January 10, 2008 4:00 AM PST

Skype's mobile dreams

Skype's mobile dreams
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Internet-calling software provider Skype sees the mobile market as the next frontier for its service, but economic realities in the voice market--coupled with mobile operators who feel threatened by Skype--could put the kibosh on large-scale adoption for some time to come.

Skype, a peer-to-peer software application that allows people to make free phone calls to other Skype users over the Internet, has become an easy and inexpensive way for people all over the world to stay in touch.

In addition to allowing voice calling and instant messaging to other registered Skype users, the service offers premium services, such as Skypeout, which allows cheap calls from Skype to landlines or mobile phones worldwide. Another paid service, Skypeln, provides a personal and portable number that people can use to accept calls anywhere in the world.

Now the company is focusing its efforts on the mobile market.

"Our users aren't always at a computer," said Tony Saigh, business development manager for mobile at Skype. "But 96 percent of the time people have their cell phones within 1 meter of them, so it makes sense for us to extend our application to users on mobile devices. I think it also opens the market up for us to people who want the freedom of using Skype but don't want to be tied to a computer."

At the Consumer Electronics Show in Las Vegas this week, Skype made several mobile-service announcements, including one touting its plans to work with chipmaker Intel to put Skype software on Intel-powered mobile Internet devices, or MIDs, and on portable PC-like devices that use Intel's low-power processors. Skype also said that it will work with Sony to put its software on the PSP 2000 portable gaming device. Skype also announced its software will be embedded on the new version of Sony's Mylo personal communicator, the Mylo COM-2, which is a small, portable, PC-like handheld device. Skype software had already been available on the original Mylo personal communicator that was launched in 2006.

While these devices will all connect to the Internet via Wi-Fi or, eventually, the WiMax broadband wireless technology, Skype has also struck a deal with a major wireless carrier to embed its application on cell phones that will use the carrier's 3G cellular network. In October, the company announced the new Skype phone in collaboration with the U.K.-based mobile operator Hutchison 3 UK. The phone, which is being demonstrated at CES, is already available over 3's network in seven countries, including the U.K., Australia, Austria, Denmark, Ireland, Italy, Sweden, and soon Hong Kong.

There's no question Skype's downloadable software application has struck a chord with traditional broadband Internet users. The service, which was bought by eBay for $2.6 billion in 2005, has been viewed as a model of success for voice over Internet Protocol, or VoIP, services, with more than 246 million users worldwide as of September. Now the question is whether the application can become a hit in the mobile market.

"When you look at adoption of VoIP on the PC, it was all about cost avoidance," said Charles Golvin, an analyst with Forrester Research. "Skype offers some clear feature benefits, but I'm not sure that is going to be enough to entice people to download the service or even encourage carriers to partner with them."

The hurdles
On the one hand, mobile is the most natural extension for Skype's application, because phones are designed for voice communication whereas PCs are not. Skype says that its stripped-down, mobile version of its software, which has been available for Windows Mobile since 2004, has been downloaded more than 7 million times. But there are still several hurdles facing Skype that could keep its mobile application from reaching the same level of success Skype enjoys in the broadband world.

Some of the barriers are technical. For example, the 3G networks that are used to provide data services are not designed to carry voice. These networks offer far less bandwidth than wired broadband networks, which means data packets are often delayed on their way to their destination. This may not be a problem for data such as e-mail, but for voice this latency can make calls sound choppy. At this point, most experts agree that voice-call quality is far superior using the old circuit-switched voice networks rather than the 3G data network.

