6.11. What Skype Forgets to Tell You Skype emphasizes the "easy" tag for Internet Telephony, and they do a great job. But there are always things they forget to mention. Unlike Macintosh fanatics who don't dare speak ill of the Mac, Skype users will speak up about the shortcomings they fight. 6.11.1. Technical Details They Don't Mention The following list describes the technical elements Skype doesn't specify: Standards exist, but Skype doesn't subscribe to them. They only mention the world of SIP phones deep inside a few of the Frequently Asked Question web pages. While the Internet oversight committees work on the technical details to advance Internet Telephony, Skype goes their own way. There are two ways to set standards in the computer world: agreement among all involved and market share. Skype jumped out so fast and gained so much market share that they are setting the standard. But coordinating the technical details needed to call from one computer-centric phone network to another demands agreement from all involved vendors. SIP phone networks are working and have demonstrated success in calling between competitors. After all, if you and a friend are both using softphones on the Internet and don't touch the traditional telephone network anywhere, connection should be simple. It's not yet, and unless Skype changes, it may never be simple. Unless, of course, the whole world switches to the Skype model. Not likely, but the idea that one operating system, Microsoft Windows, would control 90% of the personal computers in the world seemed silly at one time. Now Microsoft controls the PC world, and Skype's user base has an even greater percentage of the total computer-centric broadband phone market. SkypeOut quality can best be described as spotty. Random factors cause lousy connections too often, and some countries drop off the SkypeOut map entirely at times (anyone call France successfully in January 2005, especially with Pocket PCs?). Telephone network integration takes hard work, but other broadband phone companies provide excellent call quality and coverage, so SkypeOut must keep up. Security issues are appearing and will get worse. Skype has a terrible reputation with large companies who find it unacceptable to let the service through their firewalls so easily. What is a clever technology solution for Skypethe relayed file transfers and other way through firewallscauses heartburn and sleepless nights for security administrators. The file-transfer ability included with Skype magnifies the problem. Files that are transferred through the Skype holes in a company's security net bypass every virus check. In other words, any Skype file transfer includes the potential to completely infect the company network, with no record of where the infection entered the company.
6.11.2. Business Details They Don't Mention The following list describes the business elements Skype doesn't specify: Money, and the need for money to support Skype, will become critical over 2005. They have millions of venture capital investments, including $19 million in March 2004 as a second round. Executives refused to say how much their initial funding was, but said it was "less than $10 million" (Zennstrom interview with CNET 12/2/2003). Admittedly, the peer-to-peer model reduces costs, and the viral marketing scheme worked so well I don't think they've spent any significant advertising dollars. But the services they must provide to keep growing, such as SkypeOut improvements, SkypeIn, voicemail, and their hinted Skype for Business, will require investment. Right now, the number of Skype registered users paying for SkypeOut hovers around three percent. Of 100 users, 3 pay something. That's not a recipe for financial success, even with a million paying customers (when they're supporting many millions of nonpaying customers). SkypeOut payments must improve. The Skype forums burst with complaints about the third party authorized early on to handle credit card transactions, MoneyBookers (www.moneybookers.com). Plans to accept PayPal transactions are underway but not enabled or available in early 2005. Converting customers from free services to paid services takes careful management and strong execution. Many products make that transition, but many more fail and disappear. Skype's strong market position will keep them afloat if they make mistakes because of customer loyalty. But every other broadband phone company now targets every person with a broadband Internet connection, giving customers alternatives to Skype if they drop the ball. SkypeIn must work perfectly if Skype will ever be used as a primary phone and keep growing. How much would you pay to let a Ma Bell customer call you? You pay Vonage $15 or $25 per month for that privilege. Will you feel comfortable paying Skype 5 euros every three months? Will that convince you to switch to a computer-centric phone service for your second line for long distance cost reduction? Skype bets their company you will, and that's a big bet.
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