A most valued reader (i.e. my brother — my mum is the other reader) points me to a colleague's blog busy referring to my previous entry. So to complete the nepotistic circle of cliquedom, I'll point you back to the other side of the echo chamber. It's one of the more succinct observations of what the Skype-eBay thing is about:

Google is now going to have to play an uphill battle. That battle was made conspicously apparent when Google released GoogleTalk. Why does Google continue to insist on invitations to grow it's Gmail accounts? Why is the only other registration mechanism is to use a mobile phone? I take it that Google understands the value of tying one's digital identity with something tangible in real world. That is you have a Gmail account because of your real world contacts or your ownership of a mobile phone.

Interestingly enough, it is eBay that has the enviable position of providing digital identities with true value. eBay's reputation system is without competition. A seller's ability to command a premium bid is affected by his reputation. Buyers without established reputations are sometimes barred from bidding. Paypal's verified attaches a real bank account to an identity. When one attaches a credit card to an identity, the address becomes verified and adds additional reputation for a buyer.

This is an elaboration of Stuart's allusion to the digital identity imperative of eBay and Skype:

Skype and eBay profiles: A huge winner in this area is possible. eBay will provide just one form of reputation data. Caller ID solutions are not far behind.

I gave a talk about 18 months ago one why the real asset of a telco was the data in its customer database, and not the network. Nice to see the real world catching up.

One shouldn't ignore the international aspects of this deal. It's easy to be parochially US or Euro centric, as Jonathan Boutelle notes:

This also means that in many emerging markets no one has heard of eBay, and eBay has no effective way to reach these markets other than expensive late-stage acquisitions.

Owning Skype will make eBay immediately relevant to millions of Pakistanis, South Africans, and Georgians. It gives them a way to reach customers and drive marketplace adoption in every country on earth.

The only way an eBay-Skype hookup can justify the price paid is if eBay infects Skype with transactional functionality. Skype has to burst out of a pure C2C voice play as there's not enough money in it to support big-league financial expectations. There are many break-out points, but B2C/C2B communications strikes me as the easiest to mine for gold.

Telepocalyptic prediction #1: We'll see a "merchant edition" of Skype within 12 months, and this will be indirectly a paid-for service to eBay sellers. Skype becomes the "PBX for micro businesses", and it's the seed from which eBay can grow a bigger assault on the moribund PSTN application, particularly the 800 number market. The economic driver will be increased conversion rates, larger transaction sizes, lower transaction defect rates (e.g. wrong address), and increased up-sell during closure. Only an advanced multi-modal client can achieve these things.

Telepocalyptic prediction #2: Within 18 months, Skype will be giving away ougoing PSTN calling to places with low call termination charges, in exchange for people adopting the Skype/eBay identity and proffering personal data. eBay needs to grow Skype as fast as possible to keep as much calling on-net as it can. There comes a point when your network effect means you can suddenly drop the price for a wide range of vital services to zero (think: search, browsers) in order to support an adjacent business.

As Yannick Laclau notes, the telcos will respond with their own scorched earth policy of offering PSTN service for free in conjunction with Internet access. As he later observes, this is fatal for the PSTN disintermediators:

The internet players are deflating voice to support their applications-layer businesses in commerce, content, and advertising; the telcos are deflating voice to support their growing broadband access business.

The losers in this will be folks who only make money selling voice. Top of mind in this category is Vonage, SunRocket, Packet8, VoiceGlo, GossipTel, and the other pure VoIP guys. Skype, I felt, was dangerously headed in this category until today's rescue by eBay.

Many of the telcos unloaded their directory businesses in a fit of panic to raise some cash during the downturn. This will now look foolishly short-sighted as local search becomes the hottest part of the telco value chain. Expect to see the most "e-enabled" local search providers being snapped up by Google, eBay and Amazon. (I'm not brave enough to make specific predictions! Apart from anything, I've not been tracking the space closely — go read Om and Andy for the detail.) This local directory business will be particularly critical to integrating "voice-centric" small businesses like plumbers, take-away restaurants, etc. rather than the web-centric ones that are the traditional eBay fodder.

The collective loss of the directory businesses will also weaken the ITU cartel's ability to dissuade the listing of non-PSTN contact identifiers.

Ultimately, though, I can't beat Stuart's pithy cluetrained comment:

A marketplace is nothing without conversations.

Whether the messages over Skypenet are worth the crate of gold that was offered, I'm skeptical, but the strategic fit is certainly there. We definitely live in interesting times.

via Telepocalypse.

I asked my contacts "What does the eBay purchase mean for you and or your company?"

From Taiwan. A manufacturer of Skype hardware. He wouldn’t let me use his name.

"Actually, our eBay experience is terrible. I truly wish they (Skype) can become better... every email we sent to them is just like throwing a stone to the ocean. That is why I do not see any difference having eBay buy Skype."

