Skype

What it is: Skype is one of a slew of applications in the emerging voice over IP telephony market that allow users to engage in voice and instant messaging conversations with each other. (Phone calls via Skype are free when made to another Skype user.) It has emerged - mainly through word of mouth - as one of the most successful Internet applications of all time, with more than 300 million downloads and more than 100 million registered users. Skype was acquired by eBay last year for $US2.6 billion. Competitors include AOL's AIM Triton and Microsoft's Windows Live Messenger.

Skype's appeal is that it's easy to use and the quality of its voice service is high. "It's better than most VoIP products out there," says Steve Cawley, CIO with the University of Minnesota, where he suspects Skype is popular among international students and researchers.

Business benefits: VoIP technology offers huge cost savings over traditional telephone service, especially for companies that make a lot of long-distance calls or have employees working in places subject to high long-distance fees. Skype and applications similar to it can also help companies that haven't yet deployed VoIP create a converged communications suite, including voice, video and instant messaging, writes Irwin Lazar, an analyst with Burton Group, in a report about the technology.

For example, Lazar says, many Burton Group employees use Skype for internal and external communications. At first, most were motivated by cheaper long-distance calls. But many are now using it for instant messaging. Saul Klein, vice president of marketing with Skype, says 25 percent to 30 percent of its customers use the application for business. In the corporate environment, Skype poses some security risks (see below). But companies, especially small ones, that are more focused on cost savings than security may be willing to take that risk. Even CIOs at some larger companies such as Greif, a maker of industrial packaging products, report that they are willing to test Skype and aren't overly concerned with potential security risks.

The risks: As with any application exposed to the Internet, "the potential that some flaw will be discovered that would enable an attacker to either gain control of or disrupt a Skype user's computer or mobile device is real", notes Lazar. (In general, VoIP can pose a security risk because calls travel over data lines that may be vulnerable to Internet worms and viruses.)

These risks are magnified in the case of Skype because, unlike with enterprise VoIP systems from vendors such as Cisco, there's no way to track who is using Skype or how it is being used. That's because it can be downloaded and installed by employees themselves.

Finally, Skype can't log and monitor phone calls, so companies that have to track calls for compliance purposes may want to avoid it. Pharmaceutical company Novartis has banned it, and schools including Oxford University and the University of Minnesota have issued warnings against using Skype.

Minnesota's Cawley also discourages using Skype because of the security risks. He worries about the capability for Skype users with a public IP address to become "supernodes", acting as hubs that route calls for other users. In the meantime, he suggests that users pick another VoIP service, such as Free World Dialup, which has clients for Windows, Mac OS X and Linux. And although students and faculty can use Skype if they choose, they are asked to turn the application off when they are done calling. "If we do see a problem with Skype, we may go ahead and block it," says Cawley.