An assortment of information, discussions,events, news and views on VoIP Services.

Friday, March 14, 2008

A step by step guide on how to oversell your product: the Skype way

I believe that the title was catchy enough to make you finally land up here. So without further ado, let’s start off on the best guide on how to oversell your product, the Skype way. Marketing and sales people, pay heed. Such kind of advice is hardly floated free of cost.

First, you develop an excellent, one of its kind product. One that has all the juice to attract the masses as well as the crème-de-la-crème. Then, gradually, you market it in a very effective manner, so that it has tens of millions of users hooked on to it. This might be the hard part, but the results that you can get out of it are worth the trouble. After your product is sufficiently popular, you begin talks with big organisations to catch their attention. Once this is done, you choose one of them and offer your product to them at such a high price that it would take years for them to recover the costs, and wait, here is the interesting part. You know your product is not worth that much. But with the help of an effective marketing team, you pull off the deal. And then, as an icing on the cake, you go out in public and blab out as to how you fooled one of the biggest players in the industry and lured them into overpaying you.

Live example
Those who are in touch with the IT industry might have guessed as to what I’m talking about. For those who still did not, thank you for taking the trouble to read till here. Here is the story; I am talking about eBay’s acquisition of Skype. When founder Niklas Zennstrom and Janus Friis launched Skype in August 2003, VoIP was a very small industry. The only other major player was net4phone, which eventually ended up suing Skype in 2006 for something that made no sense. If you read out the bottom line, Skype was sued for doing what net4phone could not. Getting people on to using the VoIP service, that is.

Anyway, Skype expanded in a very grand manner. Slow to start with, it eventually added on 60 million users within a span of two years. This caught the attention of eBay, and while Rupert Murdoch’s News Corp. was also in the look-out for acquiring Skype, eBay finally took the booty at a heavy price of $3.1 billion. Days after signing off as the CEO of Skype after the deal was through, Niklas Zennstrom, who alongwith Janus Friis went on to develop, told a tech conference in Budapest that Ebay had overpaid for his company. While the words were slightly jumbled up, even an amateur could have understood what he meant. This whole episode eventually took a dramatic turn when Google started bidding for Skype quite recently, but at a price that has been written down by $900 million. While this might seem to be an extremely derogatory evaluation of a very popular brand, shockingly, eBay is still interested. Probably because of the fact that Skype did not turn out the way eBay had expected, or probably the way it was projected by the former company owners.

While one might appreciate the marketing skills of the Skype people, it was not a good deal at all for eBay. And to add insult to injury, we have Skype’s ex-CEO talking about how he is the only smart one and sold a lemon to eBay in front of the entire world. Considering all these aspects, Google might be biting off more than it can chew. While that is all for time to tell, Mr. Zennstrom has definitely raised a few doubts over the popular belief that one should not bite the hand that feeds it.

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