Skype—the hitherto free, and free-spirited, PC-to-PC VoIP service—is about to undergo a sea change. Fueled with big money from new owner eBay, it is moving into the commercial mainstream—and onto retail shelves across America. A key driver in this transformation is the glut of new Skype hardware products from big name vendors, many of them unveiled earlier this month at CES, the giant consumer electronics show in Las Vegas.
Skype has sold some hardware at its website almost from the beginning—mostly accessories such as computer telephone headsets from Plantronics Inc. But it was very much a sideline.
“Originally Skype didn’t have a clue how to sell hardware,” says Gunjan Bhow, vice president of marketing and product management at network equipment vendor Actiontec Electronics Inc. “It was an instant messaging company—you just downloaded it and used it, for free. Plus, until last April, it was only a 25-person company. But there’s a lot more money available now since the acquisition.”
Long before the acquisition, Skype had released an API (application programming interface) that let developers build products on their own incorporating some of the Skype technology—mostly software products at first, but also hardware. It later introduced a certification program. The company puts products through the paces in its lab and evaluates their marketability. Certified products get to use the Skype logo in their marketing.
The first certified, made-for-Skype hardware products began to appear last year. In August, for example, Actiontec released the Internet Phone Wizard, a device that connects to a computer running the Skype software and to any home phone, corded or cordless, allowing users to make and take Skype calls on the phone rather than using a computer headset. Actiontec followed in November with VoSKY Chatterbox, a USB speaker phone for use with Skype.
In October, Linksys introduced its Cordless Internet Telephony Kit, a cordless phone with base station that plugs into a USB port on a computer running Skype. The handset LCD displays Skype buddy lists and speed dials, allowing users to make and take Skype calls anywhere in a home or office.
Skype also began to make its move into North American retail stores in the second half of 2005. In November, it announced a deal with Radio Shack Corp. that saw the electronics retailer set up Skype kiosks in some stores to sell a handful of hardware accessories—mostly headsets—and a Skype Starter Pack that includes an inexpensive headset and a bundle of Skype Out minutes.
Then came CES, and the Skype hardware floodgates opened.
One of the most compelling new products was Netgear‘s Skype WiFi Phone, a cell phone-size handset that comes preloaded with Skype software and allows users to make and take Skype calls on any Wi-Fi network, including at hotspots. The phone’s LCD displays a version of the familiar Skype’s interface. Users navigate menus using a mini joystick or key in SkypeOut numbers or speed-dials on the standard telephone number pad. The product will be available in March.
Actiontec introduced two new products. The VoSky Call Center is an extension of the earlier Internet Phone Wizard. Users can connect any standard phone to the phone jack, but can also connect the Call Center to a PSTN (Public Switched Telephone Network) line. This allows them to switch between PSTN and Skype calls using the same phone set. They can also call in to the VoSKY Call Center when away from home, including from a cell phone, and place Skype calls using the Call Center’s speech interface.
Actiontec claims its VoSKY Exchange is the first Skype-certified PBX add-on product. Designed for businesses with 10 to 300 employees, it connects to a PBX system and enables any phone extension in the office to make and receive Skype calls without having to make any other changes to the PBX. “Amazingly enough, a huge base of Skype customers are not consumers but businesses,” notes Bhow. “We do all our conference calls with China, for example, using Skype. Other [Skype] solutions are popping up for business conferencing.”
Creative Technology introduced the first fruits of a co-development agreement with Skype that the two companies announced late last year—the Creative Skype Internet PhonePLUS. It connects to a broadband router via an Ethernet cable and allows users to make and take Skype calls without having a computer on, or even having a computer at all. The product features a 2.5-inch color screen for displaying the Skype interface, and five-way navigation buttons for menu browsing and setup.
Panasonic Communications Co. announced dual-mode Skype/PSTN cordless phones. D-Link, a consumer networking equipment vendor, introduced a Skype USB phone adapter that allows consumers to use existing corded or cordless phones for Skype calling.
Auvi Technologies LLC, a two-year-old company previously known mainly for OEM consumer electronics products, made perhaps the biggest Skype splash at CES. It showcased a line of nine products to be launched under its own name, some introduced late last year, some available in April, some in June. They include the Auvi PHIP100 VoIP-enabled cordless speaker phone with webcam which won a 2006 International CES Innovations Design and Engineering Award. The other Auvi Skype products include adapters for using standard phones for Skype and computer-controlled handsets.
The Auvi products use the headset and microphone ports on a PC’s sound card, unlike most Skype products which use USB. This offers a couple of advantages, says Kelly Peterson, the company’s vice president of business development. One is that it keeps price points low.
“It also gives us control of the sound card,” Peterson says. “So if you’re listening to music and you lift up the phone to make or take a Skype call, we can automatically turn off the music. When you put the phone down, the music comes back on. But the biggest advantage is that once we add a PSTN capability in future products, you’ll be able to transfer a Skype call to a PSTN line or conference Skype and PSTN calls.”
Auvi was already selling OEM VoIP products to GlobalTouch Telecom Inc. for resale to GlobalTouch’s SIPTalk customers. All the new Skype products are in fact also available in versions that can be customized for use with commercial VoIP services. “But personally I believe the bigger market will be Skype,” says Peterson.
He’s not alone in that belief. As Bhow points out, there are over 85 million Skype users worldwide (over 200 million have downloaded the software). The user base is growing at more than 100,000 a day and there are 3.5 to 4 million active users at any time.
“It’s definitely a large base of users,” Bhow says. “More than any [commercial] VoIP calling service—even Vonage has only about one million. We all believe there’s a huge market for this. The real question is, how much of that user base will be willing to pay [for products.]” He and others take heart from the fact that 10 to 15 percent of Skype users are reportedly buying paid services from Skype such as SkypeOut, SkypeIn, and Voicemail.
While U.S. adoption of Skype has lagged Europe and Asia—possibly by a factor as big as 10 to 1—that will change this year, Bhow and others believe. One factor will be getting the new Skype products into stores. Both Bhow and Peterson say their products will be in major retail outlets in the U.S. within weeks or a few months at most.
Other big retailers besides Radio Shack are in talks with Skype about establishing relationships. Bhow says a couple are close to signing deals. A Best Buy spokesperson confirmed the company is talking to Skype, but said it won’t make any decisions on which products to carry until it has an agreement in place.
The fact that new Skype hardware products showing up on retail shelves is certainly an indicator that service and the brand are entering the mainstream, but their presence at the local Best Buy or Circuit City is also sure to raise awareness of Skype. Consumers may never pay for long distance calls again.