Microsoft's acquisition of Skype is not just another purchase. Microsoft acquiring Skype is a watershed event, a confirmation of sorts, for cloud services, VoIP, unified communications, and freemium. One of the biggest software vendors agreed to spend $8.5 billion on a freemium cloud play that's losing money. That's about $1,000 per "paying" customer which incidentally doesn't pay much. This isn’t about Microsoft or Skype as we currently know them, nor about VoIP or presence, or even video. It is about Microsoft seizing an opportunity to disrupt and steal the carrier space.
Skype, or more accurately Microsoft, has a limited window to define the future carrier. The window is created by the state of both UC capability and interoperability. To fully exploit this window, Microsoft is going to need to push Skype far further into the mainstream--at work and at home.
Take a look at current industry trends:
* Unified communication solutions commonly include presence/IM, voice, and video communications.
* The vast majority of enterprise premise and hosted voice solutions typically support rich communications including wide-band audio, presence, and video--on internal calls only.
* The current notion of presence federation requires non scalable coordination and setup.
* The ability to dynamically migrate an IM to voice or video and back is generally limited to like and proprietary systems. * Video interoperability is limited from both compatibility and dial plan perspectives.
* Enterprise organizations are massively migrating to SIP trunks for cost savings, which generally reduce rich UC solutions to basic telephony services of yesteryear.
Now, take a look at Skype:
* Last year, Skype users made 102.5 billion minutes of calls on Skype, equal to about 20% of total international calling.
* In Q410, video calls accounted for approximately 42% of all Skype-to-Skype minutes
* In 2010, users sent over 176 million SMS text messages through Skype.
* Skype reports 170 million active users a month, and recently passed 30 million simultaneous users.
* Skype is global, assigns numbers, and has more users than any other Internet company with similar services. For example, Google Voice, which offers some overlapping services, is only available to US users.
Skype's success is largely due to its mantra of Skype Everywhere. The company diligently makes Skype clients for all major platforms including mobile devices. Though the Skype user experience is not necessarily consistent, it is widespread. However, Skype Everywhere has a significant limitation--the Skype-developed and maintained client is a costly endeavor. Even hardware devices such as televisions, use the "SkypeKit" APIs with a native Skype client. A significant portion of Skype’s near 1,000 employees were responsible for developing its clients.
Skype prides itself on not being a "carrier". Instead, it provides a rich communications application and service, not just a dumb pipe. At least that's mostly true; Skype Connect is effectively a dumb pipe service that provides narrowband voice services similar to other SIP trunk providers. Skype Connect allows phone systems, via a SIP trunk interface, to access the Skype network. No presence, no video, no SkypeName dialing, and largely competes on price. The only other Skype interface for the PBX was Skype for Asterisk, which does offer integration with presence and SkypeNames, but was killed off last week.
But what if Microsoft took a different approach to Skype Everywhere, and embraced its transport role as a new type of carrier? Not a dumb pipe, but as the glue to UC interoperability. An interface or transport layer carrier-like service that connects both enterprises and consumers with rich unified communications, addressing wide-band voice, presence, video, and more. A defined UC interface from Skype could effectively set the standard for UC interoperability--video call setup, dialing, federation, collaboration, and more between competing platforms. Call it SIPconnect 3.0. Skype just may have the momentum to pull this off.
Microsoft has a much better track record on partnering than Skype. Microsoft's early vision was a computer in every home, which is pretty bold for a company that never made a computer. Microsoft achieves success through partnerships, and although many failures exist, think Intel, HP, Compaq, Dell and others.
Skype for Asterisk was on the right path--just add video and don't kill it. Microsoft needs to open up Skype to enterprise solutions--premise based and hosted. Not just to its own Lync, but to competing enterprise UC solutions from vendors like Avaya and Cisco. And, odds are, each of these partners will respond to such an invitation favorably as each understands the value of rich unified communications. Enterprise UC vendors work hard to convey the value of rich communications: don't call unless the person is available, use wide-band audio, use video, use IM, share desktop screens. Numerous case studies show significant productivity gains with rich communications (and those primarily look only at internal communications). Skype-like interconnection as a new standard will raise all ships toward better communications and justification for UC solutions. It will disrupt telephony more than anything ever has.
Skype and Avaya previously promised such integration to take place sometime this year. Likely a forced commitment due to then-common ownership (the private equity firm Silver Lake Partners). Ironically, with Microsoft as the new Skype caretaker, the likelihood of such integration goes from low to high. It just wasn't in the Skype DNA before, but now it makes sense. Nor did it make sense for Skype to kill Skype for Asterisk; had the contract not expired for another year, its termination may have been totally avoided.
Most of us have experienced the benefits of presence/IM either on a corporate solution or popular services such as those offered by Skype, AIM, Messenger, Google, and Yahoo. But we can't use them with all of our contacts. For example, Google and Yahoo IM are tied to their email services. Conversely, Skype (as a separate app) has done an excellent job of penetrating across environments--its users include Windows, Mac, and Linux desktops as well as every major smart phone, tablet, and numerous other hardware devices ranging from phones to televisions.
The carriers simply are not keeping up with the technology or the potential. Consider wide-band audio--which was actually put forth as part of ISDN in 1988. The vast majority of VoIP phones in the enterprise now support wideband audio--yet most external calls, even SIP to SIP, still generally revert back to narrowband. Video and presence are bigger islands of interoperability. The end user communications experience on state-of-the-art SIP trunks remains comparable to what the industry delivered over the past 50 years despite huge improvements in endpoint capability.
For various obscure reasons, Skype is not considered a carrier today, but if it were it would be the largest. Skype is currently not subject to various carrier requirements such as 911 or governmental wiretap requirements. Most Internet companies were excluded from the 1994 Communications Assistance for Law Enforcement Act (CALEA; however, the US Government wants to revisit this). This gives Skype, for now, the ability to move and adapt more quickly and cheaply than traditional carriers.
While various interoperability efforts such as UCIF, SIPconnect 1.1, and OVCC wallow without widespread support or momentum. Skype usage continues to skyrocket. Skype is where the users are at, and a user base is what matters in communications. Skype has the opportunity to break away from the dumb pipe race by defining a UC interface for rich communications. Skype could emerge as a de-facto standard for interoperability, filling the gap created by formalized efforts.
Of course, even if Microsoft intends to do this, it won't be easy. Some fairly large carriers will be opposed to Skype growing one iota. Government regulators already have Skype targeted, and likely Microsoft ownership invites more regulation globally. But, the opportunity is huge--big enough to share. Carrier monopolies are over--what's needed is leadership.
Microsoft has an opportunity to truly bring Skype to the mainstream--suitable for the enterprise. Multi-modal, multi-device, cross platform rich communications. It means Microsoft will need to address another Skype taboo subject: SLAs. They'll also need to focus on expanding Skype’s user base even larger (X-Box, Messenger, Office 365, Lync). Skype has the potential to define the role of the future carrier and to propel Microsoft into a leadership carrier role--not bad for $8.5 billion.
Dave Michels is a frequent contributor and blogs about telecom at www.pindropsoup.com.
