Wednesday, January 02, 2008

Business out of P2P-SIP

Here are some of my thoughts on how to make (or save) money with P2P-SIP.

There are two points to note: (1) an end-user doesn't know (or care) whether he communicates using client-server or peer-to-peer as long as he gets all the features (audio, video, text, conferencing, offline message, etc), security and speed. (2) unlike service infrastructure where the provider can make money out of user base (either charging per call or per minute as in Skype-out or via advertisements as in youtube?), there is no solid business model for P2P-SIP. Since it is open protocol, anyone can develop a client and break free from the provider. This of it as a email client technology -- how many vendors make money selling email clients?

There are some alternatives to this ideal view of P2P-SIP though. For example, one could control the user base -- keep the enrollment of the user controlled by the provider and allow communication among the clients of the same provider. This requires that the implementation be proprietary (at least the security and validation part), otherwise anyone may write an alternate implementation to bypass the validation. Thus the protocol doesn't remain open and is not P2P-SIP.

Alternatively, one could build a server-farm of SIP proxies using P2P technology so that the maintenance cost of the servers is reduced. However, this still requires dedicated set of servers (electricity, bandwidth, call centers, etc), hence the cost saving is very low. Even though you may be using P2P-SIP you won't save much money.

Thirdly, one could build and sell P2P-SIP software, e.g., for enterprises, that doesn't require expensive call managers or central servers. This works well, but has one problem. People have come to expect that communication, at least PC to PC, is free. Unless the client software provides tons of new features, which cannot be easily done by another vendor, selling such a client software is also difficult.

So, how do you make money? You don't. Instead, you can save money.

You can save money that you would otherwise be spend on maintaining the server infrastructure or you can enable new businesses that were earlier not possible because of close systems. Most of the current communication mechanisms have evolved in a tightly controlled environment, e.g., Mobile phones, Skype, Yahoo, etc. Instead what we need is an open mechanism similar to emails and web. An email client is not tied to a single server. A web client (browser) is not tied to a single server or web site. A communication client should not be tied to a single provider.

Consider an open system where anyone can call anyone else without paying to a provider beyond the Internet connection fees. This opens door for a whole new set of businesses. For example a small time vendor, consultant or topic expert can lend his service in real-time for a small fee without going through the hassle of setting up agreement with a provider. Existing systems such as social network sites or content distribution networks can have additional feature that allows a user to interact with his friends, or other users on the same site, or other users watching the same content, irrespective of the attachment of the user to the provider. There is a huge potential for innovations in the communication client space, similar to how web browsers have evolved.

So, who can do this? I don't think it will come from existing businesses who have large user base -- this includes the likes of Yahoo, MSN, AIM, or Skype. The reason is that they wouldn't want to open up their users to others. I also don't think it will come from existing businesses that are targeted for selling advertisements -- the likes of Youtube, Google, etc.

The question to ask is who benefits from ubiquitous P2P-SIP? Media companies and content owners should invest in making P2P-SIP ubiquitous so that their existing system is improved or becomes more appealing to end users. Such companies can probably sponsor open source projects for P2P-SIP. If there is a better and free communication infrastructure, all sorts of new innovations are possible. For example, people would like to talk with their friends while watching a TV series online, a cricket match online or a movie online.

In conclusion, I feel that big companies that can benefit from real-time communication, but don't have an existing solution to work with, should invest in open-source P2P-SIP technologies. If you are interested in talking about it, feel free to drop me an email.

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