Cisco Executive Joins Skype As CEO

Cisco Systems is losing another executive to a competitor, with Tony Bates leaving to become chief executive of video conferencing and VOIP vendor Skype.

Skype announced on 4 October that Bates, who most recently was senior vice president and general manager of Cisco’s Enterprise, Commercial and Small Business Division, will take on his new position starting in late October.

While at Cisco, Bates, reporting directly to chief executive John Chambers, oversaw a business that generated $20billion (£13bn) in sales and had more than 12,500 employees. The group oversaw such enterprise efforts as Cisco’s Borderless Networks, Data centre and Collaboration.

Global brand

He also was general manager of Cisco’s $10bn Service Provider Group and was a key member of the company’s executive planning unit.

“Skype is not only a powerful global brand but also a global technology leader in Internet communications,” Bates said in a statement. “There are extraordinary opportunities ahead for Skype and I am eager to lead the company through this exciting juncture in its continuing transformation.”

In a blog post, Cisco Social Media Communications Director John Earnhardt said company chief technology officer Padmasree Warrior will take over Bates’ role. He described the group that Bates oversaw as “the heart of Cisco’s business”.

Earnhardt said, “Tony has been a great leader and asset to Cisco over his nearly 15 years here. His leadership on innovations like the CRS-1, Cius [tablet] and more have enabled Cisco to reach new markets and customers. We never like to lose a Cisco family member, but the innovation engine which began at our founding in 1984 will certainly continue.”

Bates is the latest executive to leave for a competing vendor. Cisco Fellow Jonathan Rosenberg left the company in November 2009 to become Skype’s chief technology officer. And on 20 September, video communications vendor Polycom hired Joseph Burton, chief technology officer for Cisco’s UC (unified communications) business since 2007, to become its senior vice president, chief strategist and chief technology officer.

Rapid innovation

Skype’s choice of Bates comes at a time of rapid innovation and consolidation in the burgeoning UC and video communications space. Cisco officials have said they believe that within the next five years video will account for 90 percent of all Internet network traffic, and collaboration technologies could become a $30bn business.

In 2009 the company bought Pure Digital Technologies, the maker of the Flip personal video camera, and earlier in 2010 closed its $3.4bn acquisition of video communication vendor Tandberg.

Cisco also is looking to expand its video collaboration capabilities. The company is expected to announce on 6 October a TelePresence solution for the home. Hewlett-Packard also reportedly plans to bring its video communications technology into the home.

There also have been rumors that Cisco was considering buying Skype.

Other vendors also are adding to their capabilities through in-house innovation, acquisitions or partnerships.

Polycom in 2010 has announced a host of partnerships based around UC and video collaboration with such vendors as HP, Avaya, Microsoft, BT, Juniper Networks and Siemens Enterprise Communications Group. For its part, Logitech jumped into the video communications market with its acquisition of LifeSize Communications.

Skype also has been looking to expand its reach beyond the consumer space and into the corporate world. In May, the company began testing a feature that would enable up to five people to participate in a video conference call, and on 29 September announced a UC partnership with Avaya. That announcement came two weeks after Avaya unveiled an aggressive plan to expand its communications offerings into the video realm, including via a tablet device that will compete with Cisco’s Cius.

Paying customers

In addition, Skype is reportedly in discussions about a partnership with Facebook.

Growing Skype’s business will be a particular focus for Bates. According to The New York Times, of Skype’s 124 million monthly users, only 8.1 million are paying customers. In the first six months of the year, the company made $13m on $406m in revenue.

eBay bought Skype for $2.6bn in 2005, and in November 2009 private equity firm Silver Lake Partners bought a majority stake in the company. eBay still owns 30 percent of Skype and there are a number of other minority owners.

Joshua Silverman, an ex-eBay executive, has been Skype’s chief executive officer since 2008.

“I am proud to have led Skype’s growth during this critical transition period,” Silverman said in a statement. “The company today has over 560 million registered users in nearly every country and continues to develop products and services our customers love to use. With a world-class communications industry veteran like Tony, Skype is well positioned to become the communications platform of choice for consumers and businesses around the world.”