Skype and eBay: Cautionary Tale for Communications-Enabled Business Processes

As useful as communications-enabled business apps might be, eBay's inability to wring any significant advantages out of voice-enabling eBay. Perhaps messaging of other sorts is valuable, but voice integration does not seem to have added much of anything to the eBay shopping experience.

All of which raises the question of where and when voice communications, perhaps as opposed to text-based communications, adds value to another application, or adds enough value that people even care very much.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aCWYwCYVyHx4&refer=home

Skype Founders Want to Buy it Back

Skype's founders are said to be raising money to buy Skype back from eBay. They sold it for $3.1 billion and eBay appears to want $1.7 billion. Aside from the obvious deal economics, Skype's founders have gone almost nowhere with their follow-on video business.

http://www.nytimes.com/2009/04/11/technology/companies/11skype.html?_r=4&partner=rss&emc=rss

EU Likely to Force Mobile Providers to Permit Skype Use

The European Union (EU) reportedly is preparing to force mobile providers to allow use of VoIP services including Skype over their networks, a move that would not be unexpected. EU Telecoms Commissioner Viviane Reding recently reemphasized her opposition to application blocking of this sort, and that tends to signal action by the EU.

Deutsche Telekom's T-Mobile unit currently blocks Skype access from Apple iPhones, for example, though access is possible using Wi-Fi, roughly the same policy AT&T uses.

It is understandable that mobile providers are not anxious to put themselves out of business. But VoIP blocking just isn't the right thing to do.

http://www.tgdaily.com/html_tmp/content-view-42003-118.html

Grudging Embrace of Skype, Other IP Providers is Rational, If Maddening

Major U.S. carriers haven't been happy about the emergence of Skype and other third-party VOIP clients, which threaten to undermine the global industry revenue model.

One can hardly blame them for not rapidly embracing new technology that threatens to bankrupt them, anymore than politicians will embrace being voted out of office by more attractive candidates, labor unions will embrace automation or outsourcing,  accountants and attorneys will get excited about really-simple tax codes or Microsoft is happy about effective and free operating systems and business productivity suites.

Nor can one blame VoIP enthusiasts, application providers or users for wanting VoIP to work on whatever devices they typically use.

As VoIP gets better and better, more and more users are going to conclude tha all they really need from their service provider is good broadband. Someday, service providers will have weaned themselves off a reliance on voice revenues and found other business models that work as well, or better. In the interim, service providers will not move any faster than they have to.

So disputes are going to keep occurring.

The Free Press has asked the Federal Communications Commission to investigate whether or not the restriction of Skype use on AT&T Apple iPhones, except when in Wi-Fi access mode, is in violation of federal law.

The Voice on the Net coalition Europe, which includes Google, Microsoftand Intel, has asked European telecom regulators to ban blocking of VoIP apps on 3G networks an devices. T-Mobile Deutschland blocks use of Skype application on the iPhone, for example.

AT&T allows use of Skype when users are connected to Wi-Fi, rather than the 3G wireless broadband network. That's AT&T's way of not prohibiting use of the applications, but also not encouraging them to replace voice directly. Inability to control network quality sometimes is invoked as the reason for not encouraging Skype or over-the-top VoIP over the existing network.

Someday that will change. At some point all networks will be IP-only. For wireless providers, that generally coincides with the arrival of fourth-generation networks. For wired network providers, a switch to all-fiber or high-bandwidth digital subscriber line access (plus robust wholesale regulations) typically is the driver.

But so long as the entire network is supported by legacy voice, services providers are not going to encourage IP-based voice any more than they have to. Do you know any executives, at any company, in any industry, willing to put themselves out of business as fast as possible by enabling customers to avoid buying their products?

http://blogs.computerworld.com/skype_for_iphone_doesnt_bode_well_for_at_t_telcos

Skype Hits 11 Million Concurrent Users

Whatever concerns eBay might have about Skype's ability to attract new users, Skype recently hit the 11 million concurrent users level, after passing the he 10 million user milestone was passed 83 days ago on October 17, 2007. Since 2006, there has been concern about some slackening of the pace of new user additions and at least momentary dips in Skype usage. Concurrent usage arguably is a better metric than client downloads, and that growth rate seems consistent.

Belkin Annunces Skype Phone

Belkin will offer in March a new sesktop Internet Phone for Skype (suggested U.S. retail price of $99.99) that allows users to make and receive Skype calls without use of a PC, plugging directly into a router.

Thriving Even When a Market "Vanishes"

Every trusim must be qualified. Consider the gradual folding of the "long distance" calling business into a "triple play" or "mobile calling" bundle. One might correctly note that long distance increasingly is a feature of some other product that a customer buys.

