Sample Business Studies Research Paper on Skype

Skype

            The past few years have seen an explosion in communication technology hinged on invention and innovation. Perhaps one of the most important of the invention is the Internet and the launch of the World Wide Web at the turn of the century.  With computers being able to communicate with one another and the masses able to access online pages and websites from the different web browsers available, the Internet and World Wide Web have ideally become the most important platforms for human communication. Perhaps of most importance has been the enablement for innovation that has come with the availability of the Internet for the masses, particularly in relation to communication.  Email and instant messengers such as AIM, Yahoo Messenger and Windows Live Messenger (initially MSN Messenger) were just among the first communication tools to get to the masses over the internet. Largely, these communication tools allowed users to send text and images, as well as attach files (email) in communication with other users. Aside from instant messaging and email, voice and video calls have increasingly become popular since the establishment of the Internet. One of the most important inventions in voice and video calling over the Internet is Skype, whose launch brought a great change in online communication (Fell, 2011). With users able to call other users (friends and relatives) over the Internet for free or at cheaper rates, Skype has indeed changed the lives of many, greatly narrowing the distance between people, while at the same time saving on the cost of communication in comparison with traditional voice calls.

Description

            Launched in 2003, Skype is a service that allows its registered users to call one another for free over the internet, with an option of paying for its premium service, which allows the users to call landlines and mobile phones (Keane, 2010). The service allows users to send text messages as well as video messages in addition to allowing the exchange of digital documents. Perhaps the most distinctive of Skype’s services is the video call and video conference calls. The video call feature allows users to make video calls to one another through computers and cellphones, with the option of adding other users to the call for a video conference call. The video conference call feature allows the creation of a group, and up to 25 people to participate in the video conference call at a time (Skype, 2017). Moreover, within the group feature is the option to have group chats, which ideally allows users to participate in online text chatting instead of the video conference call.

Skype uses voice-over-Internet protocol, a technology that allows users to make telephone calls over the Internet. Essentially, voice-over-Internet protocol (VoIP) employs a technology that changes the analog voice signals into digital data packets sending them over the Internet network (Arora, 2000; Desantis, 2008). Arora (2000) informs of VoIP “VOIP can be achieved on any data network that uses IP, like Internet, Intranets and Local Area Networks (LAN). Here the voice signal is digitized, compressed and converted to IP packets and then transmitted over the IP network. Signaling protocols are used to set up and tear down calls, carry information required to locate users and negotiate capabilities” (p. 2). While the technology relies on the Internet protocol and VoIP service providers such as Skype to provide the connection, interconnected services are much more intricate. According to Desantis (2008), interconnected VoIP services allow users to make and receive calls to and from traditional landline and mobile numbers, but for a service fee. Skype has such a feature, but users need to have Skype Credit or a subscription to make such calls (Skype, 2017).

Source

To facilitate calling, Skype uses peer-to-peer sharing software, which users download and install on their computers. Through the technology, Skype can have as many users as possible using the service for free, and allowing the network to be more stable and reliable (Aamoth, 2011). Furthermore, with the peer-to-peer service, Skype could essentially allow its users to use the service for free, making calls to each other across the world. The clarity, speed and stability of the service’s network rely on the number of people using the network, and the more reason the service has continued to be popular (Aamoth, 2011). 

Skype’s underlying peer-to-peer network originates from Kazaa, a peer-to-peer file-sharing program launched in the early 2000s. At its launch, Kazaa enabled sharing of different files among its users including music, video and programs, a fact that made the program very popular (Aamoth, 2011). The working of the software and the file sharing feature is that it provides a connection across everyone on the network. Additionally, the network is in such a way that there is no central server holding all the files. Thus, the more people there are on the network, the faster the network in sending files back and forth. Additionally, the more the number of people on with the specific file, the faster it is to download the specific file (Aamoth, 2011).

In its rudimentary stages, Kazaa was a backend music-sharing software built by Ahti Heinla, Priit Kasesalu and Jaan Tallinn, all from Estonia. Niklas Zennstrom from Sweden and Janus Friis from Denmark then further developed Kazaa, later selling it Sharman Networks (Aamoth, 2011). The idea and technology used in Kazaa, however, stuck with the two (Niklas Zennstrom and Janus Friis), and they used the idea to build Skype. In the new technology, the two used the peer-to-peer file sharing feature to bundle voice over the internet as a calling feature. The service then gained popularity since it allowed people from remote areas to make free, clear calls from and to other remote areas over the internet. 

At the onset, Skype allowed people to make voice and video calls over the internet through their computers. All the users needed were a headset for the earpiece and microphone, and one would then make the calls. Later however, the company launched instant messaging and live video conferencing, using the peer-to-peer network, which guaranteed clarity and stability (Aamoth, 2011). While all these were free, the company began charging for making calls to landlines and mobile phones, as well as receiving the calls, although the charges are still cheap in comparison with payment for standard phone charges for long distance calls.

