News from and about Skype competitors.

Deal done. Retail VOIP in the offing? Views later.

eBay has agreed to acquire Luxembourg-based Skype Technologies SA, the global Internet communications company, for approximately $2.6 billion in up-front cash and eBay stock, plus potential performance-based consideration.

Skype generated approximately $7 million in revenues in 2004, and the company anticipates that it will generate an estimated $60 million in revenues in 2005 and more than $200 million in 2006. For Q4-05, eBay expects the acquisition to be dilutive to pro forma and GAAP earnings per share by $0.01 and $0.04 respectively. For the full year 2006, eBay expects the transaction to be dilutive to pro forma and GAAP earnings per share by $0.04 and $0.12 respectively, with breakeven on a pro forma basis expected in the fourth quarter of 2006. On a long-term basis, eBay expects Skype operating margins could be in the range of 20% to 25%.

The acquisition is subject to various closing conditions and is expected to close in the fourth quarter of 2005.

eBay will host an investor conference call to discuss the announcement at 5 am Pacific Time today. A live webcast of the conference call can be accessed through the eBay's Investor Relations website at http://investor.ebay.com. An archive of the webcast will be accessible through the same link.

Full text of news release...

On Skype.com:

eBay to Acquire Skype

London, September 12, 2005 – eBay Inc. (Nasdaq: EBAY; www.ebay.com) has agreed to acquire Luxembourg-based Skype Technologies SA, the global Internet communications company, for approximately $2.6 billion in up-front cash and eBay stock, plus potential performance-based consideration. The acquisition will strengthen eBay’s global marketplace and payments platform, while opening several new lines of business and creating significant new monetization opportunities for the company. The deal also represents a major opportunity for Skype to advance its leadership in Internet voice communications and offer people worldwide new ways to communicate in a global online era. Skype, eBay and PayPal will create an unparalleled ecommerce and communications engine for buyers and sellers around the world.

“Communications is at the heart of ecommerce and community,” said Meg Whitman, President and Chief Executive Officer of eBay. “By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net.”

Founded in 2002 by Niklas Zennström and Janus Friis, Skype offers high-quality voice communications to anyone with an Internet connection anywhere in the world. The Skype software is easy to download and install, and enables free calls between Skype users online. Skype’s premium services provide low-cost connectivity to traditional fixed and mobile telephones. Skype’s software also offers a robust set of features, including voicemail, instant messaging, call forwarding and conference calling. Upcoming product innovations include Skype video, expressive content such as avatars, and customized toolbars for Outlook and Internet Explorer.

One of the fastest growing companies on the Internet, Skype already has 54 million members in 225 countries and territories. Skype is currently adding approximately 150,000 users a day and has created a thriving ecosystem of products, services, developers, and affiliates. Skype is considered the market leader in virtually all countries in which it does business. In North America alone, Skype has more users and serves more voice minutes than any other Internet voice communications provider.

“Our vision for Skype has always been to build the world’s largest communications business and revolutionize the ease with which people can communicate through the Internet,” said Niklas Zennström, Skype CEO and co-founder. “We can’t think of any better platform to fulfill this vision to become the voice of the Internet than with eBay and PayPal.”

“We’re great admirers of how eBay and PayPal have simplified global ecommerce and payments,” said Janus Friis, Skype co-founder and senior vice president, strategy. “Together we feel we can really change the way that people communicate, shop and do business online.”

Zennström and Friis will remain in their current positions. Zennström will report to eBay CEO Whitman and join eBay’s senior executive team.

A Powerful Ecommerce and Communications Engine

Online shopping depends on a number of factors to function well. Communications, like payments and shipping, is a critical part of this process. Skype will streamline and improve communications between buyers and sellers as it is integrated into the eBay marketplace. Buyers will gain an easy way to talk to sellers quickly and get the information they need to buy, and sellers can more easily build relationships with customers and close sales. As a result, Skype can increase the velocity of trade on eBay, especially in categories that require more involved communications such as used cars, business and industrial equipment, and high-end collectibles.

The acquisition also enables eBay and Skype to pursue entirely new lines of business. For example, in addition to eBay’s current transaction-based fees, ecommerce communications could be monetized on a pay-per-call basis through Skype. Pay-per-call communications opens up new categories of ecommerce, especially for those sectors that depend on a lead-generation model such as personal and business services, travel, new cars, and real estate. eBay’s other shopping websites — Shopping.com, Rent.com, Marktplaats.nl and Kijiji – can also benefit from the integration of Skype.

PayPal and Skype also make a powerful combination. For example, a PayPal wallet associated with each Skype account could make it much easier for users to pay for Skype fee-based services, adding to the number of PayPal accounts and increasing payment volume.

In addition, Skype can help expand the eBay and PayPal global footprint by providing buyers and sellers in emerging ecommerce markets, such as China, India, and Russia, with a more personal way to communicate online. And consumers in markets where eBay currently has a limited presence, such as Japan and Scandinavia, can learn about eBay and PayPal through Skype. Skype can also help streamline cross-border trading and communications.

With its rapidly expanding network of users, the Skype business complements the eBay and PayPal platforms. Each business is self-reinforcing, organically bringing greater returns with each new user or transaction. The three services can also reinforce and accelerate the growth of one another, thereby increasing the value of the combined businesses. Working together, they can create an unparalleled engine for ecommerce and communications around the world.

