The Skype Empire: Disintermediation Vehicle

A guest post by Todd Carothers, VP, Product Management at CounterPath Corporation.

When we started BridgePort Networks (acquired by my current employer CounterPath), we knew the fixed-line voice services was starting to undergo a decline and mobile services would grow rapidly (over 4.6B users today).  We also knew that pricing pressure would start to decrease margins for mobile operators.  What we really did not understand fully at the time was what Skype’s role would be in the dismantling of the Telecommunications value chain and ecosystem.  How could we?  Skype was just starting and the impact was marginally at first.  We did believe Skype would be a catalyst for Operators to take notice-but we were incorrect.   In fact many of the executive leadership of Fixed Line and Mobile Operators that I met with back in 2004 saw Skype as a “Gnat” buzzing around the Telecommunications sector.  They disregarded the threat at large.  Well, we all know that Skype become much more than that.  According the the latest figures from TeleGeography Research, Skype now represents approximately 12% of International Long Distance.

The article also points out that Skype-to-Skype calling has grown dramatically: 51% (2008) and 63% (2009).  Couple this with the steady growth of the concurrent number of Skype users online and it would seem that Skype is methodically and systematically eroding (Fixed Line) Operator revenues.  Check out this chart from Skype Journal on concurrent online users:

So what does this mean from a revenue perspective?  The Skype Journal also posted some incredible stats on the arbitrage impact:

The net impact is approximately $13B (yes with a big “B”) of revenue up in smoke in 2009 for Fixed Line Operators worldwide.  Given Skype’s momentum, it looks like that number will continue to grow for the foreseeable future.

Given that quantitative data above, let’s consider the qualitative + my speculation of the future impact of Skype:

First, it is clear that Skype had set its crosshairs on the ailing Fixed Line Operators first.  The numbers above prove this.  Skype will continue this route since the Fixed Line Operators really have no choice given that they are also being attacked by the Mobile Operators via Fixed Mobile Substitution (Source: SD&P Internal Analysis):

In addition note the only saving growth service for fixed operators is Broadband-a key enabler for Skype.  So the net-net is Skype will retain the upper hand against the fixed line operators.

Second, we are in the midst of Skype attacking the mobile operators.  Leveraging MobileVoIP, Skype is working across multiple mobile OSs and devices.  Even more Mobile Operators are opening up their networks to allow MobileVoIP applications to work over mobile data channels.  This is a big shift for Mobile Operators.  This puts ~80% (Voice) revenue at risk.  This week it is expected at the Mobile World Congress in Barcelona, Spain it is expected that Verizon Wireless and Skype will announce a formal relationship to enable Skype over the Verizon Wireless network as well.  Look to FT/Orange, Vodafone and Telefónica to do the same.  This is good news for users, but fast forward 4-5 years and I see the Mobile Operators going through similar pains as the Fixed Line Operators: losing voice revenue to data pipe enabled VoIP apps.  This is one of the reasons I believe Mobile Operators are ditching the all-you-can-eat mobile data plans.

Third, look for Skype to move into the Enterprise in a big way.  There is Skype for Business today (i.e., Skype trunking service), but I envision a Skype PBX Client on the desktop removing the need for a premise based PBX.  This will help give Skype its leadership position across consumer and Enterprise.

Fourth, Skype as the total Communications Portal.  Skype will knit together their consumer and Enterprise offers to create a single network, single platform experience mashing up different communications users with multimedia and collaboration services.  Think about a Skype user context switching their personal and work personas. 

Since its inception Skype’s theme has been world domination (i.e., via steps outlined above).  Here is the good news for traditional Fixed Line and Mobile Operators:  CounterPath sells the products and technology to fight the Skype threat.  CounterPath’s FMC and Softphone products are flexible, feature rich and customizable to any Operator environment.

