Skype didn’t invent Internet phone calls. But the Luxembourg-based subsidiary of Internet auction giant EBay has brought VoIP to the masses, boasting that hundreds of millions of people around the world have downloaded its free software.
In the past six months, Skype has taken steps to expand its presence from the consumer market to business users. But some say that Skype’s business offering doesn’t make the grade for business use.
Skype’s software-based service makes it an attractive choice for road warriors who can use their Skype service anyplace they have a broadband Internet connection.
Skype also makes sense for small businesses because in many cases people already have Skype accounts at home, eliminating the need for additional training. “Skype did a survey of its users,” says Skype spokeswoman Erica Jostedt, “and found that about 30 percent of people were using Skype to save money and streamline communications for their business.”
The provider sees the opportunity to grow in the SMB market and last spring announced major enhancements to its Skype for Business offering. These include a dedicated website for business users, Skype-compatible hardware from other manufacturers, and an expanded Skype for Business Control Panel to manage groups of users and pre-paid services.
Skype is making the service more attractive with new management features and better integration with desktop tools like Microsoft Outlook and Web conferencing services. The provider is also promoting its ability to increase efficiency with features like presence-awareness — similar to the way IM programs let users know which of their contacts are online. Presence-awareness is not typically offered by business phone systems.
Further, an “ecosystem” of equipment is growing up around Skype.
Manufacturers including Cisco-Linksys, Polycom, US Robotics, Plantronics are now offering Skype handsets so using the service has the familiar “look and feel.” British Columbia-based EQO connects Skype service to mobile phones while Danville-based TelEvolution recently introduced a Skype-compatible version of its PhoneGnome that combines VoIP service with conventional phone line automatically, in a single device.
“I’m seeing in so many cases where executives are using VoIP at home — whether it’s through a service provider like Vonage or Packet8 or services like Skype or Yahoo — and, because of the savings, they say, ‘can I bring this into my business?”‘ says Nick Pegley, VP of Marketing at All Covered, a Redwood Shores-based provider of IT services for small businesses.
As a result, Skype is a growing presence in the business environment, Pegly says. “Nobody really knows what the numbers are, but there is a growing number of users out there in business.” About ten percent of Televolution’s customers have started using Skype since the Skype-compatible PhoneGnome became available since May, reports company Founder and CEO David Beckemeyer.
The Linksys division of Cisco, which also recently introduced a cordless Skype handset, illustrates the way Skype is penetrating the business environment.
“A lot of the companies we work with in the Far East are using Skype,” explains Linksys VP of Product Marketing Mani Dhillon. “They were the ones who got us interested in Skype because they wanted to use it to communicate with us. Victor Tsao [Linksys co-founder, senior Vice President and General Manager] was using Skype to communicate with our manufacturers as well as our engineering team.”
And easier voice communications aren’t the only benefit. “Instant messaging and file transfer make Skype and even more valuable tool,” explains Skype Director of Operations Michael Jackson. “It helps collaboration phenomenally.”
But while Skype offers clear benefits, some say that Skype doesn’t fit the bill for business use.
Skype isn’t a good fit for business communications, says All Covered’s Pegley, because the service “doesn’t really deliver what a fully fledged business solution like Avaya or Nortel can. There are many business-class solutions out there at every price point. Skype has to evolve a lot before it’s going to get there.”
Critics point to security and call quality as two areas of concern. Further, some question the long-term viability of Skype’s architecture, which is based on a closed, proprietary protocol rather than an open standard.
To understand how Skype both benefits business users and, at the same time, opens up new vulnerabilities for voice communications, you have to understand how its infrastructure differs from VoIP phone services like Vonage.
While Vonage places calls through a central server, individual Skype users connect directly via their PCs — “peer-to-peer” — without a central server. It’s similar to instant messaging applications like AIM. This architecture is highly resilient because service doesn’t depend on any single part of the network. But it also means new security risks.
“Voice traffic on the Internet is subject to the same attacks as data,” says Vincent Weafer, Symantec Sr. Dir. Symantec Security Response. “Skype sits on a traditional PC, so malware like keylogging [capturing user keystrokes for information like passwords] can ’see’ Skype calls. We do see the underground channels are trading Skype passwords and user IDs.” And like other Internet communications, Skype is vulnerable to denial of service attacks, phishing and other types of fraud.
“Skype is widely popular,” Weafer adds. “By its nature it will be an attractive target.”
In addition, compliance with legal regulations can also be an issue, says All Covered’s Pegley. “In businesses where phone calls have to be recorded for legal compliance — financial services for example — if people are using Skype, the calls are not going through a controlled process.”
But in the end, these risks are “generic” risks inherent in Internet communications, says Skype’s Jackson and he agrees that Skype isn’t the right solution for every business.
“It’s not the right solution for the stock exchange or the ministry of defense,” he says. “We’re not targeting being the communications systems for IBM. It is the right solution for a small workgroup to increase productivity.”
One place where Skype does do better than other VoIP providers is call encryption, says Symantec’s Weafer. “Skype has put a lot of effort into protecting traffic from eavesdropping,” he says. “Skype uses encrypted traffic. Eavesdropping is possible but very difficult.”
Quality of service is second issue that comes up as Skype moves into the workplace.
“How can you assure quality on a network that’s based on peer-to-peer architecture?” asks Erik Lagerway, CTO of Shift Networks, a small business hosted VoIP phone service. “Quality assurance is hard to deliver for a group of business users. If you have a DSL link and you’re making a phone call while you’re downloading documents, you’re going to have a hard time convincing me that you’ll have enough bandwidth left over for a real conversation.”
“You need a different model for business than for consumers,” Lagerway says, adding that to assure the level of performance that businesses need, “it comes down to a managed network.”
Skype’s Jackson doesn’t deny that managed networks can offer call quality advantages over shared networks, but points out that the evolution of high bandwidth Internet connections are rapidly changing the picture.
“Three or four years ago, a call would really fill the pipe,” he explains. “Now people are listening to Internet radio. A phone call takes a fraction of that bandwidth.”
But beyond concerns about Skype security and quality, critics say that the company’s communications protocol limits the growth of the Skype eco-system. In a world where SIP — Session Initiation Protocol, the evolving open standard for multimedia communications — is increasingly being embraced, Skype’s proprietary protocol is a “silo in the meadow of communication” according to Shift Networks’ Lagerway.
“Think of email and how it started,” he explains. “It was ruled by CompuServe, ATTmail, MCImail and X.400. Those were closed proprietary systems and they eventually lost. Something simple and open won: SMTP, Simple Mail Transfer Protocol. SMTP is now ubiquitous and is the protocol of choice for all email solutions.”
But Skype’s Jackson points to the company’s proprietary communications model as a benefit for business users because it makes calls more secure.
“We think that’s an advantage,” he says. “When we designed Skype we wanted calls to be secure and we felt that a proprietary protocol all the way along was best.” And, he adds, Skype is not “religiously against” SIP. “In fact all our SkypeOut calls [calls from Skype to the PSTN] use SIP,” he adds.
In the end, Skype is looking to its sheer presence in the marketplace to deliver compelling advantages for its customers.
“The more users we have, the more development can be supported, which in turn supports more users,” says Jackson. “The Net is important for businesses and they’re increasing their investments in Internet connections because this is able to do so much more for them. Skype is just riding on that.”