Competing against Skype 104: Value Chain Denial
Do you think Skype is a threat to incumbent telcos?
This is the second in a series outlining tactics telcos have at their disposal to answer the question "If you think Skype is a threat to your telecom profits, how can you compete?"
Tie-Up Key Suppliers.
A business ecosystem attack.
Skype needs partners to make its back-end business work. A large competitor might threaten to remove their business (or threaten to enter the market directly) if a Skype supplier continues to do business with Skype or offer Skype favorable/reasonable terms.
For example, Skype's SkypeIn and SkypeOut rely on call termination service providers to touch the public telephone network. Skype also relies on router manufacturers. Some of their suppliers: Colt Telecom, Level3, iBasis, Teleglobe, Cable and Wireless, B3G Telecom, TDC Song, Mblox, mobile365.
This is a subtle attack. Stifling Skype's value chain will only show up when negotiations with partners go badly for no apparent reason. Terms become unreasonable, higher quality of service no longer available, phone calls not returned. This attack relies on Skype not being sufficiently diversified in each market and in some markets dominated by large players.
A successful attack could hurt Skype's product quality, increase operations costs, and slow Skype's build-out to meet growth.
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