Some of us have said over the years that long distance has ceased to be a stand-alone business, pointing to the physical disappearance of firms such as at&t and MCI, which were built around long distance calling. But that general statement must be qualified.

It might be true at a high level that long distance has changed, and cannot support a firm such as the old AT&T. But that doesn't mean every stand-alone long distance business disappears. Calling card revenue still seems to be growing, for example.

And one has to point to Skype, Gizmo, Jajah, Rebtel and others as examples of companies making a living on long distance calling.

In the same way, some observers have argued that VoIP increasingly is becoming something sold as part of a triple play bundle, or as the technology underpinning for analog voice. The salient example is Vonage's stand-alone VoIP service contrasted with cable operator digital voice.

Again though, one must say the general rule does not rule out the continued ability of some entities to grow their "stand alone" businesses, even in the face of the existence of the larger trend.

At the same time, voice calling and voice features and services are emerging as an attribute of experiences for which there is some alternative revenue or business model.

Stand alone VoIP will be difficult, in many cases. It will not be impossible or unprofitable. The cost structure of such businesses will have to be optimized. But even the pedestrian calling card has continued to offer some firms an opportunity even as ubiquitous mobile phone usage has become a dominant trend.

VoSKY, Skype Gateways Available Globally

The Skype VoSKY Exchange family of rack-mountable PBX-to-Skype gateways are now available worldwide, VoSKY says. The gateways allow businesses to make and receive free Skype-to-Skype calls with customers and partners, as well as between company offices, as an adjunct to existing business phone systems and calling services.

The co-branded Skype VoSKY Exchange 9040 and 9140 also add VoIP applications such as Click-to-Call, PBX Remote Access, Multi-site PBX Networking and Skype Trunking to existing phone systems.

Some will question whether the gateways are widely suitable for enterprise use. Well, they certainly are suitable for small and mid-sized business use. Enterprise policies might be more challenging, partly in terms of security, partly when complete call logging or recording is required.

For organizations without stringent call recording or logging requirements, the VoSKY gateways are an augmentation solution, used with existing phone service, not as a replacement. If the Skype network goes down, all calls simply are handled by the IP or TDM phone system as they normally would be.

VON Coalition Europe to Provide Input to EC

The Voice on the Net (VON) Coalition Europe has formed to provide policy advocacy for IP communications in Europe. The coalition will work to educate, inform and promote responsible government policies that enable innovation and the many benefits that Internet voice innovations can deliver.

The recent release of formal Proposals by the European Commission to amend the existing regulatory framework for communications marks the start of a wide ranging review by the Council of Ministers and European Parliament.

Founding members of the VON Coalition Europe include iBasis, Intel, Google, Microsoft, Rebtel, Skype, and Voxbone.

International Long Distance: Merger Wave Coming

Look for a wave of mergers and outsourcing in the international long distance business in 2008. The issue is that voice traffic growth is slowing sharply after decades of rapid growth. That means more volume is needed to keep a business cash flow positive or profitable. Not every global carrier will be able to attain that level of scale, so executives are going to have to consider buying wholesale capacity and abandoning operation of their own networks.

That, of course, is a business opportunity for wholesalers with the ability to handle a large amount of additional traffic.

International voice traffic grew approximately 15 percent annually, from less than 18 billion minutes in 1986 to just under 300 billion in 2006. But international calls grew only 10 percent in 2006, and signs point to continued sluggish growth in 2007.

Skype and other computer-based voice services are a key reason for the slowdown. "Skype only accounts for a small share of international calls, but the volume was enough to cut global growth in half," says TeleGeography analyst Stephan Beckert.

No Broadband Equality: Density Still Matters

Observers of both U.S. and U.K. efforts to stimulate innovation and competition in the core communications markets will note the vastly-different regulatory approaches. In the U.K. market, where satellite is a significant factor but cable is not, regulators have chosen an aggressive wholesale unbundled local loop regime.

The U.S. market has seen the same initial thrust, only to be followed by an alternate reliance on inter-modal competition between cable and telephone industries, rather than a primary reliance on wholesale, unbundled local loop.

So far, the U.K. market model has proven more friendly to competitors. But physical constraints still are an issue, irrespective of regulatory framework. In thinly-populated areas with low density, the cost of providing broadband remains hig

If BT’s 21st Century network provides evidence, it is that one does not change all access cost inputs simply because a network converts to IP in place of TDM protocols.

In fact, it appears that wholesale access cost for partners who want to use BT’s transmission network to serve rural or suburban customers will be as much as three times higher than similar features will cost in dense urban areas, says Keith McMahon, a U.K.-based blogger.

There’s nothing terribly surprising about this. Infrastructure always costs more, per household, per business or per person in lightly-populated areas.

There’s simply more construction cost and physical media to support, and less ability to share common costs (ports or software licenses, for example), in less-dense areas. IP doesn’t change that.