Transaction and Financial Information

eBay will acquire all of the outstanding shares of privately-held Skype for a total up-front consideration of approximately €2.1 billion, or approximately $2.6 billion, which is comprised of $1.3 billion in cash and the value of 32.4 million shares of eBay stock, which are subject to certain restrictions on resale.

The maximum amount potentially payable under the performance-based earn-out is approximately €1.2 billion, or approximately $1.5 billion, and would be payable in cash or eBay stock, at eBay’s discretion, with an expected payment date in 2008 or 2009. Skype shareholders were offered the choice between several consideration options for their shares. Shareholders representing approximately 40% of the Skype shares chose to receive a single payment in cash and eBay stock at the close of the transaction. Shareholders representing the remaining 60% of the Skype shares chose to receive a reduced up-front payment in cash and eBay stock at the close plus potential future earn-out payments which are based on performance-based goals for active users, gross profit and revenue.

The above-mentioned dollar and eBay share amounts are approximate, based on the Euro-Dollar exchange rate and eBay’s stock price as of September 9, 2005. The final value of the stock component of the consideration may vary significantly from this estimate based on the value of eBay stock at closing.

Skype generated approximately $7 million in revenues in 2004, and the company anticipates that it will generate an estimated $60 million in revenues in 2005 and more than $200 million in 2006. For Q4-05, eBay expects the acquisition to be dilutive to pro forma and GAAP earnings per share by $0.01 and $0.04 respectively. For the full year 2006, eBay expects the transaction to be dilutive to pro forma and GAAP earnings per share by $0.04 and $0.12 respectively, with breakeven on a pro forma basis expected in the fourth quarter of 2006. On a long-term basis, eBay expects Skype operating margins could be in the range of 20% to 25%.

The acquisition is subject to various closing conditions and is expected to close in the fourth quarter of 2005.
About eBay Inc.

Founded in 1995, eBay pioneers communities built on commerce, sustained by trust, and inspired by opportunity. eBay enables ecommerce on a local, national and international basis with an array of websites – including the eBay Marketplace, PayPal, Kijiji, Rent.com and Shopping.com – that bring together millions of buyers and sellers every day.

About Skype Technologies SA

Skype, the Global Internet Communications Company™, allows people everywhere to make free, unlimited, superior quality voice calls via its award-winning innovative peer-to-peer software for Windows, Linux, Mac OS X, and Pocket PC platforms. Skype is available in 27 languages and is the fastest growing voice communications offering worldwide. Since its launch in August 2003, Skype has been downloaded more than 163 million times in 225 countries and territories. Fifty-four million people are registered to use Skype’s free services, with over 3 million simultaneous users on the network at any one time. Skype Technologies SA is headquartered in Luxembourg and is growing its offices in London and Estonia.

Forward-Looking Statements

This announcement contains forward-looking statements regarding Skype and the expected impact of the acquisition of Skype on eBay’s financial results. Those statements involve risks and uncertainties, and actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, the timing of the closing of the transaction, the possibility that the transaction may not close, the reaction of the users of Skype’s services, the future growth of Skype’s user base and public acceptance of Internet voice communication services, rapid technological changes in the Internet voice communications sector, the reaction of competitors to the transaction, global developments in the regulation of Internet voice communication services including those provided by Skype, the possibility that integration of Skype’s offerings following the transaction may be more difficult than expected, and the possibility that entry by Skype and eBay into potential new lines of business will not be successful. More information about potential factors which could affect eBay’s business and financial results is included in eBay’s Annual Report on Form 10-K for the year ended December 31, 2004, the company’s Quarterly Reports on Form 10-Q, and current reports on Form 8-K. All forward-looking statements are based on information available to eBay on the date hereof, and eBay assumes no obligation to update such statements.

The eBay announcement:

***A New Way to Communicate***

I’m excited to let you know that eBay plans to acquire Skype, the leader in online voice communications.

Skype has set a new standard in online voice communications with
outstanding sound quality and unmatched ease of use. And like eBay,
Skype has a fast-growing community -- some 54 million Skype users
around the world already use their PCs to talk with one another.

And best of all, conversations between Skype users via PC are free. You
can get up and running on Skype in just a few minutes. Just go to http://www.skype.com/go/x.home to learn more and download the free Skype software application. Try it – it’s fun!

Over time, we intend to make voice communications a part of the eBay
marketplace – a huge step forward in making transactions faster and
easier, as well as bringing even more interactivity and humanity to the
eBay Community.

You can include your Skype ID in your About Me page. For now, however,
Skype links may not appear in View Item pages. We’ll be working with
you, our Community, over the next few weeks to thoughtfully work out
the details of how eBay and Skype will interact, including any policy
changes that may be required.

We expect this acquisition to be finalized soon. In the meantime, you can learn more about our Skype plans in the news release we issued just a few minutes ago.

Working together, eBay, PayPal and Skype will redefine online trade and
community. I hope you’ll join us in this exciting new chapter in eBay’s
history.

