Skype - An Entirely New Way to Connect

            When attempting to uncover a good example of a disruptive innovation that I use quite often, I began thinking about the technologies I use on a daily or weekly basis. I was soon led to my answer for this assignment and the technology I have highlighted as being disruptive: Skype. I first discovered Skype with my friends during my freshman year of high school. Although the technology had been around for a few years, it was during this time that the start-up company was really picking up steam and disrupting the multiple industries in which it operated.

            Skype was created by a pair of Scandinavian geniuses who also teamed up to create the very popular Kazaa music downloading technology. Janus Friis of Denmark and Niklas Zennstrom of Sweden first released Skype to the public in August 2003. EBay would go on to purchase the company in 2007 for $2.5 Billion before Microsoft eventually acquired the company and all of their technologies in May 2011 for $8.5 Billion. Skype now operates as its own division within the Microsoft organization. Skype has always been and will forever be free to download and use. When the technology was first released in 2003, the company solely focused on voice over IP (VoIP) operations, where two individuals could connect to each other and talk without a service charge as long as each individual had an internet connection and had downloaded Skype. In the years since these humble beginnings, Skype has since added a video chat feature and file transfer options to their list of technologies. These advancements allow Skype users to not only talk over the internet, but also videoconference and transfer documents with their friends and colleagues. While almost all of Skype’s features are absolutely free, users due have to pay a small fee (less than typical mobile rates) to call an actual telephone from their Skype profile.

            Since its founding in 2003, Skype has proven to be one of the most disruptive technologies of the 21^st century. In 2005, Skype held a 2.9% market share of the international call market. By 2012, this figure had risen to a 34% market share for international calls. Skype is beginning to compete heavily within the telecommunications industry. In particular, the international call market is currently undergoing a complete takeover. Most phone carriers charge additional fees to make international phone calls, due to the additional costs these companies endure when making connections oversees. These obstructions are eliminated when connecting individuals over the internet, which has no borders. Of course the ability to speak with family members in other countries for absolutely no charge is the main reason why customers prefer to use Skype. The videoconferencing feature only furthers the attractiveness of communications innovation. Skype is continuously looking for new features to add to their business plan and have led to the rise of multiple websites and similar apps where users connect via webcams over the internet.

The only thing that stands between Skype and a stronghold in the telecommunications market in my opinion is saturation of the market. Due to the popularity of Skype, almost all messaging applications have added videoconferencing features similar to the technology that originally brought about the company’s meteoric rise. Skype spawned an entirely new market for internet-to-internet connections. Now they must fight to control the market they created.