Skype: SWOT Analysis

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Introduction Skype was founded in Estonia, but is now headquartered in Luxembourg (about.skype.com, 2012). The company had originally filed with the Securities & Exchange Commission a Form S-1, applying to be eligible to list ADRs on American stock exchanges. Instead of an IPO, however, Skype was purchased by Microsoft for $8.5 billion in 2011. Skype had previously been purchased by eBay in 2005 for $3.1 billion, a deal that is largely considered a failure (Sarno, 2011). As a result of the deal, Skype became a new business unit within Microsoft (Primack, 2011). The purchase signified a strategic shift for Skype, and it also enhanced Microsoft's market share in instant messaging. Prior to the deal, Windows Live Messenger held a 40.67% share, while Skype held a 27.39% share, so combined Microsoft now has a dominant market share in instant messaging (OPSWAT, 2011). As outlined by CEO Tony Bates, the post-merger Skype has a mission "to be the communications choice for a billion people every day" (Bates, 2011). The vision is that Skype wants to "transform communications." The company is a differentiated player in the communications business, focusing on software for VoIP (voice over Internet protocol) and instant messaging functions. The software features both voice and video calls that are transmitted over the Internet, including value-added services like video-conferencing and file transfer (CrunchBase, 2012). So right now, Skype appears more focused on market share and

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