CONTINUED: When the carriers resist…
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7 comments

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what a larf
It would be nice if they perfected their PC software first. Starting from about 6 months ago, I became unable to call cell-phones in Japan. After repeated tech-support e-mails, I got this little gem; "Skype currently does not support calls to Japanese mobile phones" to which I responded that until shortly before they did....no answer.
Posted by chonnom (88 comments )
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Not Much To See Here
<a class="jive-link-external" href="http://www.mobileambition.com" target="_newWindow">http://www.mobileambition.com</a>
So, really, what is the big to-do here? I'm down with Skype. The service is cool. The technology is cool too. But, truly, truly, truly when is the last time you thought about the cost of making a long distance phone call? Domestic calls are virtually free (or, really, the cost is disguised) and international calls are plummeting in cost. (Although roaming calls and international long distance are still a huge profit center for the mobile industry.)Mobile Skype doesn't relieve you of any burdens. While you are traveling, you must either be paying roaming data rates, or be using a data plan. If you are using just Wifi, then it really isn't mobile, but rather portable...Mobile Skype may be cheaper than using voice minutes, but you give up the reliability of carrier voice connections. If you are traveling abroad, you will likely be using Wifi and a PC will be just as good an option.No real story here, although the VOIP guys want you to think there is. (As a disclaimer, I love VOIP. My home phone is VOIP, my office phone is VOIP, but they are relacements for traditional services, whereas mobile Skype will be an add-on service on top of your usual monthly voice/data plan fee).If we can get true mobile service without a carrier agreement, then that would be a story.
Posted by timkilroy (3 comments )
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mobile voip
i heard recently that there is a british company called vicci which seems to have a revolutionary mobile voip product on the way, wondered if anyone else has heard about it?
Posted by manheru01 (1 comment )
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What's News...
I totally agree! A new plan, on top of a plan, especially when they come only with two-year agreements (or the likes) is NO DEAL. I too use VOIP in my home and office (not thru Skype) via my pre-existing telephones which are portable but not truly mobile. With the capability to transport my DTA box anywhere in the world and plug it into any internet and any pre-existing telephone and make calls to any mobile, land line or voip phone, as well as receive incoming calls when someone dials my home or office number (no matter where in the world I am) for no additional charges; THIS is still more news worthy and impressive, in my opinion.
Posted by Lets Succeed (3 comments )
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Your Own Custom PBX
Skype has an opportunity to expand the service to support customizable PBX-like functions like find-me-follow-me, greetings based on caller-id, call actions based on time-of-day, etc. The API could expose new functionality, allowing independent software companies and handset makers to exploit the functioanality.

I have a makehift find-me by forwarding unanswered Skype calls to me cell phone, but it doesn't have the kind of flexibility I really want. It's cool though, an incoming call rings all my Skype phones wherever they may be -- home, work, etc. If I'm in the field then it rings through to the cell.
Posted by Stating (869 comments )
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The problem with mobile carriers is ...
The problem with mobile carriers is that they are providing and controlling both the pipes and the content going over them.

With the internet it's different. ISPs provide the pipes. Generally any IP protocol traffic can get through. So it's a good environment for developing applications. They only have to adhere to the standards to work.

With mobile providers it's different. They just have to limit anything that go over their networks. There is little sense in developing applications for this environment unless you are very big and you can secure in advance agreements that your applications would actually not be blocked. A lot of the development you can have on the internet you just cannot have in this environment. It's focused on providing one size fits all things for the lowest common denominator of audiences.

There is also little sense in buying mobile based technology unless you know you absolutely need it or you have lots of spare money when you know that the limitations are not just technology but also artificial limitations your provider puts on applications you can use just so you cannot use the resources efficiently (that is forcing you to use the resources less efficiently to do what you need to do so they can charge more).

There's a conflict of interest between the selling of connectivity and the selling of content (particular services) and as long as no regulation separates these two and opening mobile networks by requiring that they allow all kinds of data that adhere to basic communications standards (like ISPs allow any protocol over IP protocol) we cannot expect these networks to develop in the same way the internet does, and a ten word SMS message would cost the same as sending an email message with a million times more data on the internet.
Posted by hadaso (468 comments )
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tip of the iceberg
This is merely a precursor for what will eventually be a world where we all carry a laptop the size of a cellphone. It will have all of the functionality and be twice as fast. It's coming.
Posted by emerson direct (4 comments )
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