Skype doesn’t really need Cisco: Interview

Two weeks ago, TechCrunch’s Co-Editor Michael Arrington reported that Cisco’s bidding Skype. Talking to Mr. Sudha Valluru, CEO and founder of ViVu, Inc. (which deliver products like VuRoom and VuCast as an enterprise solution, which partners Skype, Inc. for integration of their product in Skype) we get the idea of who needs whom, the purpose behind Cisco bidding Skype.

“There are tremendous smart people in Skype and have great technologies. They can still be on their own by partnering with young companies like us than being acquired by huge companies and lose their legendary identity and innovation. And they might really do that.”

Me: Cisco, which is, day by day stepping into the field of acquiring ordinary consumers, like you and me, sitting home who got nothing to do with enterprise has made a bid of somewhat $5 billion on Skype. Skype was acquired by eBay at less than half the price than what Cisco has bid. To me, the bidding thing’s still a rumor. Is it really a rumor?

Mr. Sudha: I cannot comment whether it is true or not because I have no idea. It came from Michael Arrington, TechCrunch, so I go by his word. It doesn’t surprise me, because I believe it’s a good move from Cisco’s perspective and also John Chambers (CEO of Cisco Systems, Inc.) always had tremendous interest to bridge enterprise with social media market. That’s a new dimension for Cisco. Predominately they were perceived as systems company, selling routers and switches. Now, with the acquisition of Skype they will have a better reach to consumers, about half a billion, and most of them would go to work and use the same piece of software within the enterprise. So, it doesn’t shock me if they are going for, supposedly, $5 billion.

Me: Does Skype need Cisco for enterprise solution?

Mr. Sudha: That’s an another interesting discussion going around. Cisco is doing a lot of work to bring “Presence” to enterprises, but still struggling with that technology. So, Cisco might need Skype more than Skype needing Cisco. But again, usually, when these two companies come together or, for that matter, any company which partners with Cisco, always find it as an advantage … they are the network in the world.

Me: Skype has launched Skype Connect 1.0 recently, a very good office solution. Few days back, Skype launched a Channel Partner program, a kind of support program for its Business customers. It’s getting quite good in the enterprise filed, quite fast. Any comment?

Mr. Sudha: It (Skype Connect) predominately focuses on hooking up to the existing SIP base solutions i.e. hook up with the incumbent PBXs through the SIP/Skype gateways.

ViVu's VuRoom plugin for Skype

ViVu's VuCast

Me: Vivu’s video conferencing solutions have proven Skype good for enterprise. Skype can continue partnering vendors like Vivu, to develop better technologies and services targeting enterprise. It doesn’t have to be dependent on any technologies of Cisco, does it?

Mr. Sudha: You’re absolutely right. In fact, that could be one thing Skype might be thinking. Skype can stand on their own as a successful public company (they have already filed for IPO). Skype has a very good architecture that can reach out to any part of the world. As we are experiencing now, through our VuRoom (integrated ViVu & Skype) conversation across the globe; it will be a similar experience for any enterprise user. They are partnering with companies like us to deliver secured enterprise multi party Video Conferencing/Collaboration applications with features like Power Points/ Desktop Sharing and ability to archive.

Me: I really don’t understand why Skype should go with Cisco, because it’s really doing everything accordingly, launching newer-and-newer services for enterprise.

Mr. Sudha: 90% or even higher percentage of revenue that Skype collects, comes through SkypeOut (mobile and phone calls.) SkypeOut could face tremendous competition at some point. Take a look at Google’s acquisition of On2 and GIPS… it shouldn’t be too hard for Google to come out with something similar to SkypeOut – I think they’ve already announced it. They can go further, market it and start carving out SkypeOut revenues.

Now comes the video: So far, Skype has been extremely popular because of its free, high quality, audio conference. When you want to deliver video conference service, it’s entirely a different cost dimension – an operational cost to deliver high quality video. So the ability for Skype to deliver a free video is not possible, that’s why you heard the announcement that they will also start charging for multiparty video service. Once they do that, they will run into number of players who can also offer video conferencing with price associated with it. That might make it harder for Skype to maintain the leadership that they have for their audio services.

There are tremendous smart people in Skype and have great technologies. They can still be on their own by partnering with young companies like us than being acquired by huge companies and lose their legendary identity and innovation. And they might really do that. It is all still a rumor. Knowing a little about Skype and their pride, I don’t think they’ll easily accept it.

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