Skype IPO doesn’t mean Enterprise Solution

Skype announced it will soon have an IPO.  (Also here.)

Let’s not confuse this with being a business tool.

Yes, video calling is handy for businesses.  But what about presentation and collaborative tools?

Skype has an immense user base, and yet operational income for the first half of 2010 was only $1.4M.  This net is surprisingly small for a company this large and with their revenues ($406M).  Sustaining this small income means expanding upon a model that simply doesn’t support businesses, and doesn’t appear efficient in the first place.

Let’s break this down:

Skype is designed to encourage viral adoption.  A simple UI, free for everyone to get, and free to make most calls.  Most especially, scalability to global proportions and the ability to make and receive calls from ANYwhere with enough bandwidth.

Part of Skype’s weakness for enterprise use lies in that last portion.  Scalability to global proportions requires ensuring every Skype installation has the resources to function.  Skype installations with less-than-adequate resources notoriously borrow network resources from installations that do.  Often, Skype users with fantastic computers and high bandwidth discover everything is suddenly running slowly for no explicable reason.  Also, consider the security risk involved in sharing resources.  This is generally not acceptable within many industries, including financial, medical, and government.

Likewise, Skype’s ability to allow calls from within and without NATs and firewalls may help the home user access their account from work, but, well, it helps the home user access their account from work.  Many work environments discourage making personal video calls from work, and allowing that traffic behind the business firewall may lead to a catastrophic loss of confidential business information or a cyber attack.  Additionally, Skype’s unpublished encryption is pretty much impossible for industries to certify.

The other great weakness of Skype as a productivity solution lies in that emphasis on personal calls.  We tested Skype’s use of multiparty calling, which receives a strong “It’s okay.”  However, there are literally no useful collaborative tools.  Desktop sharing a) can’t be done while showing video; b) is a screenshot initially sized to a template window.  In the case of “a”, you can’t present anything and see reactions from your audience.  In the case of “b”, even blown up to full screen, it is still the not-to-scale screenshot from the smaller window – if it was illegible in the smaller window, it will simply be a larger illegible picture.  There is no remote application control and no annotation.

Skype cannot hope to effectively counter the WebEx’s and VSee’s of the world without risking the loyalty of their immense consumer (not “business”) user base.  It would require a complete reworking of their tools, functionality, and security.  This “from the ground up” approach would create difficulties for over 500M registered accounts (compare that install base to the net profits again!), who would need to re-learn how to use Skype.  It’s a good guess Skype won’t/can’t risk that.

WebEx and VSee are true collaboration tools.  While maintaining Skype’s video quality, they allow you to see your fellow collaborators while working with them.  You may edit documents on other’s computers, make observations during presentations, even conduct medical examinations.  They use encryption already vetted by government and industry, and work within the parameters of the most stringent security requirements.

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