Skype unveils a new service

Small business is focus of Net telephone firm

March 10, 2006|By JAMES S. GRANELLI | JAMES S. GRANELLI,LOS ANGELES TIMES

With regular calls nationwide and to China, England and Hungary, Ben Boxall's phone bill was running $900 a month - not an insignificant expense for his small Los Angeles-based import company.

After switching to Skype, the Internet program that popularized free and low-cost telephone service, Boxall cut his bill to about $150.

A year.

"If Skype ever stopped operating, we'd be in big trouble," said Boxall, who runs Luna Imports Inc.

So would many of the other small-business operators who make up as much as 30 percent of Skype's 75 million users worldwide. Recognizing that, Skype Technologies rolled out yesterday a new Skype for Business service aimed at giving small companies access to telecommunications services historically reserved for big corporations.

"Skype for Business is clarifying the package we have for business customers and also adding some new features," said Saul Klein, vice president for global marketing of the Luxembourg-based company, which was bought last September by online auctioneer eBay Inc.

Among those features are third-party products such as speaker phones, cordless Internet phones and electronic switching gear for businesses. New software also allows customers to share documents and presentations over the computer during calls, to make conference calls with as many as 500 people and to translate calls in English into French, Spanish, Cantonese or Mandarin.

"My Cantonese is awful," Boxall said. "I hope that program works."

Skype created a sensation when it was launched in 2002 by Niklas Zennstrom and Janus Friis, the two technologists who created the Kazaa file-sharing program. Conventional telephone companies, reeling from falling long-distance prices and rising competition, feared that Skype and other programs that routed calls over the Internet would siphon off their best customers.

That has happened to a certain extent. Skype has become nearly synonymous with Internet telephony and is used as a verb among devotees. But telephone giants such as AT&T Inc. also have adopted Internet telephony to lower their costs and are offering expanded services to customers, particularly in the lucrative corporate market.

The new services could help Skype tap deeper into that market and recoup some of the $4.1 billion that eBay paid for the company.

Skype's most high-profile product is the free program that lets users make no-cost voice calls from their computers. But its fee-based services, which let users call people on regular phones and use voice mail, generate the bulk of its revenue - estimated at $60 million last year.

Internet telephony experts gave Skype's business package mixed reviews.

"This helps make companies more cost-efficient and more competitive," said Jim Kohlenberger, executive director of the VON Coalition, which promotes voice services on the Internet. "We are just at the very first nanosecond of the big bang explosion in Internet phone service."

But Skype for Business is not a complete package - nor is it right for many companies, especially larger ones, said Irwin Lazar, a research analyst at Burton Group in Midvale, Utah. For most, he said, it could be used as a complement to conventional phone service.

"If you're extremely security conscious and have to track employee use of the phone, you can't go with Skype," Lazar said. "We'll continue to see its sweet spot with companies that are not too concerned about security and those whose employees do a lot of traveling."

He pointed out that Skype was facing more competition from Internet giants such as Google and Yahoo, which are embedding voice-calling programs into their instant messaging and e-mail programs.

Jeff Pulver, a pioneer in the Internet telephony industry, said the new services sounded "more gimmicky than useful" and seemed to make the company more like any other Internet phone service.

"The old Skype was truly innovative," Pulver said. "It's great that they're doing these things, but I don't see any home runs here."

But for small companies such as Luna, Skype's simplicity and ease of use have been gratifying.

"I've trained most of my suppliers and customers to use Skype, too," Boxall said. "It's just become so important to us."

James S. Granelli writes for the Los Angeles Times.

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