Sincerely,

Meg

TOM Online faces severe competitive and regulatory problems in China per reports compiled by Jirong Zhou. Jirong posted to his Zalbazone blog that TOM Online is not only far last in a three-way race for the Chinese IM market, but that major telecom operators are defending their own VoIP strategies (vaporware?) by blocking Skype.com and SkypeOut in major Chinese cities.

This is another example of telco incumbents aggressively defending their turf. Could Skype have picked a better partner, one with stronger guanxi, one better able to negotiate access to China's major markets and forge more alliances with China's regulators and incumbents? Right now they're walking away from SkypeOut revenue. How long until Chinese users get the same service as Skype users everywhere else?

The full article, including screenshots of the blockage and quotes from Tom.com CEO Wang Leilei follow...

From this post.

Cold Water

For Tom.com, third largest Portal in China
For Skype, world's largest VOIP player
For Tom Skype, their Joint Venture.

Just 3 days after Skype and TOM Online announced an exclusive joint venture (51% TOM Online, 49% Skype), there appeared a negative news on Sina's homepage, China's largest Portal. Telecom Operators are going to block Skype in ShenZheng, Shanghai, Beijing, GuangZhou. Red circled in the up picture.

I found the picture in Tom's Skype forum showing he is unable to login SkypeNet. A journalist from First Financial Daily reported his experience by calling China Telecom Shenzhen branches' 10000 service number. They said:

We detected that he used SkypeOut which is illegal to use. His number is in the black list. He must Guarantee not to use it any more. Or he will get the FINE.

Tom failed to land SkypeOut in June. And the Information Industry Department files that it is illegal to operate VOIP except the 6 Operators in China.

Within one year, TomSkype successfully get a 3.4M user group. It's an amazing rapid speed, however it still looks too slow, compared to Tencent's hundreds of Millions user group. Wang Leilei, Tom.com CEO, said,

"It's impossible to be profitable even if the 3.4M users are all using SkypeOut. So we are not going to seek opportunities to land Skypeout in the near future. The joint company is going to enrich user experiences with TomSkype."

Virtual Operators

Though it's illegal to offer VOIP Service, there are many operators making deals under the surface. Up to now only 263 got a pc to pc VOIP operating license.

Phone to Phone and PC to Phone are settled as basic Telecom service, only the 6 Operators has the legal identity to offer service. All other parties are designated as Virtual Operators. What's their fate?

[Posted by Jirong Zhou 2005-09-08 19:36:22. Mr. Zhou is business development and marketing director for Skype developer The Masters Team, maker of PowerGramo (coming into beta soon).]

via Xeni Jardin on Boing Boing, quoted in full with thanks.

Friday, September 2, 2005

FCC COORDINATING TECH AID FOR KATRINA DISASTER
Quick notes from conference call hosted by the FCC today about urgently coordinating resources and personnel from internet/wireless service providers to get communications networks up and running in in gulf states.

Lack of communications systems has been identified as a critical issue holding back aid, missing persons, law enforcement, etc. in crisis areas.

FCC personnel are working throughout the weekend to coordinate these efforts with private industry, with wireless technology groups, FEMA, and state governments in Mississippi, Louisiana, etc.

COMPANIES WITH TECH ASSETS AND/OR HUMAN RESOURCES TO DONATE FOR COMMUNICATIONS AID IN KATRINA-IMPACTED AREAS SHOULD DO THE FOLLOWING

FCC Chief of Staff Dan Gonzalez (daniel dot gonzales at fcc dot gov) says

FCC needs the following information from would be tech donors BY NOON EASTERN [GMT-5] ON SATURDAY SEPTEMBER 3.

1) identify the provider (name of your company or group)
2) identify assets you are willing to commit
3) state clearly what assets you are technologically capable of providing (IP? data? voice?)
4) what your logistical requirements are to bring that to the affected area.
5) can you bring generators? if so what size? capacity? power levels?

SUBMIT THIS INFORMATION TO

PART-15.ORG (they have an online submission form to collect this data)
or wireless@part-15.org

contacts: Michael Anderson (wireless@part-15.org) 630-466-9090, and Claudia Crowley (ccrowley at gmail dot com), 817-292-0230.

Snip from part-15.org website:

The FCC and FEMA is in a desperate need to reestablish communications in the disaster area. More specifically, the metropolitan area of New Orleans and it's surrounding areas. What can Wireless access internet service providers do to help? We can reestablish internal communications and provide connectivity to all disaster relief efforts by installing point to point, point to multipoint links, IP Web cams to assist the police and fire departments who can not be everywhere in such a large area, VoIP phones to provide voice communications to relief personnel in remote areas and many other types of normal everyday communications that most people take for granted.

To accomplish these goals, we will need not only the License Exempt Industry as a whole, but local communities, major companies, and all others that can provide even the slightest of assistance to our teams.

Link

* One of the challenges the FCC faces is fact that the coordination effort involves multiple layers of bureaucracies -- also, that there has been no central point for directing available assets offered by private industry. Participants on the call included folks from Cisco, Intel, and wireless organizations.

* Another challenge: working with FEMA and local governments to ascertain whether it is more immediately effective to get old systems up and running, or create new temporary ones. Depends on tech behind communications system in question.

* FCC reps on the conference call also said they may relax some regulations (power restrictions, etc) but are concerned that the effort be coordinated centrally, carefully, so that various emergency communications "efforts don't end up stepping on each other" and causing more of a tech mess.