One thing is for sure, 2010 will be an exciting year for the Telecommunications sector!  Look forward to the battle.

tags: skype, Orange, Vodafone, Telefónica, MWC10

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
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Skype Everywhere: Coming Soon to IBM Lotus Live Engage

A year ago August IBM's Lotus Sametime Division announced the acquisition of Skype Partner Webdialogs to obtain their widely respected Unyte Desktop Sharing collaboration technology. About four months later we learned, from Lou Guercia, Lotus SameTime's Director of Operations and Strategy, more about Unyte's integration into the Lotus SameTime offerings. In that post on Lou's presentation I asked:

Question: with IBM pursuing excellence on a service that comprises voice, video, chat and file transfer in a secure, encrypted environment, and with the stated goals of "working with their partners", would this not result in a situation where IBM would be licensing Skype technology to provide a comprehensive real time multi-media communications infrastructure?

With announcements this week, including some at IBM's annual Lotusphere 2009 event in Orlando, FL, it seems like that question is starting to get some answers..

Yesterday IBM announced "A Strong Fourth Quarter, a rarity these days". ZDNet's Dennis Howlett, in Can IBM sustain its momentum, goes on to provide some background, pointing out that most of IBM's growth is occurring in its software division. Certainly IBM sees its Lotus Sametime division as a key to sustaining their momentum. Except it appears that IBM has reorganized their SameTime collaborative services into "a cloud-based porfolio of social networking and collaboration services designed for business" under a new name: LotusLive.

In a press release this past Monday, in conjunction with IBM's annual Lotusphere event, Skype announced:

.... it will integrate Skype™ functionality with LotusLive (www.lotuslive.com), IBM’s new cloud services which are designed to help individuals build communities to work smarter, more effectively and more efficiently across and beyond their own companies. Skype’s voice and video calling will add rich, real-time communications capabilities to LotusLive, making it even easier for enterprises to collaborate in the cloud.

At Lotusphere 2009, IBM demonstrated the new Skype integration into LotusLive Engage, "an integrated suite of tools that combines your network [of contacts] with Web conferencing and collaboration capabilities like file storing and sharing, instant messaging and chart creation."

Today we interviewed Peter Kalmstrom, Skype's Program Manager for Toolbars, who had been attending Lotusphere to assist with the demonstrations. Peter made several points:

• This announcement covers only the first step of what will be a series of Skype integrations into the LotusLive offerings.
• The integration into LotusLive Engage is targeted at "businesses looking to collaborate inside and outside the organization to easily expand their networks..." In other words for businesses that need to include, say, sub-contractors, third party consultants, suppliers and buyers within their business operation processes.
• Within a LotusLive Engage contact profile, "Skype" fields have been added such that when a user clicks on a a name to bring up a profile card, the user can launch a Skype conversation and transfer files with a single click.
• The only additional requirement for engaging in a Skype conversation is that the initiating user must have a Skype client open.
• In addition to Skype-to-Skype calls, SkypeOut calls can also be made.
• Where several contact profile cards have been opened, a user can launch a Skype multi-party call to host a conferencing session.
  
• Due to the nature of LotusLive Engage's web architecture, the resulting Skype access is cross-platform; it does NOT require that the user have a Skype web (FF or IE) toolbar installed.
• A session can then also launch a Lotus Web Meeting (also known as a Lotus SameTime Unyte meeting).

Sounds like the Lotusphere demonstrations got the brainstorming going between Skype and IBM. In a concluding statement Peter said:

"We are enthusiastic about the partnership with IBM and we see a lot of areas where we can collaborate and help each other improve our services. We met with a series of executives at IBM during Lotusphere and the general feeling was highly positive."

At the same time IBM announced Salesforce.com and LinkedIn integration into their LotusLive services. Andy at VoIP Watch comments on the competitive "collaboration and communications" space where IBM LotusLive, Microsoft Office Live and Google Apps are the key players.

With the IBM offering, we are seeing one more example of "Skype Everywhere", in this case, being embedded into an offering that is key to IBM's future success in delivering cloud-based outsourced business services.

Phil will have some comments on the technical aspects of this integration along with where he feels there are "deeper" integration opportunities.

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Gartner to enterprises: Manage Skype, don’t ban it

Gartner analyst Lawrence Orans today revised Gartner’s view enterprises should block Skype. Benefits now outweigh risks, costs. So enterprises should manage Skype deployment, standardize builds, and measure support costs. Watch Skype Journal for columns on how.

Technorati tags: skype, gartner