Skype's Saviours?

The answer, in my article over at GigaOM.com, is resoundingly NO.

But there’s more to it than that.

My argument in this piece was largely an economic one, not as much a dissertation on the independent merits of the protocols in play.  I do think that the issues around SIP remain relevant as they result in far less than satisfactory economics.

However, Skype is now a big company (either within or outside of eBay).  It can afford to be infrastructure-heavy.  It can now spend money on things that it could NOT have when it was founded (and funded) in 2002.  So Skype’s design was perfect for an aenemic startup.  Note that for a number of years Skype had no billing system, no “SkypeOut”, and virtually no infrastructure.

So even if you could accept the shifted economics of moving to SIP (which is far from standardized in practise) — how exactly would you make Skype backward compatible?  How could you possibly make this shift without disrupting the current userbase?  Or are folks proposing that Skype cause every user to upgrade their client on the same day?  That would be suicidal.

I strongly believe that rumours that Skype is negotiating to buy Gizmo5 are totally unfounded — and probably originate within the Gizmo Project team itself.  Take it from the source, Mike.

Full text of the article below, but there’s a vibrant ongoing discussion @ gigaom.

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Could SIP Really Save Skype?

by Ian Andrew Bell

Global Index, a technology owned by Skype co-creators Niklas Zennstrom and Janus Friis via their company JoltID, is the fulcrum of leverage in their ongoing dispute with current Skype owner eBay and its potential purchasers. If you were either the buyer or seller in this labyrinthine transaction, you’d likely be tempted to declare, “Let’s just rip out Global Index and use something different.”

Such a move would undoubtedly take the wind out of JoltID’s sails as Skype tries to find a new home outside of eBay. Indeed, many VoIP pundits insist that Session Initiation Protocol (SIP) could be Skype’s savior. But while it’s true that technologies like SIP and its stepchild XMPP achieve a lot of the same goals as Global Index, such an argument ignores the fact that Skype is as successful as it is because it has exponentially better operating economics than the rest of the VoIP industry –- and Global Index is the singular reason why.

The Promise of SIP
In 2002, as Zennstrom and Friis were facing a bevy of lawsuits of indeterminate scope and the writing was on the wall as to the profitability prospects of a P2P file-sharing network, many in the then-fledgling VoIP industry were busily attempting to re-architect the telephone network in the Internet’s visage. A number of these services, including two from entrepreneur Jeff Pulver — Vonage and Free World Dialup — used SIP at their core. They were consumer-focused services that, in their own way, attempted to mimic the architecture, business structure and design of the public switched telephone network using Internet Protocol technologies.

SIP is now hugely significant in shaping how many telecom networks are architected. But while many of us initially thought that SIP might herald an era of person-to-person multimedia communications free from the control of large companies, it hasn’t exactly worked out that way.

The Drawbacks of SIP
For telecom companies and their vendors, the draw of SIP was that it could be used to transpose the proprietary SS7 signaling network onto the Internet while allowing the calls themselves to transit IP networks –- both at a significant discount to the cost of switched telecom trunking. But even as a client-server phenomenon deployed on the public Internet, SIP is an incomplete solution. On its own it has no way of traversing firewalls or, more importantly, dealing with NAT traversal –- a critical oversight for a protocol created in the late 1990s for the IP address-starved modern Internet.

SIP user agents (such as that software on your computer or that phone on your desk) must also be manually configured to register themselves to a SIP proxy server if users are to be allowed to use them for differing networks. Furthermore, all traffic, addressing and routing decisions in a SIP network are typically handled at the network core or by equipment operated by the service provider. That includes the various workarounds such as STUN that enable folks behind firewalls or using private IP addresses to talk to each other, not to mention derivative (and much cooler) protocols and techniques such as XMPP and Jingle.

If adapting SIP to the vagaries of the modern Internet sounds expensive, it is. By 2006, Vonage had already burned through nearly half a billion dollars. More importantly, SIP architectures are a critically flawed design starting point for a true P2P network. SIP and XMPP networks are really client-server networks masquerading as P2P.

Forgetting about the exponentially more costly business of sending voice or video data across networks, 70 percent of traffic on XMPP instant messaging networks is the result presence updates. Some estimates are that as much as 60 percent of this information is itself redundant. Servicing the traffic on a network such as Skype’s, which consists of some 45 million daily users, would bury most startups in server and bandwidth expenses. Add to that the actual messages themselves, and having to handle the voice channel or video at the core, and it becomes clear that only the big boys get to play in distributed communications services.