* Quote from call participant Jim Duncan, Cisco Critical Infrastructure Insurance group:
"Operational issue number one is fuel and energy. Convoy accident happened today with fuel truck heading into one area... getting fuel and power in is critical, nothing can happen in terms of communications without that. Communications priorities will include law enforcement issues, but also missing persons -- getting refugees access to webpages to unite missing families... Cisco is working with Red Cross to help them figure out how to get backhaul connectivity to hundreds of tent cities they're setting up..."

* Some call participants also noted that any volunteers who end up being assigned in the affected area should bring sleeping bags, water, food so as not to strain resources. Hotel rooms, cars are hard to come by. Tech experts who end up coming to the area (by way of coordinated aid efforts) should be prepared to camp out.

* SBC and other companies are working to get voice and data service set up for refugees at the Houston Astrodome. One provider of digital TV service will also be applying its technology to text messaging tools, so that people there can reconnect with families.

* Jeffrey Citron, CEO of Vonage, says his company has been donating gear and just got a hospital back online with voice services. They've been trying to round up a large number of wireless VoIP phones to distribute to first responders.

Related Skype Journal posts:

• Skyping KatrinaHelp
• Can Communities of Interest support Katrina refugees in diaspora?
• Katrina refugee telecom problems you can solve now
• Hurricane Katrina cuts a hole in the Skype network

In all the talk about Google Talk many missed Microsoft's release of MSN 7.5.

If you use MSN it is time to upgrade. Leah, the program manager for MSN messenger introduces it here and writes a letter to Google Talk here. I think Leah knows how to use a blog!

Net net, the new MS MSN 7.5 is impressive at least under the hood. It is like an old car that has been hotrodded with a new motor and at the same time they've upgraded the suspension without fixing the seats or interior. However they did stick in the new boombox. The control interfaces remain so yesteryear. Still it now kicks ass in the Voice - audio quality - and Video - department. Here it is very impressive. So real improvements and radical upgrades are under the hood. Even Leah contrasts usability with Google Talk, where she writes "I will improve my usability. Maybe your straightforward interface will bring people into the IM markets who have been intimidated out of it by the more complex clients."

Effectively we now have a defacto audio standard emerging with GIPS codec driven clients (Skype, MSN, GoogleTalk, Gizmo etc.)perhaps tuned differently, while anything else remains inferior. Even so none of these conversation clients talk to each other yet.

Thus MS now has a platform in place to build on. The next generation will be very competitive. It will need to get off the PC to be really exciting. It's also limited to Windows XP at this time. Where is that multi-platform?

So why am I not that excited?

It is not just the lack of messenger buddies I have. I can see this version will keep hardcore MSN Messenger fans happy. So if your life revolves around MSN Messenger then it's a nice step forward. I'm going to brush over some of the contact enhancements and tie-ins with Spaces etc. They are worth looking at, also don't fix it for voice users.

Biggest complaint from a "voice" user.

I said the control mechanisms were screwy. I've made a big thing in the past about "computers are connecting" "accept this conversation" and that's where this client still feels very dated. The modes eg "in a call", even how you start a call and hang up a call are not obvious. At least version 7.5 rings. Then strange things like wanting to go from "voice" to "video" force you to drop the call and reconnect. I can't explain that.

Also on the voice side there are no conference calls and no capability to interconnect into the PSTN or even other SIP clients.

Some Pluses:

On the plus side there are all sorts of new goodies enabling new ways to express yourself. Most intriging to me is what MSN calls "voice clip". This is similar to push to talk and enable clips of up to 15 seconds. This is an innovative way of providing this feature. It remains in the chat client where you can also replay it. Note pressing it during a voice call only results in your comments being recorded. So we lack call recording.

Like Google Talk, MSN 7.5 is peer to peer just using a central directory to set up the original connection. Like Google neither of these are providing a safe encrypted service. That's a starting point for Skype and I think an important one.

I like how Leah is writing about her product. It's personalising the experience. It's a great bloggy example. I'd also be interested to hear her thoughts on Skype. Then I believe Microsoft is very busy with their "Skype strategy".

It’s crazy how two IM clients like us can be so similar yet so different. You are so dedicated to your primary functions, that you have a chance at really mastering them. I love the way you concatenate messages from the same person, and that I can choose the names for my buddies. Your call connection time is very fast, and your sound effects are pleasant too. I, on the other hand, spend my energy in many different directions at once. I value chat and voice, but I also get a kick out of video and personal customization. I love helping people to share files, and stay engaged with whiteboard, P4 apps, and games. I like the silliness and vibrancy that winks and emoticons and dynamic display pictures can bring to an otherwise static interaction. I have users with such a wide variety of interests and it’s important to me to keep all these things going so they can pick and choose. I admit, though, that concentrating on so much at once sometimes makes it tough to give each feature the spotlight it deserves.(In some cases, impossible – providing simplicity and extensive choice can be mutually exclusive). Leah - "I'm Just a Messenger"

Where does Skype fit in?

I think it remains materially ahead of both MSN Messenger 7.5, Google Talk and all the rest as defining the role of a "conversation client". The IM clients are learning how to imitate aspects. None have begun to integrate modes of voice operation with headsets and handsets. None of them have released API's. None yet have an announced embedded strategy. For the most part PSTN interconnects aren't there and they aren't cross-platform. Still the combination of what's invented in these communication clients is developing as the replacement for telephony.