From its initial release, Skype has been a desktop application installed on the user’s computer and using the Internet connection to avail its services. The application is available for Windows operating system, OS X (Mac) and Linux. With the proliferation of smartphones and tablets as well as other portable devices, the developers have released Skype for all these platforms. The application is therefore available for downloading from the App Store (for iOS), Play Store (for Android), for Windows (through the Universal Windows Platform release for all Windows-based products), BlackBerry, and Symbian.

Background

            Skype’s underlying software Kazaa, built by the Estonian developers Ahti Heinla, Priit Kasesalu and Jaan Tallinn has the Estonian prime minister to thank for its existence. According to the Economist (2013), after independence from the Soviet Union, the prime minister created a good environment for business in Estonia through a flat income tax, sound money and privatization. The government additionally embarked on building its own digital system having declined Finland’s free analogue telephone exchange (The Economist, 2013). By 2000, the country (Estonia) had declared Internet access to be a human right, with free Wi-Fi a common occurrence in the country.

            These events set a precedence of a tech-savvy population, given the country’s belief and extensive use of the Internet and technology (The Economist, 2013). Therefore, with a belief in technology, the country experienced an upsurge in the number of technology start-ups, one among which wrote the code to Kazaa. The belief in the country on what technology could do and its widespread use in the country across different sectors including education set the precedence for the establishment of Kazaa. By meeting and building Kazaa as a peer-to-peer file sharing software, the Estonians, Swede and Danish coders built the foundation for the development of Skype.

            While Skype is not the only VoIP service, the fact that it is free made for its great success. Having been borne out of the peer-to-peer service that was Kazaa, Skype became widely popular in comparison with other VoIP services.   The free Internet in Estonia and the very need to share files (and the service) had a great impact in the creation of Skype as a free online calling and chatting service. In creation of Skype, the idea was to bring a free service that could allow people to communicate freely over the Internet, much as it was the idea in the creation of Kazaa as a free file sharing software (Arora, 2000; Desantis, 2008). The idea of creation of Skype, and even its underlying software and functionalities, therefore came as a result of the success that came with Kazaa.

Players

Skype had Niklas Zennstrom from Sweden and Janus Friis from Denmark as the main entrepreneurs who worked in its creation and running in the early years of the company, and the innovation that allows people to make voice and video calls from the Internet on their desktop computers, and most recently on their mobile phones.  With its headquarters in Luxembourg, Zennstrom and Friis had previously worked in the creation of Kazaa, a peer-to-peer file sharing software in collaboration with Ahti Heinla, Priit Kasesalu and Jaan Tallinn from Estonia (Fell, 2011). Having worked on the creation of Skype, Zennstrom and Friis released the first public beta version of the software in 2003, making its first official launch to the public (Fell, 2011).

In the early beginnings of Skype, Zennstrom and Friis were the main players behind the software, later making agreements with Onet.pl to offer the software to the Polish market. The agreement with the Polish web portal allowed Skype to get further market and exposure before it purchase by eBay, which paid $2.5 billion for a 65 percent stake in the company (Fell, 2011). eBay’s purchase of Skype not only allowed the company (Skype) to gain more traction, but also brought more performance-based considerations allowing the software to bring even more features, while at the same time registering more users. The performance-based considerations by eBay are especially visible given that 2006, a year after its sale to eBay, Skype had more than 100 million registered users; double the users it had the previous year (Fell, 2011).

Backing

At the onset, Zennstrom and Friis were the only people involved in the investment and management of Skype. Given that it was a free service, there was not much in revenue that the software brought, although it carried advertisements, which brought a little revenue. The introduction of Skype Credit and subscription, however changed the company’s revenue streams, allowing it to get some revenue from its users. With a $2.95 monthly subscription fee, users could make unlimited (within the fair usage policy) calls to landlines and mobile phones in the US. The feature allowed the company to gain more in revenue, in addition to the Skype-In feature, where people using landlines could call Skype users through a regular phone number for $12 for three months or $24 for a year (Fell, 2011).

After its purchase by eBay, Skype added even more features given the monetary backing that came with such a purchase. By 2007, Skype was generating $382 million in revenue in addition to having more than 276 million active users (Fell, 2011).  Skype’s ownership by eBay was however a short hiatus, as the company (eBay) sold the online video and voice calling company to Silver Lake Partners and other investors for $2 billion (Horowitz, 2011). Skype’s sale to Microsoft for $8.5 billion made things better for the Internet telephony company given Microsoft’s financial backing and in depth knowledge of the technology industry. Today, as part of Microsoft, Skype has become the default video calling app for all Microsoft products including Windows 10 and Xbox.

Process

From the onset of its launch, Skype was a desktop client. The first beta version released to the public in 2003 was a desktop application that allowed users to download and install the client on their desktops. In addition to running the native desktop client, Skype is also online on the web through its IP addresses skype.com and skype.net. Thus, after launching the native client software for users to download from Skype’s online domains, users would register and have their accounts ready to make video and voice calls over the Internet (Horowitz, 2011).