The implications for competitive providers who lease access from BT and provide retail services to customers under their own names (analogous to U.S. competitive local exchange carriers) are clear enough. Competitors will choose to place their own facilities where customer density is greatest.

The largest nationwide providers, including Carphone Warehouse, Sky, Tiscali, O2 and Orange will find it worthwhile to interoperate at the Tier 1 MSAN level, which gives them coverage of 1,200 exchanges and about 70 percent or 17.7 million of the 25.3 million U.K. homes.

U.K. cable networks largely overlap the areas served by Tier 1 MSANs, for obvious reasons: that is where most of the customers are. Cable networks pass by around 11.8 million homes or 47 percent of total U.K. homes. As McMahon lays out the competitive scenario, about seven companies will contest for customers in 11.8 million homes, or just half the market.

About six companies likely will compete to serve 5.9 million homes or 23 percent of the market. In all likelihood, just one company, BT, will be in position to serve 7.6 million homes, or about 30 percent of total homes.

Population density and loop length still are key impediments to high-bandwidth services, no matter what the regulatory framework.

gPC from Wal-Mart, Everex

Wal-Mart will sell a $200 Linux-powered desktop built by Everex and running Google applications. The Everex gPC runs Gmail, Google Docs & Spreadsheets, Google Calendar, Google Product Search, Google Blogger, Google YouTube, Google Maps, Google News, Meebo (instant messaging), GIMP (image editing), Firefox, Xing Movie Player, RhythmBox, Faqly, Facebook, Skype and OpenOffice.org 2.2.

The device is seen as an impulse buy. First-time users and grandparents, perhaps. Or, as will happen, as test platforms for people who already have full-featured PCs, but want to experiment with Linux apps and cloud computing. In some cases, people might just use it as a communications and Web apps platform.

Besides green, the “g” stands for the gOS, the Ubuntu 7.1 Linux desktop developed by an open source startup of the same name. “The gOS is an alternative operating system that makes it apparent that Google is your entire computing experience,” said gOS founder David Liu.

Google Buying Skype?

So the latest rumor is that Google is trying to buy Skype. While the move makes a certain sense, this might be a trial balloon of the sort often floated by investment bankers eager to get some deal fees.

Skype, Logitech Partner for Video Calling

In 1970, AT&T introduced "Picturephone" service in Pittsburgh. It flopped. In fact, the average person wouldn't normally think to turn to a telephone or cable company to buy or use video-enabled communications. Instead, one might think of WebEx, Cisco, Packet8 or Skype. And options on the mass market front just got better.

Skype and Logitech have partnered to create a High Quality Video experience using Skype 3.6 for Windows and Logitech QuickCam software, version 11.5.

The new capability provides VGA-quality video calls (640-by-480-pixels) at up to 30 frames per second over connections of 384 kbps connection or higher, when using a
High Quality Video-certified Logitech webcam and a PC with a dual-core processor.

Obviously, both end points need the set-up to ensure the best experience. This is a potential experience changer, as it should allow full-screen images with decent quality.

Skype 3.6 for Windows is expected to be available in early November in 28 languages. The Logitech QuickCam software version 11.5 is expected to be available at the same time.

The Logitech QuickCam Pro 9000 and Logitech QuickCam Pro for Notebooks webcams are now available for a suggested retail price of $99.99 in the U.S. and EUR 99.99 in Europe.

The Logitech QuickCam Orbit AF is available now in the U.S. market and Europe for $129.99 and EUR 129.99, respectively.

Covad Goes Private

Covad Communications Group has signed a definitive agreement to be acquired by Platinum Equity in an all-cash transaction valuing Covad at $1.02 a share. Platinum Equity is a global merger and acquisition firm. Irrespective of what it means for Covad as a financial asset, it will be interesting to see how Covad and its customers might benefit.

In some ways, Covad is a hard company to explain in simple terms, much as EarthLink is somewhat convoluted. "National local" possibly obscures as much as it clarifies. It provides fixed wireless, T1, DSL, hosted voice, wholesale and retail services. It does operate a national network to service local access markets. It is a small business specialist but has lots of consumer end users. It has lots of central office co-locations. The problem is that all those things get done by other entities as well.

Covad's line-powered voice offering actually is unique in the market. But that's a position praiseworthy and troublesome at the same time. Whether something is "unique" or "odd" is a matter of perspective. There's no question but that line-powered voice is positioned in its own quadrant, as far as mass market voice services.

The issue is how much effort it takes to make the benefits clear to a typical consumer abd whether the benefits are valuable enough to differentiate the offering. Cable companies decided it was a negative to offer anything other than "digital voice" to customers, with no new features. At the other end of the spectrum, hundreds of millions of people had no problem at all grasping what Skype was all about.

