Skype Announces Enterprise SIP Play

Long a 'bootleg' application in the business setting, Skype seeks legitimacy—and revenue—from the corporate community.

By Michelle Megna | Posted Mar 25, 2009
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This week, Web-based VoIP service provider Skype unveiled plans to tie business organizations with IP PBX systems into its global phone network, announcing the beta release of Skype SIP for Business.

With Skype SIP for Business, employees of organization with PBXs that support SIP (which is virtually all such IP-based phone systems) will be able to make domestic and international calls to mobile phones and landlines from their regular office telephones—at Skype's low global calling rates.

For incoming calls, there will be two options. To receive Skype-transported calls from the PSTN, organizations can purchase SkypeIn DIDs ('direct inward dialing' phone numbers) from the provider. Alternatively, they can post "click-to-call" buttons on their public Websites, so Skype users can dial in directly over the service. Such calls will be received through their existing office system at no cost to the customer.

Companies will be able to transparently manage Skype calls with existing hardware and applications, maintaining all their existing functionality such as call routing, conferencing, interactive voice response menus, voice mail, and call recording, Skype's Peter Parkes wrote in a blog post. No additional downloads or training will be required.

"According to IDC, 438,000 IP PBXs were shipped worldwide in 2008, so this represents a significant opportunity for Skype, and for small, medium and large businesses around the world," Parkes wrote.

During the beta period, all calls will be charged at standard Skype rates (2.1 cents per minute), the company said, adding that it plans to announce further pricing details when the product is fully launched later this year.

The news comes as Skype's parent company, eBay, works to execute a significant shift in its core business from auctions to other selling formats as it battles Amazon for market share.

Since buying Skype in 2005 for $2.6 billion, eBay has been under pressure to start reaping some revenue from the VoIP player. That's become especially critical with it now facing competition from other Internet giants like Google, which most recently announced its own Internet phone service, Google Voice.

In particular, Skype's SIP for Business news comes on the heels of its announcement to investors and analysts that it will double its revenue to over $1 billion in 2011. Skype CEO Josh Silverman laid out a strategy that involved beefing up its core business with the introduction of ads and social network-styled marketing, bolstering its mobile and hardware ventures by partnering with smartphone and hardware makers, respectively, and by ramping up its corporate offerings.

"First we will focus on small businesses," he told analysts, "and then we will move to enterprise in due time."

The SIP move is prudent, and should prove to be a "win-win" situation, Rebecca Swensen, IDC research analyst for enterprise mobility and IP communications services, told this reporter.

"The business world has been waiting for them to do this for a while, to provide the ability to use Skype through PBX for cheaper calls, so it makes sense from a business perspective," she said. "Businesses right now want to do anything to lower their costs, and they can do that without much, if any, up-front cost, so it's good for them. If businesses can use Skype SIP to make calls cheaper, that's a great first step for Skype in terms of entering the market. They have traction in the small business market, but this will give them a beginning with large enterprise. So it's a win-win situation."

Getting to the enterprise market
Peter Hall, principal analyst at telcom consulting firm Ovum, said the move should help Skype overcome obstacles it faced with the enterprise market—namely the reluctance of IT managers to embrace the technology.

"Though Skype says 35 percent of its users use it for work, most of that is not with the sanction of the IT department," Hall said. "IT managers tend to frown on Skype because it's a consumer approach, so there are issues of perception—fears that it will punch through firewalls, but those are far-fetched. Still, Skype has spent a lot of time reassuring them of security, and by and large, it is as secure as the business apps they're using."

To help IT managers feel comfortable with the technology, Skype has made it more enterprise-friendly, Hall said. For example, a feature that allows users to transfer huge files can be disabled by IT when installing it for their workers.

"Managers were worried that an employees could exchange huge company databases without anyone knowing," Hall said, "So it's things like that that Skype was paying attention to."

This strategy, along with the SIP announcement today, puts Skype in a better position to compete at the enterprise level, Hall added.

"The latest announcement means Skype can be integrated because SIP is the de facto standard for enterprise VoIP," he said. "Skype had shunned this, they used their own proprietary protocol, but they recognized that SIP is what the majority have employed."

While the news today signals that Skype wants to be taken seriously by big business, Hall said that may take some time. "Right now it's really still the smaller businesses that are extremely interested. Enterprise-size companies aren't going to be drawn in so much by cost-savings, because they have the power to negotiate similar rates with their existing provider if they don't already have good deals on calling rates," he said.

"And a in a survey we've done with large enterprise, the result was that the majority don't regard Skype as a serious voice service—this was last year. Two-thirds said they didn't like employees using it because of policy issues."

Adapted from an article first published on InternetNews.com

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