Enter the Supernodes
Or do they? As it turns out, features like instant messaging, voice/video chat, and presence management are ideal applications for the technology that Skype’s founders had been playing with for years in the P2P world. The networks using their technology when Skype was founded in September 2002, Kazaa and Morpheus, handled massive volumes of data between peers with no real central core to speak of, but still significant domain control by FastTrack, the company created by Zennstrom and Friis to license technology using the same moniker. The key concept exploited by the services derivative of this technology is the distributed, auto-discovering, self-healing node-supernode model tied together by PKI encryption.

On any of the other VoIP and IM networks such as Gizmo or iChat, each user is a node -– a logical endpoint in a cloud that connects to host computers operated by the service. But with Kazaa, Skype and even Joost, a small percentage of each service’s users unwittingly conspire to provide the network’s backbone in the form of supernodes. Which means that if you have some combination of a permissive firewall, really good port-forwarding on your router and a public IP address on your computer, you, too, can be a Skype supernode. When it comes to traversing firewalls, NAT, and handling distributed authentication and presence management, supernodes do all of the heavy lifting.

That is the reason Skype is able to service 45 million daily users on a fraction of the infrastructure that a SIP-based provider like Vonage needs to deploy. The workload that normally would be handled by equipment owned by the company is distributed among the users themselves.

The Power of Global Index
In order to make this seamless to users, Skype implements a Service Discovery Protocol. Such technologies have always worked well on Local Area Networks (Apple’s implementation is called Bonjour) but often get confused on the public Internet because there is usually no central registry — and because the broadcast packets they use tend to get snubbed by access routers.

When you load it up, it starts with a table of known supernodes and the central Skype server. Skype’s only centralized involvement is in verifying your identity via PKI authentication and providing an update (if necessary) of friendly nearby supernodes. From that point on, your associated supernodes handle every piece of data you share on the network. An added bonus is that supernodes can redesignate the location of the master Skype hosts on your computer whenever necessary.

Since the whole thing is encrypted, and the encryption keys of nodes and supernodes are all validated by Skype’s root key authority, everything on the network is trustworthy and virtually impossible to hack or otherwise corrupt. In other words, the Skype network is fully distributed, self-healing and largely decentralized, but still maintains all of the advantages of command and control desired by a service operator who actually wants to make money from integrating the service.

Thanks to Global Index, Skype operates at cost levels that are believed to be a fraction of those of even the most efficient SIP or XMPP-driven networks. It is this economic advantage that trumps the possibility of forklifting standards-based telephony technologies into the core of Skype’s network. If you truly wanted to replicate Skype’s ingenious — and very practical — design, you’d be better off looking at technologies like Napster, Bittorrent or GNUtella.

Ian Andrew Bell is creator of the team management service rosterbot.com

“VoIP is dead,” Skype General Manager of Voice and Video Jonathan Christensen declared at an industry conference a few weeks ago. He spoke figuratively, of course, but he may well have been right. While Voice-Over-Internet Protocol proponents had long promised a decade of creative destruction, they themselves appear to have become the victims.

-Ian.

——- http://pulver.com/reports/vonews.html

Key3Media, the World’s Leading Producer of Technology Tradeshows and Events, Announced Its Strategic Acquisition of Networking Pioneer pulver.com’s VON and SIP Events

LOS ANGELES–Sept. 11, 2001–

Global Acquisition Completes Months of Planning that Places Key3Media at the Forefront of Networking Space

Key3Media Group, Inc. (NYSE: KME) today announced that one of its wholly-owned subsidiaries has acquired two major pulver.com event brands: Voice on the Net (VON) Conferences and Session Initiation Protocol (SIP) Summits. Pulver.com is considered one of the industry leaders in the Networking and IP communications space. As part of a long-term agreement, pulver.com President and CEO Jeff Pulver will continue to manage the VON and SIP tradeshows and conferences for Key3Media.

This acquisition culminates six months of strategic planning and analysis to position Key3Media as the industry leader for networking tradeshows and events. After months of research it became quite clear that pulver.com’s VON and SIP events were a perfect fit for Key3Media and a match that will quickly differentiate Key3Media networking events in the future.