From Sweden. Ben Isacsson:

"Yes a very, very new culture will emerge. At least for me. I will stay (with Skype) for a while - but only until I find a non US-owned program."

From South Africa. John Sjolund

"To be honest I do not really think that it will impact our business much. We use Skype all the time in our business and love it. I am confident that this move will only mean that the product gets better.

I think that it could involve very interesting revenue generating opportunities for other businesses through the use of papal credit as opposed to Skype credit. I think the incorporation of PayPal is golden.

I am hoping that they don't move it into an exclusively North American thing now however.

I am very excited by the prospect. I listened to the eBay webcast and was very impressed with the eBay people.

From the UK. Robin Batt, marketing consultant in VoIP space.

"I'm amazed and astounded. It doesn't make any sense at all! I just heard the news and am thinking it thru give me a few minutes....

Well, first off, I guess that marks the end of the Internet ‘crash’ – or the beginning of a whole new bubble. Good news for the Internet industry (that someone would pay 2.6 BN for a company that's not yet turned a profit and only just starting to generate any revenue at all)

I have to say I can’t quite see the logic behind the marriage. Sure they can cross sell into each others' communities, but Skype hasn't exactly experienced problems with customer acquisition (maybe eBay has - I dont know). If this is all about enabling eBay buyers to talk to each other - and generating additional revenue from the voice calls, then:

a) I don’t see why they would buy Skype - why not build their own P2P voice functionality

b) I can see that generating some additional 'net new minutes' - but I don’t know that eBay users need to talk to each other, or how many would pay to do so (to justify that kind of a purchase price)

I might be being shortsighted, but I don’t quite get it. All of eBay's other recent acquisitions have been in the marketplace/ecommerce space – logical. Perhaps eBay were simply feeling left out of the VoIP hype/race with Google, Yahoo, Microsoft etc.

Also, it'll be interesting to see what they do with the brands....2 very powerful brands, but with really quite different brand values."

From Prague, Czech Republic. Robert Hernandez, a developer of a Skype enabled product for Columbus CRM.

"Skype has undoubtedly fused with one gigantic community and infrastructure, ready to take on those 'other camps' currently making a lot of noise. If Skype's current partnering model holds up, we see great opportunities in relationship management and all the ideas going around this. This is 10+ in our scale."

From the UK. Marcus Williamson. Connectotel, the developer of a Skype SMS product.

"We hope that eBay's acquisition of Skype will mean a timely solution to the issue which all developers of services on Skype face, namely how to bill for services on the Skype network. As the owner of Paypal, Ebay already has expertise in the area of payment systems and has a well-defined eBay API and Paypal API. The next step for Skype/eBay should be to provide a payment API to allow developers to credit or debit a user's SkypeOut account for micropayments. Skype/Ebay would benefit by taking a percentage of each transaction, as Paypal already does.

Paypal API info:
Ebay API info:

From the UK. Martin Schoenenberger. Skype User and Swiss Investment Banker.

"Through this acquisition eBay gains a strong foothold in the the rapidly growing VOIP market. By joining the eBay, Paypal and Shopping.com platform, Skype will be able to aggressively expand their user population. The synergies will be enormous."

From Estonia and Skype. Jaanus Kase, Blogger for Share Skype.

"A large part of the deal is the promise that Skype will stay independent, just as PayPal has. They got acquired by eBay some years ago but they're still operating fairly independently, joining forces with eBay at places where it's good for users, just as Skype will do. (Quote from Skype Forum: )

From the Skype Forum. Judging by the early feedback on the Skype Forum, it looks like a lot of people care. The results of the early poll (monitor it here ) sum up many of the comments so far by participants on the Skype Forum.

In your mind, is the eBay acquisition of Skype a good thing?

• Yes - 29% (8)
• No - 70% (19)
• I don't care - 0% (0)

Despite the negative poll numbers, most see it as an opportunity.

From Canada. From me...

Many questions are answered in this eBay financial disclosure (pdf download). For an overview of the purchase visit this eBay investor relations page.

So eBay buys Skype. Who cares? I do. The road for the next year will be tough as cultures merge and evolve, but the end result will likely be very positive, as many developers above indicated. Skype will likely get the resources it needs to compete.

This is a shock. It touches all us Skypers. It appears end users are worried about the change; but most business people are embracing the opportunity.

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

The Ebay rumors are hilarious. Nobody can verify or confirm anything. Not even vague denials from any of the parties. Who benefits from the leak? Skype's VCs pushing valuation buzz and Skype's bizdev team, both to better arm-twist partners.

Everything Skype can offer eBay or its subsidiaries (technology, network access, Skypification of its user experience, PayPal currency conversion of Skype Minutes) can be delivered as a service, without an equity entanglement.

And then you get the Skype Voice announcement. Bill Campbell does a fine job skewering the outrageous charges imposed by Skype. Can you imagine paying 30% of a sale to your credit card company? