Big Bad Skype??

May 3, 2004

in Skype Journal

I received this from Ed Prentice. He’s one of the guys that really gets it. I just wonder if these guys are going to print my “Skype Business Plans” post on the enterprise next. I’ve added a few comments to their note for I think they have the shades down.

From the Network World Newsletter. Today’s focus: Who’s afraid of the Big Bad Skype?

By Steve Taylor and Larry Hettick

The Skype Web site has a quote from the Feb. 16 issue of Fortune Magazine, where FCC Chairman Michael Powell says, “I knew it was over when I downloaded Skype. When the inventors of KaZaA are distributing for free a little program that you can use to talk to anybody else, and the quality is fantastic, and it’s free – it’s over. The world will change now inevitably.”

We’re not sure we’ll go quite that far, but we do see some issues being raised that can no longer be avoided in several circles. In particular, corporate networks, service providers, and PBX manufacturers will all have to deal with the issue of peer-to-peer applications sooner or later. Let’s take them in inverse order.

From the perspective of the PBX manufacturers, what we see here
is a softphone application that will perform a few of the functions of the IP PBX. The on-screen app does a bit of presence management, and you certainly have the ability to have a conversation. This bolsters our argument that the IP PBX has to be viewed as a lot more than just cheap telephony, and the integration of applications into the IP PBX infrastructure is key to the adoption of these devices.

Is this a centralized view or a view of the personal IP PBX on my desktop? The personal IP PBX may require some backup and there are certain advantages to knowledge sharing and networking that can be accelerated by some centralization. Still how well are the traditional PBX suppliers positioned to help with this transition? The IP PBX of tomorrow may not cost very much. The value will be in the services. Particularly, presence, collaboration, real-time adaptation. Perhaps IBM or Microsoft have some advantages in this area?

We’re also not sure there’s a great threat to the incumbent service providers. Long-distance revenue from individuals who have not shopped aggressively are threatened the most. For instance, if residential users are already paying around three cents per minute for long distance, then moving to “free” long distance isn’t a great incentive unless you’re on the phone for hours at a time. The incentive is even less for large corporate users, where the domestic long distance rate is starting to creep under a penny a minute. Also, in it’s current PC-client format, you’re not likely to want to be tied to your PC as opposed to being able to roam around the house with a traditional phone. Then there are the issues like E-911 that clearly point to having at least one “real” phone around.

Think we are missing the point here. This is not cost driven. It is presence and mobility that is creating a tomorrow phone that is WiFi enabled Smart PDA Cell Phone, that may or maynot require your PC to be on. This roaming with the home phone metaphor is a real barrier to considering how it will be. Finally the nail in the coffin is sound quality. Each new friend I turn on to Skype makes the same comment the sound quality potential is way beyond Skype’s current delivery.

The biggest threat (and opportunity) that we see is in the control of corporate networks where Skype, as yet another peer-to-peer application, can have a major impact. That’s the subject of our next newsletter.

Yep in the Enterprise all these buddy lists, presence capabilities, impromptu conferencing, and collaboration tools can really have an impact. In the corporate environment seeing your buddies buddies will be commonplace. Still Skype’s model suggests that Enterprise Skype will aggregate the local P2P activity and manage log-ins for the group. Thus corporate P2P clouds will use the efficiency of all the dispersed computing power and yet retain control of the cloud and provide the supernode functionality providing an additional level of security. Is this still a good guess? Will it help with WiFi security when the PDA becomes the corporate campus phone? Guess I can read next weeks edition.

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