“Ten years ago the PC defined the IT industry. Today the network is defining the industry and will continue to do so for the next decade. This acquisition strategically positions Key3Media to play a dominant role in the networking space,” said Fredric D. Rosen, Chairman and CEO of Key3Media Group, Inc. “Key3Media’s NetWorld+Interop brand has always been the definitive networking event in the industry. Now the synergies created with this new acquisition position Key3Media as the unparalleled leader, bringing together buyers and sellers in the networking and IP communications industries.”

Jeff Pulver, President and CEO of pulver.com, Inc., is a globally respected visionary with more than a decade of experience in Internet and IP communications and is a dynamic entrepreneur. He is the publisher of Internet technology related research such as The pulver Report, the founder of the VON and SIP events, and the producer of the Presence and Instant Messaging (PIM) trade show. Mr. Pulver is the co-founder of the VON Coalition, Free World Dialup, Vonage and WHP Wireless and is one of the true pioneers in Internet telephony whose expertise is widely utilized in the telecommunications industry.

There are six VON Conferences around the world each year. The VON Conferences focus on the convergence of the telecom and Internet industries. The next VON Conference, Fall 2001 VON, will be taking place October 15-18, 2001 at the Georgia International Convention Center in Atlanta, Georgia. Other upcoming VON Conferences will be held in Hong Kong in November, San Jose in January, Seattle in April, and Helsinki in June. There are currently two SIP Summits each year. Fall 2001 SIP Summit will be taking place September 10-13 in Austin, Texas. SIP Summit enables attendees to listen to the senior executives responsible for driving the international SIP industry forward and to meet with these players to take advantage of unique business and personal networking opportunities.

“As the world’s leading information technology event producer, Key3Media has set out to reinvent the tradeshow industry with customer-centric programs and community-focused content,” said Jeff Pulver, President and CEO of pulver.com, Inc. “I am pleased that pulver.com’s VON and SIP events will now have a unique opportunity to grow to the next level under the Key3Media umbrella.” Corporate Solutions of Fairfield, Connecticut was the exclusive representative for pulver.com in this transaction.

About pulver.com

pulver.com builds community for the IP Communications industry through conferences, newsletters, mailing lists, analysis, liaison roles, advise to start-ups, summits, test projects and its web site. This role started with the emerging VoIP industry and has expanded into the instant messaging, wireless internet and broadband home spaces, since such services provide an integral back end to the increased functionality of IP-based communications. The company’s founder, Jeff Pulver, has been involved with the technology since the beginning. For more information, visit www.pulver.com.

About Key3Media…

Key3Media Group, Inc., is the world’s leading producer of information technology tradeshows and conferences, serving more than 6,000 exhibiting companies and 1.5 million attendees through 60 events in 18 countries. Key3Media’s products range from the IT industry’s largest exhibitions such as COMDEX and NetWorld+Interop to highly focused events featuring renowned educational programs, custom seminars and specialized vendor marketing programs. For more information about Key3Media, visit www.key3media.com.

Certain matters discussed in this release are “forward-looking statements,” including statements about Key3Media’s future results, plans and goals and other events which have not yet occurred. These statements are to qualify for the safe harbors from liability provided by the Private Securities Litigation Reform Act of 1995. You can find many (but not all) of these statements by looking for words like “will”, “may”, “believes”, “expects”, “anticipates”, “plans” and “estimates” and for similar expressions. Because forward-looking statements involve risks and uncertainties, there are many factors that could cause Key3Media’s actual results to differ, materially from those expressed or implied in this release. These include, but are not limited to, economic conditions generally and in the information technology industry in particular; the timing of Key3Media’s events and their popularity with exhibitors, sponsors and attendees; technological changes and developments; intellectual property rights; competition; capital expenditures; and factors impacting Key3Media’s international operations. In addition, the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Prospectus Supplement dated June 22, 2001 filed by Key3Media with the SEC under Rule 424(b) relating to its high yield bond offering and the section entitled “Item 1.Business – Certain Factors That May Affect our Business” in the Annual Report on Form 10-K for the year ended December 31, 2001 filed by Key3Media with the SEC contain important cautionary statements and a discussion of many of the factors that could materially affect the accuracy of Key3Media’s forward-looking statements and/or adversely affect its business, results of operations and financial position. These statements and discussions are incorporated herein by reference. Key3Media does not plan to update any forward-looking statements.

Key3Media, COMDEX, NetWorld+Interop, Interop and associated design marks and logos are trademarks owned or used under license by Key3Media Events, Inc., and may be registered in the United States and other countries. NetWorld is a service mark of Novell, Inc., and is registered in certain jurisdictions. Other names mentioned may be trademarks of their respective owners.