Skype and Competition

Courtesy:  Skype Journal

Every startup founder is getting this question from investors, and customers. This wasn’t true in 2009. The question speaks to two of Skype’s strengths as it approaches its 8th birthday: brand and network effects.

The first strength is brand awareness. Everyone knows Skype. Literally half of Internet users have tried Skype. So Skype is no longer the domain of specialists in telecom, instant messaging, or video conferencing. More people know about Skype than know about Cisco’s telepresence or that Vidyo powers Google+ Hangouts. More people understand you can make cheaper calls on Skype than know of the hundreds of other services that offer even lower rates.

The second strength is network effect. The chance that someone you know is in Skype are vastly better than with any other communication or collaboration service. A user’s social network switching costs are not trivial. You lose history, you lose touch with contacts. You are adopting a weaker dialtone with fewer people you care about available for calls right now…

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