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Skype: Poised for Growth or Getting Squeezed?

Skype began talking up its presence in the enterprise market in 2007, so in the fall of that year I invited Skype to participate in a panel on Unified Communications at VoiceCon San Francisco. The company had started to promote its Skype for Business offering and, although it was skimpy, I thought the attendees would be interested to hear what they had to say.

Back then, Skype was already making its presence felt, albeit on the fringes of the enterprise. It was not competing on RFPs, but rather coming in via the back door--individuals and/or departments were loading the Skype client onto laptops and PCs so they could make free business calls as well as free calls to families and friends located across the country and the globe. Skype for video was just starting to show up and at the time, many IT departments didn't know exactly what to do with the traffic; some were blocking Skype transmissions, most weren't.

Jonathan Christensen, then Skype’s senior director and now its media platform chief (whatever that is!), reinforced his company's "wink, wink, nod, nod," relationship with IT, when told the audience, "Skype doesn't really have a view on the enterprise. We take more of a view (of) the user."

Christensen wouldn't say the same thing today. As Skype prepares for an IPO in early 2011, it clearly wants to demonstrate to investors that its business plan includes more than free calls for friends and family members... The enterprise market is squarely within its sights.

To that end it has beefed up Skype Manager, hired a new CEO--Tony Bates--who ran both the Enterprise and Service Provider businesses at Cisco, and has placed David Gurle in charge of the Skype for Business program. Gurle played a critical role in launching Microsoft's OCS several years ago, and then left to take a high-level position at Thompson-Reuters. Skype has yet to put in place an enterprise-focused sales operation but that's supposed to happen over the next several months.

The key question is whether Skype can move fast enough. Just a few days ago, Om Malik ran an excellent analysis of the opportunities--and pressures--Skype is facing. On the positive side, Malik observed, "Skype for Business has the potential of transforming the enterprise telephony landscape, especially if Skype doesn't fall prey to the old thinking. It would need to think beyond PBX to have a lasting impact. Sure, some of the traditional companies are going to ignore Skype--they will anyway--but it would be a good way for Skype to grow-up with the customer base which has made them so successful: little businesses of today."

Malik noted, "Skype is trying to compete with Microsoft's Lync--a set of technologies that allow you to communicate, collaborate and socialize with others, especially in business environments.... Skype has not been shy about its own Business ambitions and in previous interviews had indicated that it is going down this line where it becomes the hub for such collaboration." At least according to this analysis, UC is a vehicle by which Skype can demonstrate value-add to enterprise IT decision makers.

But if Skype intends to compete on the basis of more than just cheap phone calls, Malik asserts that Skype will need to evolve from its current positioning into more of platform play. He wrote, "Skype needs to embed itself in many places for people to start using its dialtone to make calls to non-Skype numbers and thus bring in the dollars. This is an area where the company is looking at an uphill climb."

That climb, however difficult, is one Skype can't afford not to take. Although Skype is in a quiet period ahead of the IPO, reports about its growth trickle out, and long-time Skype watcher Phil Wolff has some theories about potential dangers that may undercut the good news. Among them:

* "Competition. People are substituting Facebook and Twitter and other IM for Skype text chat. So more people aren't logging into Skype unless asked while others take longer to sign up for Skype accounts.

Counter: Millions more folks are holding conversations in context-rich places like a band's fan page or where social objects trigger talk. Horizontal tools like Skype and email are becoming backup choices.

* Theory: Dependency. Skype growth follows bandwidth and availability. Not much growth in that department this year thanks to the economy. Upgrades are on hold in much of the world.

Counter: None."

So, is Skype poised for growth or is it being squeezed by rivals in the social networking market? David Gurle will be among the keynoters at Enterprise Connect Orlando 2011, and it should be very interesting. Hope to see you there.