While I mull over how a client can have so much potential and so many flaws I start to think about what I might do given MS resources. I think I'd start comtemplating a "range of communication clients" --- launching MSN in different formats with different skins to cater to different audiences. It appears stupid for both MSN and Yahoo to continue developing just one chat client. Why not broaden the range?

Vonage thinks of itself as a phone company. Others do too. Google does not. While being thought of as a telco simplifies your positioning and marcom plans, there are tradeoffs. For one, you don't have a portfolio of other services and activities to leverage.

For example, Google can easily GTalk-enable its email, social network, and blogging services. They are already building on their digital identity (gmail accounts). Tribal search ("hey, team, let's find who leaked the story.") can't be far behind.

Yahoo! can deliver movie previews and Microsoft can let you know of updates to your blog.

Vonage and Skype don't have other assets to leverage. At minimum, they can be more reliable (apparently the Vonage approach) or add more features (the Skype approach). At best, they can partner through alliances and through turning their networks into open application platforms.

Can the landed gentry of telecommunications change their self image and their brands?

It's been a busy week. Vonage going public. Google Talk launched. SkypeNet and SkypeWeb announced. And everyone's waiting for the portals to jump in hard. MBAs around the globe are figuring out where all the players fit, where they're strong or weak, going up market or down, mobile or landline.

So let's play.

Four buttons on the left:

• S for Skype
• G for Google
• P for Portal (AOL, Yahoo!, MSN, et al) and
• V for Vonage

To Play:

1. Name your axes, label the columns and rows
2. Place the tokens on the grid
3. Write a Caption
4. Post it to your blog and leave us a comment, or email it to FUN @ SkypeJournal.com

We'll post your chart, and ridicule it without mercy. (Maybe learn something, too.) Do your worst.

24 hours and Google Talk is the buzz of the town, up in the "Skype" buzz neighborhood.

Is it all over for Skype? As Google Talk launched tonight with an Orkuttian viral shove provided by Gmail. At first glance it could be Skype's worst nightmare or the kick start necessary to refocus Skype. If you missed the buzz, Google Talk is the long awaited and predicted IM / Voice client. It won't be over for a while and the battle will take to the trenches with Yahoo, MSN and AOL battling to the end. This is a first salvo. Don't expect Google's feature set additions to follow Skype's path immediately to Telecom as Google has other opportunities sitting there within its empire. These are my first impressions.

• Extreme Simplicity. If you have a Gmail account you can just log in. The client is very simple.
  
• Find buddies quickly. If they are in Gmail then you can make hundreds of invites very quickly. Authorization is simple.
  
• Presence. Simplified and more intelligent than ever with customized field options that add new fun to presence. It's about time!
  
• Chat. Very basic, no emoticons etc. Still it's clean and archived and I bet searchable (if not now soon) by google desktop. Chat uses XMPP and thus iChat and Jabber clients can connect directly to Google Talk. You can also add it immediately to Trillian. (Trillian could be quite a winner). Guess that will put Google Talk presence on mobiles too!
  
• Talk. Talk is chat centric. Ie click to chat rather than Skype's click to call. Clicking opens a chat dialogue box. You then initiate a call from the chat window. Talk quality matches Skype and is better than Yahoo.
  
• Chat Window Organization. Windows self organize in an interesting fashion until closed.
  
• No profiles and no friendly pictures at this time.

How it really worked.

I had 8 conversations all around the world. Some of the voice connections didn't connect immediately and felt like they failed. There was just no sound. Sometimes the sound started after the call was connected for 30 seconds or more. This is likely just a short term bug. I enjoyed the inbound ring tone. Distinctively different from Skype. The invite process was very simple, building my list very elegant.

What's Missing?

From a Skype user's point of view: Almost everything. There are no profiles, no photos / pictures, no voice mail, no multi-conference or multi-chat. Plus there is no SkypeIn or SkypeOut capabilities. This is not a phone replacement. The multi-chat and conference calling should be easy to duplicate. The telephone system more difficut. However, each name is a SIP name and that is designed to connect with Vling and Gizmo project in a very short time. Plus with rumors around Google raising money, a TMobile USA purchase can't be that far away. That would provide a user base, the WiFi hotspots and most importantly the chance to integrate mobile numbers with VoIP.

Where's the Strength?

Talk is already integrated with Gmail and thus links nicely with IG, Google's personal content portal. So when will GoogleTalk have access to Orkut (profiles / social networking - pictures and profiles) Blogger (another place to share presence), Desktop (archive searching), Maps (location information) and instantly the whole Jabber/XMPP community. How quickly can Google bring these all together. Then they already have a photosharing program etc. Google has all the elements to bulk up to a Yahoo like client very quickly. Add in Ad Sense etc. Very neat models are likely to emerge. I heard from one punter tonight they had told their mother to buy more Google shares.

Developer Talk

Google has a great page outlining their preliminary plans and open strategy for the future of "talk."

