Presented by: Lana Peters

Skype: Leading VOIP Revolution & Acquisitions

of Skype

Free Calls over the internetusing Peer-to-Peer technology

&eBay and Microsoft acquisitions of Skype

History/Background

1995 VocaltecInterest in Business applications was limitedRevenues for VoIP services less than 1% of

worldwide voice market

In 2003 Niklas Zennstrom CEO & Janus Friis Founded

SkypeChanged the telecommunications world

• Unlimited free calls• Superior quality

• Free download of Peer-to-Peer software

Enabling Technology & Business Strategies

KaZaA • File-sharing internet software

• Architectural features• P2P

• Low cost of maintenance• Easy registration of new users

• “word- of- mouse”Recruiting programming talent

“Supermodels not needed! We want your brain!”

“State-of-the-Art” Technology• Firewall bypass technology

• Global networks• Intelligent routing

• Security• Super simple

• Pocket PC software/ Mobile apps

Company Offer

Time Warner Cable Digital phone service $39.99 a month

AT&T Call Vantage $29.99 a month

Verizon VoiceWing $34.95 a month

Vonage Unlimited phone service $24.99 a month

Yahoo Messenger Free PC-to-PC among yahoo users

MSM Messenger Free PC-to-PC voice communication

Competitors

Source: Skype: Leading the VOIP, TIM Programs at Polytechnic University

Revenues

SkypeOut- value-added offering for fee based service

• Low cost international callsPartners Plantronics and Siemens

High quality telephone equipment and computer hardwareMarginal cost low

The acquisition of Skype by eBay

Looking to expand their vision and opportunityeBay + PayPal + Skype =

Unparalleled e-commerce and communications engine

eBay bought Skype in 2005 for around $3.1 billion

Skype- New users invite new usersEBay usersPayPal Wallet

EBay- Buyers & sellers meetPayPal walletSkype usersSkype-Enabled ecommerce

PayPal- Sellers offer PayPal & buyers use PayPalEBay & Skype usage

Skype Journal, this glimpse of the possible future, from the eBay Financial Analyst conference (4 May; pdf — pages 290 and 287,

eBay sells Skype

In 2007 after it failed to produce hoped for synergies

eBay sells Skype to investors led by private-equity firm Silver Lake Partners for 2.75 in 2009

A mere 18 months later….

The acquisition of Skype by Microsoft

In May of 2011 Microsoft’s CEO Steve Ballmer buys Skype from Silver Lake Partners for $8.5 billion —the biggest in the company's 36-year

history

Microsoft's Skype acquisition strategy

• Integrate Skype into everything from Xbox gaming consoles to its Office software for

businesses• Mobile-phone market (only 7.5% of the

smartphone market in 2011)

Microsoft's Skype Today As of February 2013 Skype has 250 million active users

What challenges might Microsoft’s Skype face in the future?

Was it a smart investment?

Microsoft Inherits Sticky Data Collection Issues From Skype, by Kevin J. O’Brian Published: February 24, 2013, The New York Times

Question #1

What was the record breaking amount that Microsoft bought Skype for?

A. 2.75 billionB. 3.1 billionC. 8.5 billion

C. 8.5 billionAnswer:

Question #2

What company did Niklas Zennstrom & Janus Friis start that helped them create the peer-to-

peer business model for Skype?

A. NapsterB. KaZaAC. iTunesD. Morpheus

B. KaZaAAnswer:

Question #3

Which of the following is not a way Skype earns revenue?

A. Low cost international callsB. Headsets and telephone equipment C. Monthly service fees for local calls

C. Monthly service fees for local calls

Answer:

Thank youThe end.