Why Microsoft Plus Skype Is An Enterprising Idea

Skype, the omnipresent unified communications service for consumers and even small businesses, is a much better fit for Microsoft than it was for eBay. And if Microsoft executes on the rich possibilities, it might just be a stunningly good fit. If.

Because of regulatory considerations surrounding their $8-5 billion merger deal, neither Microsoft chief Steve Ballmer nor Skype CEO Tony Bates had much to say beyond the obvious integration possibilities. We're not thusly constrained.

There is wide-ranging fear that Microsoft will suffocate Skype's multi-platform support, which is not only atop the list of most useful Skype benefits, but is also one of the vital things Microsoft must get right. Ballmer said the right things, namely that compromising this support wouldn't be in Microsoft's best interests. Evidence suggests that Microsoft works to ensure its applications run across platforms, and now even as Web-based services. But evidence also suggests that Microsoft doesn't always give non-Windows platforms the same attention. Witness Outlook on Mac, which lagged the Windows version for years. Such a lag will hardly be tolerated with Skype.

Beyond that concern, the rest of the criticism about the Skype deal amounts to speculation, fear, and conspiracy theory, because Ballmer is right: Microsoft would be stupid to ignore the variety of desktop and mobile platforms Skype runs on. But don't pretend that Skype will function equally well on all systems; it will be easier for the company to enable more functionality within the Microsoft ecosystem. Even so, if Microsoft can spend $8.5 billion, it can ensure success on all fronts.

For enterprise users, the big question is what the Skype/Lync roadmap will look like. Ballmer noted that Lync sales grew 30% last quarter. He also noted that Microsoft would integrate Lync and Skype. From Lync, users will be able to connect with other business users (partners, customers) via Skype, an added Lync advantage, given that it already supports federation with Windows Live IM, AOL IM, Yahoo IM, and Google Talk (via an XMPP gateway).

For chat, voice calls and video could present hurdles, primarily because Skype and Lync make fundamentally different assumptions about the network. Lync's encoder is built for optimization on enterprise networks; Skype's for the public Internet.

Lync and Skype share almost identical end-user features (more so in the enterprise, with Skype for Business and Skype Connect), including chat, audio, video, screen sharing among individuals and groups, as well as various calling control features, like call forwarding and transfer and voicemail.

But Lync also has many enterprise-class features, including Active Directory integration for role-based access control and authentication. Lync allows centralized call management, end-point encryption, and call logs, and it can work with a variety of SIP gateways, as well as with a variety of videoconferencing systems, including room-based ones.

For Microsoft Office and Exchange customers, the Lync integration is huge. Being able to detect and extract presence information in Outlook, for example, or to click-to-call from a Calendar invite makes collaboration seem natural. It's a no-brainer to add those same capabilities to Skype.

For now, Microsoft can keep these two products separate (there is also a parallel on the consumer side between Microsoft's Windows Live Messenger and Skype). Over time, it might start to make sense to blend them using the best of what each offers, similar to the Outlook client, which can tap into an Exchange server in the enterprise or serve as a front end to a POP or IMAP-based system for personal use.

Making Skype more enterprise-ready must have been at least a secondary goal when the company brought in Tony Bates from Cisco. Although Microsoft didn't say whether all of its unified communications technology would come under Bates, it would make sense to let him sort it all out. But it's probably a bit too early for all of that.

Eric Krapf, co-chairman of UBM TechWeb's Enterprise Connect conference and editor of the No Jitter UC blog site, says a single brand won't work today anyway. Skype is well known in consumer circles, and Lync (and predecessors) in the enterprise, and neither has much crossover. But if Microsoft can tell potential Lync customers that they will have a public network for VoIP, that could be a winning formula, Krapf says.

The next question is how Microsoft will compete with enterprise products such as Cisco's WebEx and Adobe Connect, which offer everything from corporate Webcasting to rich media internal conferencing. Microsoft doesn't have a product here, while Skype recently announced that it would partner with Citrix, using GoToMeeting as Skype's Web conferencing platform. There's no reason that partnership can't stay in place, and in fact Microsoft should work hard to extend the capability to Lync.

The biggest opportunity for Microsoft and Skype might be in mobile. So far, Skype has struggled to make the platform fully available (that is, all features) on all mobile platforms. There still isn't an iPad version, though the iPhone one works reasonably well, able to take advantage of the iPad 2's camera for video chatting. There's an Android version, but not with video (coming soon, though). There is no Skype for RIM's BlackBerry or PlayBook. And Microsoft announced recently that Skype was coming to WIndows Phone 7. Suddenly, now there's the opportunity to have video chats and IMs across platforms. Maybe Microsoft can get its newest WP7 pal, RIM, on board as well.

If Microsoft can do all of this, it may put a damper on technology like Apple's Facetime and Google Talk. And if Microsoft can make mobile Lync access happen through Skype, then suddenly you've got mobile communications across devices everywhere, inside the enterprise and out. Carriers may have something to say about that, but they're starting to get on board (see: Verizon). From any tablet, the ability to connect via video into, say, an enterprise-class room-based video system, or join a GoToMeeting call . . . that becomes pretty compelling and must certainly put the likes of Cisco on notice.

Extend those capabilities to the consumer side (Xbox, Kinect, Windows Live Messenger, and TV, where Skype is already making inroads), and Microsoft + Skype = $8.5 billion.

Fritz Nelson is the editorial director for InformationWeek and the Executive Producer of TechWebTV. Fritz writes about startups and established companies alike, but likes to exploit multiple forms of media into his writing.

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