Google's mission is to make the world's information universally accessible and useful. Google Talk, which enables users to instantly communicate with friends, family, and colleagues via voice calls and instant messaging, reflects our belief that communications should be accessible and useful as well. We're committed to open communications standards, and want to offer Google Talk users and users of other service providers alike the flexibility to choose which clients, service providers, and platforms they use for their communication needs.
Google

How does Skype stack up? Yahoo?

• Google may win on philosopjy alone (see above mission) or the resources in dolars and manpower. However today, while Google may get it's Orkuttian swell of new users isn't actually an acceptable replacement client for either Skype or Yahoo. Both do more better for their current audiences.
• On features, Skype is still ahead and if they would speed up their development and releases of call forwarding, VM improvements, Video, and their Presence Server they still have a chance althougth the market has shifted dramatically. Yahoo is bulking up however still does nothing really well. That may change.

Where should Skype's strategy start?

Open Up! By contrast with Google, Skype is on a philosophical back foot, well balanced. Being closed is no longer an asset, so Skype can compete only on its design, features and capabilities. To open up, the Skype chat client must adopt the Jabber/XMPP protocol, accelerating its interconnect and encouraging developers to "stick" / "start" developing products around the API. So far Google hasn't announced an API (count the hours). They will need one even if just for hardware. Skype will be forced to open up many aspects of its interface now.

Michael Robertson was caught talking to Chris Pirillo on the Gizmo Poject today. They are using Gizmo to record the session. He openly discusses what's good about Gizmo (e.g. the recording features) and provides some useful background on why he started with hardware at SIPPhone and effectively copied Skype. I've paraphrased the podcast. Time approx 30 minutes. Download or read the summary.

When I started Sipphone we focused on the hardware because we thought a market for soft phones would emerge. However with the exception of Skype no one did a good job on software. So frustrated 9 months ago, we decided to build our own client. Our goal is to build an open directory. I don't think we will knock Skype out of the running. I do hope that embracing open standards and openness will win the day in the long run. Skype has a huge lead and yet the world does change very quickly. We will be adding IM functionality to the product. Haven't started working on video. Will people really use it? It's fairly straightforward to add in for SIP and then setup video sessions. IM is the next big feature set we are adding. (Chris asks... how do I know it is recording. Skype is really missing the record feature). Now you can add sound effects while the call is happening. (Chris barfs....).

We are SIP based so we can use a regular phone to call any Gizmo client and vice versa. That is one of the benefits for connecting different networks from universities to small businesses. So you can dial direct using Gizmo. Want a real openness with our directory.

We are still in the earliest stage of VoIP. I talked to a major telco and they said we don't see the average consumer making calls on a PC. I got the same response years ago with people saying users won't play MP3's on PC's. Questioned about Mobile. The only hope to fundamentally compete with the wireless guys is WiMax. We need to watch how it develops and see how it delivers on its promise.

How long do you give Yahoo, AOL and Microsoft? Several examples today. eg Apple iChat that bastardizes SIP. MS Messenger and Windows use SIP but what it doesn't do is allow the tech details to go through firewalls. So far not done GIPS so voice isn't competitive. It astounds me that more people haven't taken a deeper look at Skype and followed a lot of their design choices like using GIPS.

You get free VoiceMail with Gizmo -- no charge it is included with your free account. If we tick advantages... recording the call, voicemail, we are not P2P like Skype so as an advantage we never commandeer your computer to route calls etc. We have chosen a different topography where we deploy relay servers around the world to assist in the routing of calls. Listen Skype has done a good job and they are a good marker. They do inflate their download numbers. We have an auto update feature built right in. We have a lot of catching up still to do. I do think that with the right partners we can close the gaps real quickly.

The challenge of the UI is to come up with the right balance between voice and IM. The challenge is how you balance these fairly different functionalities. We will have to make up a lot of it as we go on.

It's intriguing that an IM product that's had a voice component for years must launch a new version "with voice" and yet that is the message that Yahoo is promoting with the release of Yahoo Messenger 7.0 for Windows. As I reported on the beta version it's a big step forward and it does add real utility to Yahoo. Will it hold the tide of IM users flocking to Skype? Maybe. Is it enough to turn the tide? No not yet. Still it makes the Yahoo client much more sticky. Plus Yahoo has some integration options with e-mail and mobile IM that keep it attractive.

Two things Yahoo is really promoting in this release.

1. Free worldwide PC to PC calls. You can also buy a phone card although the integration could be better. Voice now works, often better than using the phone, however it's not well integrated, retaining a bolted on rather than built in feel. Example - the VM voice mail notification (you have to have "messenger" "show/hide" "seach bar") for it to be visible. The voice archives are difficult to find without this. There is no "events" notification. I can't identify how a YahooIn call (Future) would be handled, or how caller ID would be presented in the future. The downside of these additions is a lack of control over whether anyone can call or start a chat etc.
2. Photo Sharing: On the plus side Yahoo has enhanced how pictures can be shared. It's another integration. The more I think about it the more I'd like to see it in the actual client, Slide shows should be possible

Emoticons: Yahoo adds some new ones. They are nicely done.

Things I haven't checked but am curious about.

• Is dialup performance better than Skype? How's the voice quality stack up. Yahoo has many more dialup users.
  
• What will the impact on Yahoo chatrooms be? Will better voice change dynamics? Note the beta and previous versions weren't voice compatible.

