More on The Innovators Dilemma by Alec Saunders
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Skype Winning With 3? Actually It's 3 Winning With Skype

Two posts this week about Skype and mobile operators by Om Malik and Rich Tehrani underscores why playing with your competition makes sense.

What's interesting is neither has had any first hand experience (that I know of) using the 3 Skype service in the UK as I have. If they did, they would have been even more effusive on the positive side of things in their commentary.

First, from a price and performance perspective, I can't make calls any more cheaply in the UK while on the go than I can with the Skype phone from 3, running iSkoot's technology. Once 3 opened the service up to allow Skype Out calls, it was game over to any other carrier for someone who has to reach a community of people I deal with the way I can via Skype (or for them to reach me) or to make International Long Distance calls. The only rival is client Truphone and that's because their service is a mobile phone derived service at the core. The Skype phone though has the second largest telephony addressable audience in the world, next to the regular PSTN, so when the two are combined, 3 wins the game.

The key is presence. I spend almost no time leaving voice mails, as the presence data available via Skype makes it easier to reach someone I need to talk to. After that, everything else is just another feature.

By selling Skype as a service now, 3, is going to sell more data plans, and connect more people to more people. Other carriers should carry the same idea forward. What's more, since the new SkypePhone2 can be tethered, I can always us it connected to my laptop as a 3G modem, making it a great value for those who don't want to buy a separate 3G stick or card.

To me, both Om and Rich have made solid points why some USA carrier should embrace the SkypePhone from INQ. It will be a win, once their networks can support all that Data traffic of course.

Update: Jim Courtney weighs in with his thoughts a few days after this post.


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Andy Abramson


Skype's addressable audience size + an all digital backbone (3 was the first to embrace 3G and IP)

A need to differentiate itself from Vodafone and Orange in the UK, plus more established carriers who are not Skype friendly where they compete.

Proven uptake in the UK with Skype and sales of SkypePhones.

New Skype application (from Skype) works on more handsets (i.e. Nokia, Samsung, etc.) means chance to convert.

High pre-paid market existing in UK with both banked and unbanked consumer audience means better chance to convert users to 3.

PrePaid means lots of money in the bank that never gets converted (breakage)

This is a true differentiation strategy and very workable.


So I am missing what is in it for 3 in this service. As I understand it, with an unlocked phone and a one-time SIM, I get unlimited airtime when calling other Skype users. It really looks like it is a loss leader in the hope that they will subscribe to voice/data plan. It is not a strategic plan and I am puzzled as to why all three of you suggest otherwise.

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