Meaningless Hype of the Week: Skype and Avaya


This week’s RSS clogger was news about Avaya and Skype announcing a new strategic partnership. The partnership got very broad media coverage – even the New York Times. Most of the coverage suggests it is big news, but it isn’t. It’s too little too late.

What Happened
On Wednesday, Skype and Avaya announced that the previously announced Skype Connect previously known as Skype for Business will now be jointly promoted by Skype and Avaya which previously announced certified compatibility. Avaya and Skype also happen to be a sister companies due to majority ownership of both firms being held by Silver Lake Partners (which also owns a portion of Gartner Group which happens to think Avaya is magical).

Because of the common ownership, this type of joint go-to-market has been expected for a while. But there was little indication that Skype and Avaya had any interest in working together. Here is a quick Litmus test: Google the words Skype and Avaya and you get 554k hits. Compare that to Skype and Cisco which gets 2,540k hits. The world has 5 times more to say about Skype and Avaya’s biggest competitor than Skype and Avaya. It isn’t just the world-wide web either. The word “cisco” appears on Skype’s own website 544 times and “avaya” only appears 75 times. Actually, I did this count last month for a Cisco Skype research piece soon to appear on GigaOm Pro, and the Avaya hit count a month ago was only 50. It is up 50% – presumably since Wednesday.

The Details
This new found love actually comes in two phases. The first phase is just Skype Connect working with Avaya which is basically old news. Skype Connect is a SIP trunk service. It really has nothing to do with Skype’s core services such as desktop calling, IM, presence, videoconferencing, or even Skype’s newer services such as Skype Mobile. Nor does it fully leverage Skype’s chief assets, a worldwide brand customer base, as the glorious partnership is limited to the US.

It isn’t big news for Avaya either as Avaya already discovered (one might conclude invented) SIP about three years ago. Avaya is rapidly integrating SIP into all of its systems and endpoints. Avaya embracing Skype Connect means nothing new, no new commitment, no changes, and no sacrifices.

Skype Connect is certified for several equipment makers. ShoreTel was first, then came Cisco. In addition to Avaya, the list currently also includes 3CX, Siemens, and SipXecs. Furthermore it likely works fine with every other brand of SIP enabled phone equipment. There is no competitive advantage to Skype Connect with Avaya equipment.

Supposedly, beginning this month, Avaya will pre-install Skype Connect on Avaya phone systems. I am not sure what that means, but I am suspicious it means nothing. But I will point out, that picture frames typically come with pictures pre-installed too.

Where’s the Meat? .
Phase two of the partnership is where Avaya truly integrates with Skype’s key features. Now this is big and way overdue. Avaya already has a UC client that does everything that Skype’s client does, but without Skype. That is the Avaya UC client can do presence, desktop dialing, softphone, video, and IM. All but the softphone work only with other Avaya users on the same or federated networks. By adding true Skype functionality, Avaya customers will gain 560 million potential new users to communicate with in new innovative ways. A significant competitive differentiator. Phase two includes (list courtesy of SkypeJournal):

  • Federated directories, contacts, dialing, voice, video, IM and presence.
  • UsingSILK and other HD codecs used by Skype for greater fidelity.
  • Administrative controls on the Avaya side will treat Skype like any other service.
  • Avaya will drive customers to buy Skype Connect and set up aSkype for Business account.
  • Won’t useSkypeKit; new technology roadmap is coming.
  • Will use SIP stack. SIP, Simple, RTP protocols were mentioned.
  • Avaya’s hosted services are out of scope for now.
  • United States only.
  • Not an exclusive deal.

Phase two makes a ton of sense and could even be news. But the problem is phase two isn’t expected until the 2nd half of 2011; a year away, probably more. That basically means development hasn’t even started yet.

Enterprise UC vendors largely limit themselves to self imposed walled gardens. There are large public IM, presence, and video networks that enterprise players position as evil and dangerous. But communication networks don’t work that way. The value of communication technologies increase with a larger network of users eligible for communication. It is a classic lesson of telecom that never gets old…. email, fax, the telephone itself all started with proprietary closed systems and took off after crossing a proverbial chasm of general interoperability.

Too Little Too Late
A year is a long time. Fifteen months ago, eBay mostly owned Skype. Since then, Skype was to IPO, instead got sold off, announced yet another IPO, and is potentially in play to be acquired yet again. Avaya had an interesting year too, going from number 3 in the market, to number 1 after it acquired the larger competitor Nortel, and now at number 2 barely behind Cisco.

Avaya has a lot of priorities – it is facing strong and innovative competition from Cisco, Microsoft, IBM, and Siemens. The UC market is in a major transformational phase, and Avaya is still working to integrate Nortel products and channels, all while expanding its virtualization strategy, learning Android, and much more. Skype, a largely free service with little enterprise penetration, probably falls somewhere on the priority list around #786.

So as important as step two really is, that fact that it’s about a full year away and inherently a low priority reduces its significance to a fraction above meaningless. Things are moving too quickly to gauge how this could be significant a year from now. That’s assuming it even happens. Cisco could acquire Skype (something I think makes tremendous sense) and rumored as a possibility. In fact, I give that a higher probability than phase two happening in a year. And if Cisco does acquire Skype, phase 2 will indeed happen – with one slight change. Or if Skype does an IPO, that event itself could alter is development priorities and commitments in a number of ways.

However, on the same day, there was another Skype story that received less attention. Facebook and Skype Readying Deep Integration Partnership. Now, that is interesting.

Dave Michels