Should Skype Migrate Away From Its Proprietary Technology?

Posted by: Olga Kharif on September 6, 2005

Skype has been wildly successful so far because its secret technology has been different from anyone else’s. The popular service’s peer-to-peer technology could penetrate firewalls and enable people to talk from one PC to another for free. But the big question now is, Should Skype migrate away from its proprietary technology?

I just spoke with independent analyst Jon Arnold who believes that, ultimately, Skype will need to standardize on Internet Protocol to as to become the de facto PC-to-PC calling technology, used with all Instant Messengers (IM).

Indeed, standardization has done wonders to many a technology’s adoption. And it could, potentially, push Skype out into the mainstream. Or, it could kill Skype. This would be a risky move, one that would pitch Skype even more directly against IM heavyweights Google, Yahoo and Microsoft. Do you think a move to IP would make sense?

Reader Comments

Andy

September 6, 2005 9:03 PM

I think Skype should maintain its proprietary technology. It gives them a competitive advantage in a sector that's being saturated by the big boys (Microsoft, Yahoo, Google) who are jumping into the game with Skype.

What Skype should do is open their platform to developers in the form of an API to allow customization of applications built on their platform.

DaveHowe

September 7, 2005 3:24 AM

I am not sure what this article is about - Skype *is* based on IP; only IP packets can be sent across the internet, and Skype works across the internet therefore Skype is based on IP.

What Skype isn't, is based on any of the commonly accepted standards for VoIP - the main two being H323 and SIP of course. Google has said it is going to standardize on SIP; Microsoft already offer SIP (as part of the xp release of microsoft messenger) and H323 (Netmeeting) and the Yahoo IM client contains a SIP VoIP module too. Aim still uses its own propriatory audio solution, but I suspect once they see which way the wind is blowing they will wish to join the interoperable solution rather than be left out in the cold.
One aspect of SIP is the ability of different SIP registrars to talk between themselves and act as local "exchanges" rather than standalone services - so in theory, a future Y! SIP phone user could call a Google, Microsoft or FWD user simply by prefixing the recipient's number with the "area code" for that SIP registrar.

In theory Skype doesn't have to convert - they could act as a hub for SIP conversations to and from their network. However, the cost for this would be huge (SIP is p2p, the registrars simply act as a negotiation service to accept incoming calls and forward them to registered endpoints, which then complete the triangle by connecting directly back to the initiating user's IP address; skype normally directs most of its traffic though Supernodes - ordinary users who also have to handle relay traffic for people not capable of accepting incoming call connections - but if it upgraded its supernodes to handle SIP relay too, that would actually be harder than simply ripping out its current proprietary solution and starting over with something SIP compatible.

MikeC

September 7, 2005 8:53 PM

Using Skype as a hub for p2p connections would be possible if there was a way to "standardize" the information, similar to the way freenet stores information (redundancy). Adding SIP compatibility might require a SIP-compatibility layer or some form of encapsulation -- which could be a problem.

What Skype may wish to do instead is to make it a dual Skype/SIP/H323 client -- meaning while it uses the Skype network, one can also use it to connect to SIP and H323 networks (similar to e.g. GAIM and Trillian). Just like everything else, that could kill them, but it could be the thing that saves them.

The main thing about Skype is its renowned "quality" -- something that open protocols can't provide. Providing a interoperability layer instead of direct SIP/H323 implementation may or may not work around this "problem".

Nicholas

September 8, 2005 4:44 AM

Skype's proprietary technology is a big part of its competitive advantage. That makes sense from a business point of view since it's a way for them to achieve lock-in.

Of course, that depends on them keeping the majority of market share, since being the defacto standard has the network effects in its favor as more and more people use it because others are, and there's no other way to connec to them except for their own tools.

The only problem is that this strategy is distorted simply becaue of one word. Google.

There's another. Microsoft. But Google's the wild card on Skype, simply because it's the 800 pound gorilla moving from its mindshare from different adjacent markets and moving into this territory with the cachet that could catch the imagination (and sign-ups) of users, and make it not only a serious rival to Skype, but possibly its ultimate erosion.

One can argue that Skype's technology and quality of calls are beyond par, but we all know how well Google takes different segments it enters by storm and improving on them.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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