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Innovation and New Product Development Case Study

Case Title:

Skype: Leading the VoIP Revolution?

Publication Year : 2005

Authors: Bindu Kannan

Industry: Internet and e-commerce


Case Code: IPD0034B

Teaching Note: Not Available

Structured Assignment: Not Available

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In 2004, the global market for Voice over Internet Protocol (VoIP) had reached around $82 billion. There were around 1,100 VoIP providers in the US. Skype technologies was one such privately held Global Internet Telephone company which offered VoIP services. Skype revolutionised the VoIP market by offering free internet telephony to the customers. Backed by the success of its music file sharing system Kazaa, Skype offered its services based on the P2P technology which eliminated the middlemen and the benefits thereof was passed on to the customers. Since its launch, Skype’s software had been downloaded nearly 145 million times, and around 35 million registered users were using Skype’s services as of March 2005. The case discuss on the business model of Skype and the technology behind it. The case further highlights on the challenges faced by the company.

Pedagogical Objectives:

  • To understand the Business model of Skye
  • To discuss the implications of the P2P technology
  • To discuss the long term implications of the revenue model of Skype.

Keywords : Product Launch; Disruptive Technology; Skype; VoIP; InternetTechnology; KaZaa; Business Model; Niklas Zennstorm; Vonage; World of mouth; Innovation Management Case Study; Napster; VoIP Providers in the US; Free calls


  • Introduction
  • Background Note
  • About Skype
  • Business Model
    • Technology
    • Services offered

  • Skype's Challenge
    • Economic Implications
    • Privacy Issues – Individual users
    • Security issues – Corporate users
  • Road Ahead

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