Verizon Wireless Looks to Lock High Use Skypers and Drive Data Revenue

| Feb 19, 2010 | Wireless Services - U.S. | Analyst: Bill Ho

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Event Summary

February 17, 2010 – Verizon Wireless and Skype have partnered in creating an “always on” mobile Skype application. Skype Mobile will operate only on select smartphones and allow customers to conduct calls to their Skype contacts without drawing from any monthly voice minutes. Further Skype Mobile features include Skype chat and displaying the users’ presence/state information, similar to the computer application.

Analytical Summary

• Current Perspective: Positive on the partnership to bring Skype mobile calling to Verizon Wireless, because Verizon Wireless obtains a competitive differentiator, with an exclusive U.S. relationship, and the deal opens up each company’s large user bases to the other. Skype provides both the user base and a well known brand/service for Verizon Corporation to integrate into its future wireless and wireline activities.

• Vendor Importance: High to Verizon Wireless, because the Skype Mobile application runs only on select Verizon Wireless smartphones and provides a voice-based reason for users to adopt these higher-end devices. As a result, the carrier can convert and upsell some frequent international callers to data plans.

• Market Impact: Low to moderate to the U.S. wireless segment, because one of the main benefits to use Skype is the low cost international calling rates and therefore it is likely to draw the most interest among heavy international callers at Verizon Wireless, or from Skype computer application users. It remains to be seen if Skype Mobile will draw significant switching apart from a very niche audience.

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Current Perspective

Competitive Strengths and Weaknesses

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