Product details

By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.
You can change your cookie settings at any time but parts of our site will not function correctly without them.
Case
-
Reference no. EC37
Subject category: Entrepreneurship
Published by: Stanford Business School
Originally published in: 2006
Version: 24 August 2006

Abstract

Since the company launched its software product in August 2003, the word ''Skype'' has become synonymous with free calls over the Internet. Skype developed software that allowed people around the world to talk to each other for free. Prior to the company''s US$2.6 billion acquisition by eBay, announced in September 2005 and finalized in October 2005, the Skype network had grown to over 55 million registered users. Within two years of the Skype beta product launch, the software had been downloaded over 205 million times and the user growth rate had climbed to an impressive 130,000 new users per day. Skype''s registered user growth rate exceeded that of KaZaa, Hotmail, and ICQ over the initial 24-month period after each company launched its product. From Skype''s inception until the company''s acquisition by eBay, the company had secured over US$20 million in venture capital funding, while operating with just over 200 employees. eBay announced its intention to acquire Skype in a cash and stock transaction totaling US$2.6 billion on 12 September 2005. The acquisition was completed on 14 October 2005. Within six months of the announcement, Skype went on to sign co-marketing deals and partnerships with Motorola, Intel, Kodak, Netgear, Panasonic, Philips, and Warner Music Group. Skype continued to break new records and achieve significant growth: the total number of registered users climbed to over 100 million in April 2006 and the number of simultaneous Skype users on-line was propelled to 6 million. By mid-2006, it was believed that Skype carried an estimated 7% of all global international voice traffic. Looking forward, the Skype team had a number of challenges with which to contend. How would the eBay acquisition impact Skype''s distinctive culture? How would Skype compete with emerging services such as GoogleTalk and incumbents such as AT&T? What strategy should Skype pursue to sustain its growth?

About

Abstract

Since the company launched its software product in August 2003, the word ''Skype'' has become synonymous with free calls over the Internet. Skype developed software that allowed people around the world to talk to each other for free. Prior to the company''s US$2.6 billion acquisition by eBay, announced in September 2005 and finalized in October 2005, the Skype network had grown to over 55 million registered users. Within two years of the Skype beta product launch, the software had been downloaded over 205 million times and the user growth rate had climbed to an impressive 130,000 new users per day. Skype''s registered user growth rate exceeded that of KaZaa, Hotmail, and ICQ over the initial 24-month period after each company launched its product. From Skype''s inception until the company''s acquisition by eBay, the company had secured over US$20 million in venture capital funding, while operating with just over 200 employees. eBay announced its intention to acquire Skype in a cash and stock transaction totaling US$2.6 billion on 12 September 2005. The acquisition was completed on 14 October 2005. Within six months of the announcement, Skype went on to sign co-marketing deals and partnerships with Motorola, Intel, Kodak, Netgear, Panasonic, Philips, and Warner Music Group. Skype continued to break new records and achieve significant growth: the total number of registered users climbed to over 100 million in April 2006 and the number of simultaneous Skype users on-line was propelled to 6 million. By mid-2006, it was believed that Skype carried an estimated 7% of all global international voice traffic. Looking forward, the Skype team had a number of challenges with which to contend. How would the eBay acquisition impact Skype''s distinctive culture? How would Skype compete with emerging services such as GoogleTalk and incumbents such as AT&T? What strategy should Skype pursue to sustain its growth?

Settings


Related