Skype Qnd the Chqnge of the Value Curve in Voip Industry
The intention of this essay is to evaluate the change of the value curve in the chosen industry caused by a recent innovation in its industry. To develop this theoretical analysis, it seems interesting to mention the case
of Skype which has revolutionized the telecommunication industry. Originally released in 2003 by three Estonian developers, the service allows people to communicate thanks the voice-over-IP solution. Bought by Microsoft in 2011 for $8.5 billion, it reached 663 million users in 2012. Moreover, Skype reveals the essential shift from analogue phones to digital communication. Within this essay, several theoretical concepts would be developed and underpinned practical examples taken from how Skype has revolutionized the
telecommunication industry. Firstly, the new value innovation which constitutes Skype would be characterized. Afterwards, the impact of Skype’s new value innovation on its industry would be explained. Secondly, it would be seen how innovation and entrepreneurial intensity of firms introducing new services or products can influence the shape of the industry value curve, using strategic canvas framework. Thirdly, the identification of new groups of customers that enable the new innovation would be demonstrated.
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o begin with it seems relevant to define innovation. According to Steve Job cited in Fortune in 1998, innovation does not depend on the amount of money you spend but on “the people you have, how you 're led, and how
much you get it”. Besides according to Drucker (1985, cited in Kuratko and Hodgetts, 2004:137), innovation is “the specific instrument of entrepreneurship [...] the act that endows resources with a new capacity to create wealth.” Drucker asserts that innovation leads to wealth creation. Kim and Mauborgne nuance the notion of innovation introducing the new value innovation. According to them, “Value Innovation is the
of Skype which has revolutionized the telecommunication industry. Originally released in 2003 by three Estonian developers, the service allows people to communicate thanks the voice-over-IP solution. Bought by Microsoft in 2011 for $8.5 billion, it reached 663 million users in 2012. Moreover, Skype reveals the essential shift from analogue phones to digital communication. Within this essay, several theoretical concepts would be developed and underpinned practical examples taken from how Skype has revolutionized the
telecommunication industry. Firstly, the new value innovation which constitutes Skype would be characterized. Afterwards, the impact of Skype’s new value innovation on its industry would be explained. Secondly, it would be seen how innovation and entrepreneurial intensity of firms introducing new services or products can influence the shape of the industry value curve, using strategic canvas framework. Thirdly, the identification of new groups of customers that enable the new innovation would be demonstrated.
1
T
o begin with it seems relevant to define innovation. According to Steve Job cited in Fortune in 1998, innovation does not depend on the amount of money you spend but on “the people you have, how you 're led, and how
much you get it”. Besides according to Drucker (1985, cited in Kuratko and Hodgetts, 2004:137), innovation is “the specific instrument of entrepreneurship [...] the act that endows resources with a new capacity to create wealth.” Drucker asserts that innovation leads to wealth creation. Kim and Mauborgne nuance the notion of innovation introducing the new value innovation. According to them, “Value Innovation is the
References: Figure 1 - Value innovation (retrieved from Kim and Mauborgne 2012) Figure 2 - Value Innovation: The Strategic Logic of High Growth (retrieved from Kim and Mauborgne 2012) 10 Figure 3 - Growth of Skype (retrieved from TeleGeography | Data-driven telecommunications market research 2011) Figure 4 - Red ocean vs. Blue ocean strategies (Retrieved fromKim and Mauborgne 2012) 11 Figure 5 - Strategy Canvas (retrieved from Kim and Mauborgne 2012) Figure 6 - Strategic canvas Skype (Own illustration based on conference Jonathan Rosenberg 2012) 12 Figure 7 - Four Actions Framework (retrieved from Kim and Mauborgne 2012) Figure 8 - Skype still in the "blue ocean" (retrieved from Focus.com and CreditScore 2011) 13 Figure 9 - 3 Tiers of non-customers (retrieved from Kim and Mauborgne 2012) 14