Overall

Skype still has quite a lead. From recent reviews of new clients Jajah, Gizmo, Wavigo, Voipbuster, all these are lacking what makes for an easy-to-use telephone replacement. In Yahoo's case they have the resources and capabilities to blow Skype out of the water. Still it's only going to happen if they get the basics right and open up to the developer community. That's key if Yahoo is to get linked to the next generation of hardware devices now being released. Otherwise Yahoo could find themselves locked out of the future because they are not compatible with these upcoming products.

Skype just lost a portion of my family SkypeOut business to a product still in beta. VoipBuster enables you to dial most of the SkypeOut global calling countries for "FREE" after you have opened an account and paid one Euro. Otherwise you are limited to calls of one minute. That's it $1.27 and you can call the UK, Canada, Australia and thoughout the US for free from your computer. Many other rates are similar to SkypeOut rates. So how long will this last? Are they buying the business? What should the rate really be? Questions I don't know the answer to. However, "FREE" local calls in the US is what this provides me. If this is forever then my landline could go. With SkypeIn and VoipBuster combined users can become even more aggressive on their communication strategies. Is this another sign of rates accelerating to zero?

VoipBuster is another small phone client that you download to your PC. It's not particularly flashy. After you enter a contact you can just click and dial their PSTN number. All numbers are in the international format. +CCareanumber. Apparently there is no PC to PC calling capability. Thus all calls are routed back through the PSTN. It works just like you would expect it to work. Audio and general quality is fine. I tried it on a broadband line. So what we have is a dialer, no chat functionality, no conference calling, no presence infomation, no mute button. So this is stripped down. Just like the old telephone. Plus, like Skype, when you call a PSTN number there is no caller ID sent. Where's this product going? I don't know; I sent some questions to VoipBuster support.

I suspect that VoipBuster hasn't yet declared their rates or their hand. The company behind VoipBuster is Swiss, Finarea SA, and they have many budget Voip plays going. Don't be surprised if the number of new beta accounts is limited. I suspect that VoipBuster hasn't yet declared their rates or their hand.

VoipBuster also needs an API, for then I could manage it with an Actiontec or similar USB device. That would bring this free international dialing quickly to my PSTN handset. In fact all these VoIP startups are going to start copying the SkypeAPI for as hardware rolls out it provides consumer lock-in. Consumers will pay $125 or so for a Wi-Fi phone or a DualPhone however they aren't going to pay that for a service they have never heard of. We are all more likely to buy hardware when we know it will work with multiple providers.

For now VoipBusters is an even cheaper way to call. Overall, my take is VoipBuster is still a long way behind Skype in functionality. However they are showing a new way to get into the game. For just 1 Euro you get all this free calling. It's a low risk purchase.

The world ain't fair.

Wealth is unevenly distributed, and economic mobility isn't even close to a norm. A drive west from Lake Michigan down Chicago Avenue for an hour makes that clear.

You see the same thing in Skypeland.

The millions of dollars that Skype helps keep in caller pockets? Most of that is middle and upper class money. The savings go to those with midband connectivity, with the disposable income to pay monthly what others call a day's take-home pay. Or a week's. Or longer.

The DSL or cable buy-in to the always-on Internet remains too steep or unavailable, even in the United States. Water, electricity, telephony, sewage, public safety, public health, courts, voting. It must be a mandate to add the fast net to universal access.

That's a dream of mine. Guaranteeing access to the net to everyone everywhere.

Everyone has dreams.

Many are dashed. Some don't know it. Denial for others.

Take SIP's dream. (If you're not from Planet Voipon, SIP is a telecom standard that tells software how to act like a phone network.) SIP's vision is profound and beautiful. A world without centers, where anyone can plug in to the network the way people plug in to email. Telephony as free as your Internet connection.

SIPsters don't have momentum; it's more like the inertia of the desperate who haven't an alternative. Thousands continue to invest fates and fortunes on SIP's promise. Slow to pay out, SIP now finds itself growing but eclipsed by Skype's breathtaking J curve and flashy consumer acceptance.

Many SIP evangelists are working themselves up to condescending that the Skype-thing exists, is popular with consumers in a fad sorta way, and doesn't completely suck as a product. But Skype is so closed and proprietary and consumerish and otherwise icky that the future still lies with SIP.

And they may be right.

Nobody guarantees Skype's survival or ubiquity. But there are few serious rivals and Skype continues to raise the cost of entry.

As it stands, SIP hasn't evolved much, either in specification or in practice. Why? I've heard some blame it on big telcos dragging feet, hesitant to obsolete product families. Others blame SIP never being implemented the same way twice. Or a standards process and body slow to embrace bold changes. May disparities between software and telco cultures be at fault?

Assume Skype will keep evolving quickly, serving 300 million users before 2008. How soon will the SIP community respond to the competition? Will they act effectively? With a potent vision? With specs that everyone will embrace and stick to? We'll see. The recent P2P SIP meeting holds promise.

I had a comforting reality check over breakfast with family still in town post-wedding. Nobody there ever heard of Skype, VoIP, SIP or anything like it. The same look they gave when I mentioned blogs at another wedding in 1999, the Internet in 1993, DARPAnet in 1979. Tolerant, loving, bemused, and not the least interested.

