Skype’s new revenue plan, Enterprise Telephony

Skype is finally moving into a market segment where the actual money is, and that is Business Telephony. Lately it has been playing very nice with most of the Enterprise Telephony service providers. “Skype for SIP” offering already interops with Shoretel. According to Om , Skype is likely to announce tomorrow that the Skype for SIP offering will interop with Cisco Systems Unified communication 500 systems. This is a big leap forward. It’s and interesting combination. Cisco being the leader in Business telephony and Skype, the undisputed leader in PC based consumer telephony. The journey for Skype doesn’t end here, they are also working with another major player in enterprise telephony, Avaya communications. Avaya recently bought nortel's enterprise division.

Hopefully moving closer towards standard protocol like SIP will help them mitigate the dependency on P2P protocol, and come out of the legal issues they are facing with Joldid. I guess it may take a while before they can build a workaround for P2P.

The recent moves from skype other than the legal issues are quite promising and looks like they are on the right track after the recent buyout from private investors

India might ban VoIP calls

India’s intelligence bureau has requested Indian government to block all Voice over Internet Protocol services till it finds a solution to trace VoIP calls. The reason being, VoIP services are used by terror groups for communication, and currently India doesn’t have the capability to wiretap these calls. I do understand the seriousness of the concern with the national security. However, what I don’t understand is how come India could not find a solution to trace VoIP calls. Its not that India is the only country facing the security threat from VoIP services, there are many other countries that are going through the same hell. But not all of them have banned VoIP services; instead they have found a solution to wiretap VoIP calls. For e.g. in US, it’s mandatory for any VoIP vendors to support wiretapping capabilities. There are well written standards to wiretap VoIP calls.

Banning VoIP services is not an easy task. There are so many loop holes in the technology that one could easily hack the system. In addition, P2P technology makes it harder for wiretapping VoIP calls. We all know how skype is not complaint with the wiretapping rules. I’m not sure how security forces can wiretap Skype, which uses P2P technology for communication. For tracing and listening to the VoIP calls, you need servers that have the capability to intercept the voice, and provide a backdoor to the security agencies to listen to the conversation. I know it sounds creepy, but that’s the way it is. When it comes to national security, anything is ok as long as innocent people are not wiretapped.

So instead of blocking VoIP, Indian government should focus on building solid technology to trace such calls. They need to follow US government policies, and find a way to expedite the process of bringing in new technologies that can help them monitor VoIP calls.

For folks that call India often, this might be a bad news. The reason we are able to make International calls to India at such a low rate is because of VoIP. A ban could prove costly and would increase per minute rates to India drastically. Lets hope Indian government finds a solution to monitor VoIP calls instead of banning VoIP services.

Unlimited Calling, Skype or Vonage?

Skype with the new management has lot of things on the plate to address. With more than 400 million users, it needs to provide premium features for which users would be willing to pay. One of the biggest cash cow for skype is the SkypeOut feature, using which users can call landline and mobile from skype client. This makes the client more than just a normal PC client. Skype has unlimited calling plan for $12.95. However, VoIP service providers like Vonage are also aggressively moving into this arena; marketing their products for a cheaper price. Vonage world prized at $24.95/mo provides unlimited calling to 60 countries, which includes India, Mexico and Canada.

From a product standpoint, Skype and Vonage are quite different. Skype is a PC VoIP client and Vonage a VoIP landline service provider. However, both these products allow users to call national and international landline and mobile phones. The subtle difference is in how you make and receive voice calls. You need a PC to call Skype users and other phone numbers. With vonage, you can use your regular phone to make and receive calls. Both of them have a cap to the unlimited calling plan. With skype, the “unlimited” plan is 10,000 minutes per month and for Vonage, its 5,000 minutes per month. So the tall claim of supporting unlimited call is not really unlimited.

If you frequently talk to friends and families who live outside USA then “Vonage world” should be one of the best deals around. It not only allows you to call more countries, it also provides so many additional features bundled in the monthly $24.95 package.
Here are some of the features that are bundled with the monthly package
• Unlimited local and long distance in the U.S. and Puerto Rico
• FREE unlimited landline calls to all cities and locations in more than 60 other countries**, including India, Mexico and Canada NEW
• Convert all your voicemails to emails and text messages with Vonage Visual Voicemails
• Caller ID, Call Waiting and Anonymous Call Block, Call Hunt, Call Transfer, Do Not Disturb, Click-2-Call,Ring List etc
• Number portability that will allow you to keep your current number

I have used skype couple of times and the quality was always awesome, not yet subscribed to Vonage, so can’t comment about the quality. I know bunch of my friends and colleagues have switched to Vonage and so far they seem to love the service. Let me know what you guys think about these services. Additional thoughts from experts Here and Here

For Skype it’s a New beginning

Skype says, Freedom at last. Free to do what its best at. Not gone get bogged down by all those big corporate policies. Today, eBay, the company that made the founders of skype billionaires , announced it has signed an agreement to sell its Skype communication unit for $2.75 billion. The buyer is an investor group led by Silver Lake and includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board. EBay will retain 35% equity investment in Skype. The deal is expected to close in the fourth quarter of 2009.


Here is what eBay CEO says about the deal:

“This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype,” said eBay Inc. President and CEO John Donahoe. “We’ve acted decisively on a deal that delivers a high valuation, gives us significant cash up-front and lets us retain a meaningful minority stake with talented partners. Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments businesses. As a separate company, we believe that Skype will have the focus required to compete effectively in online voice and video communications and accelerate its growth momentum.”

Josh Silverman, CEO of Skype calls it a beginning of a new chapter for Skype . He has been instrumental in leading the company in the right direction after the founders cashed out. There was a great momentum going for Skype in the mobile arena under the guidance of Josh. The revenue projection for this year looks solid and stands at $600 million. Skype carries 8% of the global long distance traffic.

From a technology standpoint, eBay did a poor job by not acquiring the P2P technology IPR. The P2P technology used by Skype is proprietary and is owned by Joltid, a company that was founded by Niklas. Yes, Skype doesn’t use a standard VoIP protocol. It uses a proprietary protocol. Time and Again, folks from VoIP industry have raised this issue many a times. I don’t see a motivation for skype to support standardized protocol like SIP. NADA! From a user standpoint, they don’t give a damn what protocol is used for communication as long as the quality of service is good. However, from an interoperability standpoint, it makes sense to support a standard protocol. (They do support SIP protocol for PSTN interface and maybe for SIP trunking.) I guess this is more to do with software support than hardware. Supporting standard protocol is gone cost them tones of money. They need to build SIP proxy servers, media servers to traverse NAT fire walled clients and support CALEA compliance. All these infrastructure cost would affect their revenue margins as well. With 400 million users worldwide, they could probably become a bigger MagicJack, which is making close to $100 million in revenue .