SKYPE Vs AT&T
AT&T Overview
The American Telephone and Telegraph Company (AT&T) was incorporated in New York in 1885 as a subsidiary of the American Bell Telephone Company. AT&T’s corporate charter laid out the firm’s mission: “Connect one or more points in each and every city, town or place in the State of New York with one or more points in every other city, town or place in said State and in each and every other of the United States, Canada and Mexico; and each and every of said cities, towns and places is to be connected with each and every other city, town or place in said states and countries, and also by cable and other appropriate means with the rest of the known world.” AT&T began building its network out from New York in several directions. The first line, to Philadelphia, opened in 1886. AT&T reached a major milestone in 1892, when it began telephone service between New York and Chicago. Keeping pace with the growing demands for telecommunications required continuous innovation, improvement and expansion in each area. Transmission media evolved from open wires to cable, coaxial cable, microwave relays and to fiber optics.
Skype Overview
Skype was built by Sharman Networks after they bought Kazaa, a file sharing program from Niklas Zennstrom of Sweden and Janus Friis of Denmark. Skype leveraged the same type of peer-to-peer networking idea that Kazaa was built upon, but applied it to voice transmission instead. The idea was that the more people that used Skype, the more reliable the connection would be for each of them. Skype’s big selling point was that users could make free voice calls (using their computers and a headset) to each other from anywhere in the world. After all, since it was a peer-to-peer network it was to Skype’s advantage to have as many people using the network as possible so that it’d be stable and fast. Skype also handled instant messaging, which is relatively easy compared to voice data and eventually added live videoconferencing—all of which was free between Skype users. Then it started making money by charging people for using Skype to call out to regular telephone numbers, and to accept incoming calls to Skype from outside phone numbers at rates that were pennies on the dollar compared what people were paying for standard phone service and long distance calls.
In 2005, eBay purchased Skype for $2.6 billion. Unfortunately, eBay’s plans for the company faltered, and ended up with them selling 70 percent of their stake to outside investors. On May 2011, Microsoft agreed to purchase Skype for US$8.5 billion, and announced the company would be incorporated as a division of Microsoft called Microsoft Skype Division.

VoIP Industry Overview
The Voice over internet Protocol (VoIP) services industry refers to the conversion of voice signals into digital data, which is transmitted over the internet. VoIP services cater to businesses, consumers and state bodies. VoIP services are delivered through several facilities, including cable infrastructures and the Public Switched Telephone Network (PSTN). Other delivery providers include power lines, satellite and wireless infrastructures. The global VoIP market recorded strong growth between 2006 and 2010, but the residential customer segment has witnessed a decline since 2010. Obstacles to market entry include competition from leading outfits such as Google, and strict regulations to which the industry must adhere. The rollout of 4G technologies will fuel market growth, and cable companies offering VoIP service together with cable service will do well over coming years. Mobile VoIP applications are expected to reach $36 billion by 2016, with the number of users rising to 180 million, according to Visiongain. VoIP technology is allowing operators to provide cheaper communication services to an ever-expanding global consumer base. Mobile operators and VoIP vendors continue to team up to better deploy mobile VoIP services.
Porters Industry Forces Analysis for the VoIP Industry
Threat of Substitutes: Substitute for VoIP is low
Threat of New Entrants: The threat of new entrants is high in this market. As a rule in economics, companies will enter this market until there is a profit to be earned. Companies like Microsoft, Google, and AOL are just a few that are planning to compete in the VoIP market.
Bargaining power of Buyers: The bargaining power is moderate because of the ease of switching to other companies. Customers are “fought for” among competitors.
Bargaining Power of Suppliers: Weak/Limited bargaining power. VoIP providers are widespread and infrastructure is readily available.
Rivalry among Existing Firms: High - Low switching costs and lack of differentiation. Skype and other services are challenging well established telecommunication companies but they have the capacity to put up a fight.

Skype’s SWOT Analysis
Strengths
• Simple to use
• Free video conferencing
• Great quality of service
• Major community interest
Weakness
• Quality of service depends on internet speed
• Malicious links
• Hackers can spy calls
Opportunities
• International e-commerce
• Mobility and fixed mobile union
• Next generation peer-to-peer technology
Threats
• Companies offering international calls
• Encryption system
• Competition from oVoo, facetime(Apple devices), Tango etc
Skype’s Competitive Advantage and Recommended Strategies
Differentiation with low-cost service is Skype’s approach for competitive advantage. Skype has easy and effective marketing and less expansive retailing and distribution. The fact that there is no special infrastructure to support the promotion, gaining customers, and the distribution channel gives Skype a strong competitive advantage over the rest of the VoIP service providers. "Skype to Skype" lets you call anyone at zero cost that has downloaded and installed the free Skype application on their computer or smart phone. With "Skype-Out" you can call any landline or mobile phone in the world at comparatively cheap local rates.
Interestingly Skype-Out rates are independent from the caller's location. Additionally, the payable value-added service “Skype-In” allows users to be reached by a traditional phone through a regular phone number.
Global mind-set: analyzing the environment from a global communication standpoint Core Competency - Word of mouth marketing -this leads to its competitive advantage low acquisition costs. Core Competency - Relationship with mobile operators/TV manufacturers and businesses using Skype
In summary, Skype should embark on extensive advertisement to increase its customer base. The more customers Skype will retain will translate into their revenue and market share.