Skype Employees: 155

Vodaphone Employees: 60,000

Scaring Vodaphone Germany into filing an anti-Skype tarriff: Priceless.

Update: only 155 people at Skype right now (instead of the 300 I first reported), so they are Twice As Disruptive Per Employee!

Could the real winner turn out to be GIPS (Global IP sound). The stream of announcements they have strung up since Skype launched becomes more important by the day.

“Microsoft’s adoption of GIPS technology for MSN and RTC is a major validation of our solutions and their ability to provide the best possible voice quality over the Internet,” said Gary P. Hermansen, President and CEO of GIPS. “There are over 200 million downloads of our software currently in market today, and the addition of Microsoft users further enforces our leadership as a provider of high quality VoIP software.” Global IP Sound

Joins a stream of recent wins.

“The Company continues to show solid growth performance with 13 new OEM license agreements that include Avcon, V2Tech, Netease, BICOM, Finarea, Ecton, Talk Free, Pingtel, nanoCom, Santa Cruz Networks and three Tier 1 Internet Service Providers. Global IP Sound

Ashod's WigiWigi Video application has moved to the beta stage.

The User Interface is still a bit crude for mom to use but the one-to-one video quality and fluidity is setting the bar higher for all contenders in this market.

I will be doing more testing during the week and keep you posted. Right now it is for geeks only. But I don't think it will be that way for long.

Jeff Pulver announces the impending the release of another "Communicator" sometime late this summer. Does that mean the current Communicator is toast? Will Jeff still support SIP? How will this fit with his current center staging of Skype in VON programs? Will P.C emerge as a HGC like deal? Would Jeff like to get his hands on Skype USA? He's already got influence seemingly on the legal side.

I'm looking at doing a new release of p.C before the end of the summer that is unlocked from the start and I hope to offer a new build sometime after that which supports the GIPS wideband codec. I just have some business and technology issues to work out in between.

I'm also working on a re-launch of the FWD website. I've decided to take a "Geek Approach" - I'm not exactly sure what this will evolve into but it will be different than what we currently have, and what we had before.

Aswath Weblog

A pointer in Om's blog took me to karnellKNOWLEDGE. It's a great rant on how Vonage strategy for customer aquisition just doesn't stack up. Maybe Vonage should offer a free softphone? It looks at Skype mentions in the blogosphere and contrasts the impact with Vonage spending on advertising.

The report also quotes Sandvine data which appears to me to be a little suspect. I think getting a useful sample on VoIP users remains difficult. I think James Enck also questioned the same figures.

Last night I posted on Gizmo and wasn't able to log on and try it. Today it offered up a software update and it's working. My Gizmo name is stuart_henshall. So I tested with my buddy bill_campbell. After testing, these remain my questions.

Questions:

• What would be the compelling reason to switch? From Skype to Gizmo?
  
• How and what opportunities does this provide for PBX integration, something many Skypers want?
  
• Is the fragmentation of the VON VoIP market only going to affect other SIP players and have no impact on Skype?
  
• Why aren't the "rates" for CallOut or CallIn competitive?

The sound quality matched Skype on our Gizmo to Gizmo call. It uses a SIP number you are assigned. The call history reflects the SIP numbers rather than the names which is less useful. I made a "CallOut" (lots of Skype copying in this product) to Bill's cellphone and it connected first time. Quality was appropriate to a good call with a cellphone user.

Nothing changes my comments from last night. I can confirm that, like Teleo, in Gizmo you can add a buddy without requesting an authorization. That gives you access to my presence information unless I refuse a listing in the public white pages. There is no text / chat functionality, a major disadvantage from my perspective.

I also paid more attention to the CallOut and CallIn rates. They are HIGH. It may be a bug, it may be part of the beta. I made one call to Bill's cellphone. An hour later the free .25 cents in the CallOut balance is still .25 cents. If the billing on that isn't real time they will get killed on free calling very quickly.

Lastly, I can't make out the UDP connection data. It appears that this call was routed through their servers. So is that why the charges are high? Is there a cost to scaling this solution?

In October 2003 Michael Robertson of Sipphone (Linspire and MP3 fame) said "So Skype is a nice little experiment but it will get quickly run over by SIP.". It took him until now and Project Gizmo to try and address the Skype desktop challenge. So today yet another softphone client emerged. As expected from the founder of Sipphone he's positioning Gizmo as "giving" you your SIP number, open source and plenty of other claims. Still the core story that Project Gizmo hopes to hook consumers on is below. It's the open versus closed argument again. It won't be enough and I'll tell you why.

Net calling software Skype has exploded onto the scene. Its ease of use and robustness have quickly built an enormous user base and introduced many to the power of net calling. But Internet users should be wary of Skype because its strategy is a throwback to the '80s built on proprietary standards that locks out all others. This week, a product called Gizmo is being unveiled - the first viable Skype alternative built on open source that pledges to connect to all. Michael Robertson . com

The argument fails because the product isn't better, not due to the righteousness of an open source argument it just doesn't have the features for tomorrow. Similarly, he forgets or never mentions in his argument mobile carriers. Skype sometimes suggest they should be thought of as a mobile carrier. Of course they have no infrastructure. Which is the final element. Skype and Gizmo are just pieces of software.