As the ink still sets on Microsoft’s acquisition of Skype, industry analysts are continuing to debate the wide-reaching implications of the deal. With a price tag of $8.5 billion, Microsoft is taking a huge gamble on Skype’s potential to turn a profit, something it hasn’t done in many years. Yet this gamble is more than just on Skype. Microsoft has used over a sixth of its cash reserve in the expectation that voice and video calls over IP will become the key communication tool for both business and personal users.
The long-held promise of voice and video calls over IP is still yet to reach maturity. Since its launch in 2003, Skype has experienced a difficult and at times slow development path. The much-publicised acquisition by eBay and the near collapse of the company in 2008 has seen its expansion delayed, especially into video conferencing and mobile applications. Additionally, the marketplace has become much fiercer. Google Voice, Apple’s FaceTime and T-Mobile’s Bobsled (currently enabling VoIP calls on Facebook) are just a few of the competing services challenging Skype’s dominance.
However, competition is no bad thing, especially in this market where the biggest challenge to mass adoption still remains our global network infrastructure. I continue to be amazed at the possibilities of video conferencing. Speaking to friends and family spread across the globe is something I never take for granted but I have yet to use any video conferencing service that provides a strong quality of service, most notably on mobile devices. Without question, these are best-effort services, but if we are to truly embrace the possibility of IP-based voice and video communications our networks need to improve.
A recent New York Times article picks up on this theme and questions whether mobile carriers are ready for the mass migration of services to data networks. Looking at current mobile networks, the answer would appear to be no. Both fixed and mobile carriers are continuing to explore how they can answer the enormous bandwidth explosion while remaining financially viable. What many carriers fear here is becoming merely the transport link for these data services, essentially, the ‘dumb pipe.’ To avoid this, carriers need to find ways of selling additional services. Some are eschewing this problem by partnering directly with service providers, such as Google, others are doing so by developing their own applications.
One response we’ve already seen from the industry to the adoption of these services is the removal of unlimited data packages. The removal of these packages has in-turn led to an upswing in the use of WiFi services and predictions that WiFi could offer a significant data offload for already overburdened data networks. Yet even here the industry is facing significant challenges, especially when it comes to inter-working between mobile carriers. However, the WiFi Alliance is hoping to make some progress in this space later this year with the development of universal standards.
The big question is what happens next? How do Google, Apple, Facebook and now Microsoft leverage their VoIP and video conferencing solutions and profitably expand their customer base? How do mobile carriers offer customers the bandwidth required to effectively use these services while remaining financially viable?
It’s going to take some time to answer these questions and I suspect there will be a number of net neutrality hurdles to overcome first. I’d be interested to hear your thoughts on this. Do you use VoIP solutions? Have you moved away from traditional voice services? What challenges do you see to mass adoption of VoIP and video conferencing?