Downloading Skype and installing on the desktop across different platforms, creating a username and being able to make free video and voice calls was the first step in disseminating the innovation. After its purchase by eBay, then Silver Lake Partners, and later to Microsoft, the businesses increased advertisements to popularize some features the innovation, which were initially not part of the application. For instance, at its launch and a few years after its launch, Skype did not offer video conference calls. However, over the years, Skype has included video conferencing as part of its offering (Skype, 2017).

With a proliferation of smartphone and other handheld devices, Skype has moved from just the to-go desktop video calling client to becoming one of the most popular smartphone applications. Despite having competition on the Android and iOS platforms in Google Hangout and Apple’s FaceTime, Skype’s Android and iOS apps are still among the most popular for video calls (Horowitz, 2011). Today, therefore, users can easily download Skype from the App Store (iOS) and Play Store (Android) as well as Microsoft’s Market Place onto their smartphones and easily make local and international calls to both Skype users and none-Skype users on their landline and mobile phones.

Value

Over the years since its launch, Skype has grown to become one of the most popular online voice and video calling application.  From its launch to date, Skype has had unprecedented success changing the way people communicate. Among the greatest impacts Skype has had is availing the ability of people to communicate across different platforms. With clients for desktop computer across the different platforms (Windows, Mac, Linux), Skype has essentially enabled easier communication among people, and at no cost to its users. Even more is that Skype is currently available for mobile phones across the different mobile device’s platforms. Although it faces competition from Google’s Hangouts and Apple’s FaceTime, Skype’s main advantage over its competitors is the ability to work across different platforms, while its competitors are platform specific.

Skype’s value goes beyond simply connecting people socially over long distances. According to Moskvitch (2013), Skype has become a professional tool used by people from different professions. For instance, doctors are actively using Skype to give instructions on procedures to peers far away, a feat that would have been impossible over voice or email. Moskvitch (2013) informs that doctors find it easier to give instructions and explain intricate procedure via video. Using vide in this case makes it easier as the other can see what the other is doing, and provide immediate feedback, in addition to demonstrating the procedure.

Making traditional international calls is an expensive affair to both the recipient and the maker of the call. Skype on the other hand, offers a cheaper option for users to make local and international calls over the internet at a fraction of what telephone companies charge. Essentially, Skype allows people to keep in touch cheaply a fact that increases social bonding across the geographical divide (Moskvitch, 2013). Families, friends and relatives can today stay in touch regularly at cheaper or no cost at all.

Skype for business on the other hand, allows businesses to communicate with their clients, other businesses, and employees, as well as enable employees working in teams to collaborate on different projects. Through a video conference call, employees working as a team on a project can communicate and work as if in one room. Skype for business additionally allows businesses to make, receive and transfer calls in the office, at home and on the road at low rates. Given the availability of the software on both desktops and phones, businesses can therefore transfer these calls on PC and mobile.

Skype continues to face competition from other cross platform voice and video calling applications on smartphones such as Whatsapp, Viber, and ooVoo among others. However, it is noteworthy to mention that while the competition offer greater choices to users, the revolution began with Skype. Moreover, while the new competition may be good at providing the video and voice calls on mobile phones, Skype remains king in online desktop telephony. The growth of Skype was unprecedented, and over the years, the company has retained most of the engineers who worked on the first iteration of the software, giving it consistence, and perhaps the stability it requires to keep connecting people and changing the world as it did when the service first launched in 2003.

References

Aamoth, D. (2011). A brief history of Skype. Time. Retrieved from http://techland.time.com/2011/05/10/a-brief-history-of-skype/.

Arora, R. (2000). Voice over IP: Protocols and Standards. Washington University. Retrieved from https://www.cse.wustl.edu/~jain/cis788-99/ftp/voip_protocols.pdf.

Desantis, M. (2008). Understanding voice over Internet protocol (VoIP). US-CERT. retrieved from https://www.us-cert.gov/sites/default/files/publications/understanding_voip.pdf.

Fell, J. (2011). Skype: From startup to $8.5B in eight years. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/219621.

Horowitz, B. (2011). Why the Skype investment worked. Fortune. Retrieved from http://fortune.com/2011/05/10/why-the-skype-investment-worked/.

Keane, M. (2010). The secret to Skype’s success: Growing the online phone market. E Consultancy. Retrieved from https://econsultancy.com/blog/5272-the-secret-to-skype-s-success-growing-the-international-phone-market.

Moskvitch, K. (2013). Skype: How the online chat revolution changed lives. BBC. Retrieved from http://www.bbc.com/news/technology-23862352.

Skype. (2017). Groups calls. Retrieved from https://www.skype.com/en/features/group-calls/.

The Economist (2013). How did Estonia become a leader in technology? The Economist. Retrieved from https://www.economist.com/blogs/economist-explains/2013/07/economist-explains-21.