Skype heads for the business VoIP market

Skype plans to offer a business telephone service for "individuals and workgroups, not CIOs" that the free Internet phone service provider believes will shake up another major telephone market.

Winning over business will not be an easy task, Skype co-founder Niklas Zennstrom said on Wednesday. Incumbent suppliers of business phone services and equipment fiercely protect customers, who in turn are extremely loyal. Also, why would a business trust its phone network to a start-up such as Skype, which uses new peer-to-peer Net phone technology, has just 60 employees and very nascent sales channels?

This will be the biggest test yet for Skype, which after just a year in business has become a big hit with consumers. It's trying to cash in on the fact that 22 million consumers downloaded the free Skype software since it first became available, and then made nearly 1.8 billion minutes of calls that would have normally been done across traditional phones.

"We can't do all of this ourselves and are looking for partners -- resellers, hardware makers, system integrators, consultants -- to help," Zennstrom said. "But it's not the big that beats the small; it's the fast that beats the slow."

Zennstrom did not reveal when the business services will be offered and other important details. He did say "Skype for Business" will include Skype's free software to make unlimited calls between Web-connected PCs and some personal digital assistants. There will also be new premium features, including SkypePlus voicemail and expanded conference calling and SkypeIn, in which Skype users can get calls from the traditional phone network.

As for any new equipment that will debut with the business service, phone maker Siemens is already at work on a cordless phone-like device that will probably be part of the new Skype For Business offers, Zennstrom said. It's likely Skype will use the business service to market its existing SkypeOut, an in which Skype users can make calls from their PCs or PDAs (personal digital assistants) to the traditional home or mobile phones for two US cents a minute.

Skype uses peer-to-peer architecture, which requires absolutely no infrastructure and only minimal capital investment compared with phone companies that own their own lines and switches. Rather, Skype's 750,000 daily users create the network on the fly, sharing computer resources to manage traffic flow and ensure call quality. Skype claims its network can grow organically without the need to add new equipment to support increased traffic demands.

This "network free" concept is unprecedented, even for Net phone providers that are already turning the century-old telephone industry on its ear. With Skype, one no longer needs a few hundred thousand dollars in start-up costs typically associated with Net phone service, let alone the billions of dollars in investments to become a traditional phone company.