Skype with Wi-Fi VoIP Mobile Phones

Amazed by its cracked code (confirmation awaited), Skype is pushing itself farther into the wireless space to extend its business model, with the launch of Wi-Fi phones designed to support Skype's software. Four companies have produced handsets to support the launch: Belkin, Edge-Core, Netgear and SMC. The four new handsets - Belkin WiFi Phone for Skype (F1PP000GN-SK), Edge-Core WiFi Phone for Skype (WM4201), Netgear WiFi Phone for Skype (SPH101) and SMC Wi-Fi Phone for Skype (WSKP100), enable Skype subscribers to make phone calls without any connection to their computers. Skype is targeting a market that analysts predict will grow rapidly as more Wi-Fi networks pop up in throughout the country. According to a recent Infonetics Research report, the Wi-Fi phone market increased 116 percent between 2004 and 2005 to $125.5 million. It's projected to more than double in 2006 as enterprises and consumers deploy local area networks for voice over wireless service.

The handsets automatically synchronize to a Skype account and contacts, and operate when in range of a Wi-Fi hot spot. Users can make and receive calls on the go, using any wireless connection, after entering Skype username and password. The move is potentially worrying mobile phone industry, as if VoIP Wi-Fi phones become popular, and there is sufficient Wi-Fi coverage through Wi-Fi clusters, people may no longer need to pay for mobile calls. The phones will work on encrypted Wi-Fi networks as long as a user has the proper network ID, but not on paid Wi-Fi systems like those offered at many bookstores and cafes as they are not designed to work seamlessly across multiple access points. Skype is not the first VoIP provider to offer a standalone Wi-Fi phone, although it is the first to offer the service for free. Vonage already offers such devices, but customers pay a monthly fee regardless of whether they call in or outside the network. These handsets also support common Wi-Fi encryption protocols, including WEP, WPA and WPA2 with PSK support. But there are some glitches which can make these phones show-stoppers like SPH101 from Netgear only supports 802.11g, so users searching around in more popular 802.11b hot spots for a connection will be disappointed. Both phones from Belkin and Netgear do not support emergency 911 calling. Users will still require a traditional land-line or cell phone for this as having an IP phone means that the subscriber is not limited by his geographical location so a call from VoIP phone can not be easily routed to local emergency number like 911 in USA, 113 in Italy and 112 in Germany. On the positive side, customers interested in Wi-Fi Skype phones should be aware that the company has made SkypeOut, its Skype to regular phone calling feature absolutely free until the end of the year. Skype has not announced a decision on whether or not it will keep this feature free beyond 2006. Free SkypeOut works for anyone within US and Canada.

This depicts Skype's strategy to expand in the wireless space very aggressively. In April, Skype forged agreements with several music publishers to make ringtones part of its product portfolio. It has also joined forces with Motorola to introduce the Motorola Talk & Tunes Wireless Internet Calling Kit, which enables Skype users to wirelessly listen to music and manage calls over the Internet simultaneously from a PC using Bluetooth technology. Moreover Top Global announced a 3G Mobile wireless Skype solution based on the company's 3G MobileBridge platform, which serves as a gateway/router that links 3G and WLAN/LAN networks.

Future value proposition will come from the bundling and the compatibility of Wi-Fi VoIP phones as well as consumer adoption. Bundling of Wi-Fi VoIP phones will drive the retail market and the dual mode phones (VoIP / Cellular) will drive the enterprise market. This dual mode strategy will also be a step towards "Fixed Mobile Convergence"