Richard Martin Blog: Skype's Month From Hell

Not a great month so far for Skype. First, the world’s largest VoIP provider in terms of subscribers saw a video of a purported desktop version of Google Voice, potentially Skype’s biggest rival, posted on TechCrunch.

“You can use Skype and buy a Skype-In number for €50/year to duplicate much of this functionality,” wrote the indefatigable Michael Arrington (didn’t he give up blogging a year or so ago?), “but that’s just a ridiculous price to pay for a soft phone in our opinion.”

“Many have proclaimed this to be a move that would put Google Voice in direct competition with Skype," wrote Garrett Smith on VoIP Insider.

Skype already has some renewed competition on the low end of the VoIP food chain, from prepaid provider Nymgo, founded in 2008 and offering per-minute rates that make Skype look expensive.

“Unlike Skype -- which has increasingly been focused in recent years on business-grade IP telephony features, IP-PBX and unified communications systems integration, and other services like video calls,” wrote Steve Taylor of Distributed Networking Associates and Current Analysis principal analyst Larry Hettick on Networkworld.com, Nymgo founder Omar Onsi “freely admits Nymgo is focused on ‘connecting calls for the cheapest rate possible’ so he has avoided branching out with anything but simple SIP-based voice connectivity.”

Then this week a hacker calling himself “Sean O’Neil” posted the code for a reverse-engineered instance of Skype’s implementation of the RC4 cipher, which is one of several encryption technologies Skype uses. On his blog, which has since been taken down, “O’Neil” crowed about the difficulty of cracking Skype’s code and criticized the company’s security practices: “For over 10 years, Skype enjoyed selling the world security by obscurity.”

Skype’s response was hardly a model of de-obfuscation: "We believe that the work being done by Sean O'Neil, who we understand was formerly known as Yaroslav Charnovsky, is directly facilitating spamming attacks against Skype and we are considering our legal remedies," Skype said in a statement. "Whilst we understand the desire for people to reverse engineer our protocols with the intent of improving security, the work done by this individual clearly demonstrates the opposite."

“Yaroslav Charnovsky,” eh? That immediately raises the question: Is this guy friends with unmasked Russian spook Anna Chapman?

At any rate, Skype, which has built a customer base of close to half a billion but has never been especially customer- or media-friendly, probably doesn’t have to worry just yet about losing its position as the most popular VoIP service in the world. For a variety of reasons including Google’s poor track record outside its core business and the failure of ad-supported business models for voice calls, wrote VoIP Insider’s Smith, a desktop version of Google Voice is “simply not a game changer, not enough to kill Skype and likely won’t put much of a dent in their business.”

That may be so, but when there’s an online petition signed by thousands of would-be users begging the world’s best-known Web company to please, please, supply a free desktop version of your core product, that’s probably not a good sign.

Then, earlier this week, Skype announced that Madhu Yarlagadda will become its new chief development officer, overseeing engineering and software development.

Yarlagadda’s last post? Vice president of engineering for integrated customer experiences at Yahoo. That’s a bit like hiring the navigator from the Titanic to pilot your new yacht.