Launch of Skype Phone

Skype generates revenue through its premium offerings such as making and receiving calls to and from landline and mobile phones, as well as voicemail and call forwarding. Skype is linked with a growing network of hardware and software providers and is an eBay company.

Skype joint up with 3 Mobile - a wireless carrier in Europe, Asia, and Australia, to launch a customized cell phone. This is the first time a mobile operator is allowing Skype users to make free Skype-to-Skype calls and send free Skype instant messages directly from a mobile phone. Skype deals with complaints by using a forum where Skype users note down the problems they are experiencing; program developers solve their problems there and is known for giving a relatively fast feedback. Using the selling and marketing concepts, Skype is able to use its popularity on SkypeIn, to attract people into buying the new Skype-phone through integrated marketing. 3 Mobile, owned by Hong Kong's Hutchison Whampoa, do not charge extra to customers using the Skype feature but they will need to pay extra for other services such as text messaging.

Strong competitors within the industry such as Apple's iPhone would be a threat. Skype-phone is comparatively standard to iPhone where it combines web browsing and iPod music player to its design and Skype-phone has no expertise since it is an augmented product of a phone, and only has the basic concept of cheaper phone calls. However, Skype managed to cooperate with 3 mobile which is a large step to success having the handsets easier to get to consumers' hands and also being the first phone company doing so, thus benefiting from first marketing. iPhone would however, be deprived because it is limited to O2(UK mobile operator) users only and the handset is locked, preventing from consumers to use it abroad. Skype's strength towards iPhone is that once the buyer recognises the need for a cheap price plan phone, Skype-phone would seem more beneficial and practical in the long term since it will be cost-saving for consumers. This new innovation gives selective attention to original Skype users so they can talk for free outdoor using Skype-phone.

Skype is relied upon at businesses as many use it as their source of communication, thus the product's position is graded heavily. Skype uses one of Michael Porter's competitive positioning strategies - overall cost leadership to compete in the industry and it slightly differentiates Skype users from other consumers because they can use the iSkoot button on Skype-phone, which instantly brings the features of the internet voice service directly to the handset. It is also one of the few companies that sell social goods to the public, using no deceptive practices or unfair competitive marketing practices such as penetration pricing because price plans have always been below the industry average. Skype has been undergoing total quality management to retain its customers by constantly upgrading the quality of videos with Skype beta version and cooperating with Logitech, believing "The experience is so good, it might be better than being there".

SkypeIn, one of the main services of Skype, is used extensively at work to communicate within the organisation and clients overseas by video-conferencing. Skype had a reputation for zero faults since its inception but in August 2007, Skype suffered a major outage resulting in complaints on having to use other ways of communication such as landline and other VOIP providers - Google Talk, one of its main competitors. This is Skype's marketing environment, where it has no control over, that affected the ability to maintain relationship with target customers. However, the negative impact was smaller than anticipated. Given that Skype has provided a consistent and reliable level of service, years of customer loyalty due to customer satisfaction has helped the firm to maintain its reputation despite its bad publicity of incompetent delay in restoring the program. This is because Skype has reached the production concept where consumers value SkypeIn and