Skype has to pay. On key resources, it adds one ponit, it is sticker


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designer that has to design the stickers. On revenue streams, it affects credit & subscription that Skype get from the selling of the stickers.

3. Multiple epicenter-driven innovation

Alternative Future Business Model Canvas 3 explanation (Multiple epicenter-driven Innovation)

To affect more aspects on the business model canvas, Skype has to do the multiple epicenter-driven innovation. For example, Skype can develop a new


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feature called Skype game. It is a bulit-in feature that can be played by users. Users can play the game with one of their Skype’s friend live. To make this

feature, it affects software development in key activities, add one point in key resources which is hire the game developers, add one point in cost structure to

pay the game developer, and get extra revenue stream from the bulit-in features inside the games that the users can purchased. Also Skype has to develop the

lighter version of their mobile apps, so users will not hesitate to install and use it on their phone, not only on their PC and tablets. This innovation affects

software development in key activities and add one point on customer segment. It is expand the customer segment more, not only people that use it on PC and

tablet but people will also use it with their handphone, even on their apple watch.


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References

http://blogs.skype.com/tag/innovation/


Business Model Generation by Alexander Osterwalder & Yves Pigneur

http://blogs.skype.com/tag/innovation/



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Appendix


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management of technology task: skype business canvas

Documents

skype business model

skype system

company profile skype

number of users

contents company profile

mapping environtments

risk mapping

global technology leader