Microsoft Buys into P2P: Skype

Windows Skype: A Telco Nightmare

May 10, 2011—The peer-to-peer Voice over IP application, Skype, has been purchased by Microsoft. What happens now has the possibility of changing telephony and voice/video communications, as we know it.

Skype is a peer-to-peer based voice and video application that has been a thorn in the side of telco carriers and governmental units across the planet. It uses Internet Protocols to carry voice via global Internet plumbing. It was invented in an era where telco voice call toll avoidance was a popular idea: circumvent costly telephone company charges—especially expensive international phone call costs.

The popularity of Skype internationally is huge, with an estimated 100M+ world-wide users. Historically, when broadband connectivity was spotty, and its speed was slow, Skype had huge quality issues. The architecture of Skype improved vastly over several years and several owners to the point where Skype reliability for voice is very good, and video communications is almost as good.

Of huge benefit, however, is the sheer number of Skype users, their contacts, and their status as a social network rivaled only by Facebook, Twitter, and the burgeoning number of Google, and Yahoo user lists. Microsoft has, in one purchase, bought the identities and accounts of millions, whereas their own efforts at Hotmail, Windows Live, and other network identity federations has been historically awful. Now Microsoft has an application that drives social networking, has a huge user list, and adds value to Microsoft’s efforts to try to build a visible user community.

Microsoft’s Windows Mobile offering may get a boost as well, as community application momentum for Windows Mobile is perceived as week, compared to that of Google’s Android developers, and those of Apple’s vast iPhone developer plantations. Skype over mobile devices is a common toll-avoidance mechanism for smartphone users, and an easily transportable directory/contact service for users. Where Microsoft has failed to develop strong and portable federated identity management for users, Skype gives them a chance on a par with Google and Apple.

There are other features that Microsoft hasn’t explored in their own offerings, that the Skype acquisition brings to users. Skype video conferencing works across a wide cross-section of hardware platforms. YouTube-ish possibilities to rival Google are a distinct possibility, as is the capacity to offer an application and especially media store for P2P video that’s being done by Hulu, NetFlix, XFinity, and others.

Using Skype’s P2P infrastructure goes against the grain of traditional communications infrastructure—and it’s why Skype remains popular—it’s tough to shut down and uses its user’s CPU and communication strength rather than a centralized approach. Microsoft doesn’t have to buy a lot of infrastructure to make Skype expand, rather, it must keep Skype reliable and add features which anchor on the Skype user base and the market it represents.

Skype works today across a wide number of platforms that Windows products currently don’t transverse—Linux, and to a lesser extent, Apple. Skype also works well on Android, and other smartphone platforms, and gives Microsoft and unembarrassing entrance to non-Windows platforms.

Mobile, desktop, laptop, and future platforms will likely have Skype running on them as a highly-desired, get-there-first application demanded application, and Microsoft has the ability to gain another must-have application to offer users. It leverages a huge user-base. The user base comprises a stunningly broad cross section of international users. In turn, the Skype application is ripe for delivery of lots of value-added media, as well as the revenue from Google Voice-like revenue, unified telecom features (that Microsoft has been trying to beachhead for years).

Microsoft gets to buy a user base that comes close to rivaling Google, Apple, and Yahoo with a killer application that works on a lot of equipment and has a brilliant future. Let’s see what they do with it.



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