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Skype is a free license video chatting and archiving software developed by Microsoft Inc. that has greatly revolutionized communication at a business and individual level. The application allows people to make live video calls, conference chats and archive resources. Microsoft would have a difficult time making the decision to switch to charging for their Skype services. This is because customers have grown accustomed to the free service. They would be discouraged from subscribing to the services once charges apply. Furthermore, given the highly competitive nature of the software industry, raising the charges of Skype would drive customers to other equally efficient applications such as Google Hangouts, Team Speak, and Fire fox VoIP add-ons. From this perspective, Skype is positioned in a very unstable environment (Tang, Wei, & Kawal, 2012).

The beneficiaries of Skype should understand that the acquisition of the VOIP vendor in 2011 represented a business investment for Microsoft. Therefore, the last four years represented a marketing strategy to capture a significant market share. Consequently, the corporation has gone nearly a decade without any profits from Skype (Tang et al., 2012). Meanwhile, they continue to incur heavy costs generated by user traffic, server maintenance, and other office costs. If Skype users expect to continue enjoying the excellent features in the software, the promotion campaign to introduce paid Skype would appear as logical and a reflection of better services in the future. The only reason for a company to pay $8.5 billion for software that is distributed freely is only if they plan to charge for its usage later (Tang et al., 2012). Therefore, Microsoft would have to bow to the marketing departments’ pressure for increased yields on their Skype investment. Therefore, in conclusion, Microsoft needs to find a compromise between recouping their investment and maintaining their market share. An alternative can be to charge specific services and still leave others free.

 

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Tang, J. C., Wei, C., &. Kawal, R. (2012). Social telepresence bakeoff: Skype Group Video Calling, Google+ Hangouts, and Microsoft Avatar Kinect. Proceedings of the ACM Conference on Computer Supported Cooperative Work, CSCW, 37-40.

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