SIP and Skype - Differences and Similarities

Both Skype and SIP technology will do basically the same thing for you. After all, both Skype and SIP are VoIP. They provide users with internet telephony, allowing you to make and receive free calls from other users, and they offer the option of making and receiving calls from the telephone network, as a paid feature. Both Skype and SIP will allow you to obtain other extra features (voice mail, unlimited calls to a country or group of countries, among many others).

So, what are your trade-offs when choosing Sip or Skype? Why do people keep talking about one and another?

With Skype:

You download a program, you register a free user and you connect to a peer to peer network that allows you to talk, chat, and have video conferences with many other millions of users around the world, or free. One single network around the world, with millions of users (and you depend on one single provider, too).
From the same Skype program, you can use certain special features (such as SMS texting) that are not usually bundled with SIP services.
You can extend the functionality of the program by installing add-ons, but requires some expertise.
Skype works out of the box, and it is a service that targets personal, individual use. In most cases, there is nothing to configure other than feeding in your username and password (especially, you don't need to touch your firewall).
You get a product that is a mix between a chat and a phone and works anywhere on the internet, but was not conceived to replace your phone, particularly regarding the emergency services.
It uses a closed, proprietary technology. If it stops working for you, you are out of the network. In general, you don't have other options than the Skype program.

With SIP:

You have providers and services of many kinds. Some of them offer products that work out of the box and can replace your telephone, be it a landline or a mobile phone.
Others providers offer services and products that require quite some expertise, more in a do-it-yourself fashion.
Being an open standard, SIP allows you to handle the internals (how the sound is compressed and how much bandwidth it will chew up, what is the quality of the sound, and many more details).
Also because it is an open standard, you have more options at the time of troubleshooting your connection, more resources to ask for advice and opinions, and more options in general. If one service does not work for you, you can select another provider, and there are more services available for business or commercial use.
It is not so easy to phone other users for free unless they hired your same provider, because there are thousands of different SIP networks.
Many providers that use SIP offer packages that can replace your telephone service.