Posted by dhilipkumar
- Apr 24, 2009, 04:52 PM
Skype Means Business
Skype on Monday launched a new service to ease the transition of small business into internet telephony, a bid to capture some needed revenue by tapping into a new market it expects will find cheap phone service in a global recession compelling.
"Skype for SIP" aims to reduce the friction of migration by enabling its VoIP phone service to be used over standard equipment and PBX setups that support the Session Initiation Protocol (SIP), a common installation. The beta requires that one create a new Skype ID -- a shame for those who already have an established Skype identity -- but apart from that it promises that setup can be accomplished "without any expensive forklift upgrade of your existing infrastructure!" (breathless emphasis theirs). Beta participants would be immediately able to call other Skype member for nothing -- and, perhaps as important, receive calls from them at no cost the caller -- and make calls to anyone else for about two cents, according to the Wall Street Journal.
Skype has long had a business unit, but that version of its service required computers and software, which is how most users make their Skype calls. With Skype for SIP the company seeks to lower the pain barrier by requiring no hardware installation whatsoever, and the re-configuration of a SIP-emabled PBX to an established codec that presumably is within the skillset of whoever maintains it already.
With Skype for SIP you simply place and receive calls with Skype using the standards based SIP protocol that many phone systems support natively. No more messy boxes in the middle, no more points of failure, just pure SIP all the way from your place to ours.
The allure of free and near-free is strong, but a chief drawback to Skype in anything but a mom-and-pop workplace is that it is computer-centric: you tend to make and receive calls via your WiFi connected computer, and, adding insult, for privacy you have to use a clunky headset (which probably isn't connected to the computer at all times) or Bluetooth headset. To use it at all your computer has to be turned on, in a hot spot, and with Skype software running. There are Skype-enabled handsets available that connect directly to a WiFi network, but not many to choose from.
Skype has a tremendous following but makes relatively little money (sound familiar?) and has been something of a thorn in the side of parent company eBay from nearly day one.
Parent company eBay's decision to pay $2.6 billion for the company in 2005 has been roundly criticized and it has yet to monetize the acquisition in any meaningful way with its core auction business.
Skype has 405 million registered users, but few pay for anything. The basic service -- calls over the internet to other Skype users -- is free. Revenue, which the Wall Street Journal says was $550 million last year (that's $1.35 per registered user), comes from such upcharges as the lease of a telephone number so non-Skype members can call you, and voicemail-to-text conversion.
Skype was novel when it came on the scene in 2003 but now the competitive landscape is much more complicated: Cisco is the powerhouse in enterprise VoIP, Vonage is struggling in the consumer market against bundled offerings from cable and satellite providers, and startups like Truphone have brought internet telephony calls to the iPhone -- and even the iPod touch, which isn't even a telephone. Skype has done a deal with Nokia on its high-end N97 handset, and it's easy to imagine a world where a considerable business is done not through corporate swithboards but on wireless handsets under a blanket of minutes-liberating WiFi -- as it is already.
Still, small businesses with little to no infrastructure have found Skype to be a solid alternative to landlines or cell service, which are far more expensive -- about 1/3 of Skype members use the service for business purposes, the company says. And the ubiquity and relative cheapness of WiFi has created a bit of critical mass for VoIP, which is only now becoming something of a disruptive force in the decade or so it has been around.
The biq question is whether eBay is hoping to finally get a decent return on its investment with Skype or to generate enough cash flow to enhance the resell value or a going concern. Ebay has consistently declined to say whether it intends to sell, and any talk of that now will likely be postponed until some solid numbers emerge from the SIP initiative.