Everything in between takes a bit of explaining.

Skype Phone Coming

One mobile device trend is the creation of "cross over" devices that meld feature phones big on media with "work" phones optimized for email. But there's another trend: creation of new devices that are optimized for one particular application or use mode. Add the new Skype phone to that bucket.

Skype plans to introduce the phone in the countries where mobile carrier "3" operates. 3 is the mobile venture of Hong Kong's Hutchison Whampoa Ltd. and operates in Australia, Hong Kong, Indonesia, Austria, Denmark, Italy, Ireland, Sweden and United Kingdom.

The whole point here is to optimize the phone for Skype, making it as easy as possible to use on a mobile device. If BlackBerry is "email in your pocket," and iPhone is "Web and music in your pocket," then the new device is "Skype in your pocket."

MySpace Adds Skype

MySpace will offer one-click Skype service to its 110 million users, beginning with users in 20 countries in November. MySpace will share revenue from the deal with Skype.

PC-to-PC phone calls will be free, with fee-based personal phone number, voice mail, call forwarding and calls to public network devices or mobile handsets.

More than 25 million MySpace users already have installed the My Space IM program, which will be Skype enhanced.

Users who set their MySpace profile to "private" won't receive a Skype call from someone who is not on their friend list. Users may also selectively add individuals to their Skype personal contact list, and any call can be blocked at any time.

Aside from potential commercial benefits for Skype and MySpace, the move contributes to a trend: embedding of communications inside popular applications and experiences.

"Google Me"; "Skype Me"

No matter what financial pundits say about EBay's purchase of Skype, Skype has had enormous impact. As "Google" now is a verb, as in "Google it," so is "Skype" as in "Skype me." Assets can trade one way or the other. But "assets" aren't the same thing as "significance" or "value" to people. Skype is hugely valuable to users. No matter how you want to quantify the matter--10 million concurrent peak users or 200 million downloads--that's a huge user base. More important, Skype is part of the fabric of daily life for millions of people, as is Google. We may agree that EBay overpaid for Skype. That has almost nothing to do with the social significance of Skype. That's huge.

Skype Valued at $1.7 Billion

Skype is worth $1.7 billion, based on charges EBay has taken both for the Skype acquisition and payments to outgoing CEO Niklas Zennstrom, who has left EBay.

Since the second quarter, EBay CEO Meg Whitman has made clear its concern that Skype is not delivering financial results on the scale EBay had expected.

At the time of the acquisition, eBay and analysts trumpeted the move as a way to increase higher end auction sales by making it simple to connect buyers and sellers by voice. So far, it appears the synergies haven't materialized in any significant way.

Skype also has more competition these days from alternate providers offering calling from mobile handsets and standard analog telephones that provide a reasonable alternative for some applications.

PC-based calling remains the Skype mainstay, despite the availability of Skype-compliant phones, as probably had to be expected. There's nothing wrong with that. But the consumer electronics industry has proven the difficulty of getting mass adoption of specialized appliances of all sorts.

Then again, unified communications and messaging now have the attention in the business space, while video and audio get the attention in the consumer space. VoIP also is a victim of its own success. Now that it has become a mainstream product, it is, well, just a product.

Also, beyond obvious cost savings in the enterprise, small, medium business and consumer spaces, it might be hard to argue that VoIP has had the impact of text messaging, instant messaging, simultaneous ring, visual voice mail or "presence." True, some of those features are enabled by or enriched by VoIP, but the value is harder to convey in a marketing message, at least in the North American market.

We seem to have moved beyond the simple "cheap calling" stage and into a much more complex "new capability" stage in some sense. But that's a harder, more complex sell with a longer adoption cycle.

On the other hand, the market for IP-based replacement of voice lines is quite large, in comparison.

In its most recent quarter, Skype booked $90 million in revenue. Assume Skype does not worse than that for a whole year, generating $360 million in revenue. Attributing just $20 a month in revenue for U.S. digital voice accounts, and assuming just four million U.S. subs, the U.S. cable industry is earning $960 million a year selling VoIP services.

Even beleaguered Vonage, at its present pace, will book revenue of $784 million over a year.

Skype Worm Attacking Windows PCs

A computer virus called “w32/Ramex.A” is affecting users of Skype for Windows. Users whose computers are infected with this virus will send a chat message to other Skype users asking them to click on a web link that can infect the computer of the person who receives the message.

“The chat message, of which there are several versions, is cleverly written and may appear to be a legitimate chat message, which may fool some users into clicking on the link," Skype says.

“Skype has been in contact with the leading antivirus software companies about this worm, and we know that they are updating their software to effectively stop this worm and as well as its side effects. Currently, F-Secure, Kaspersky Lab and Symantec have already updated their antivirus products to detect and remove the worm.

The rest of you, watch out!!!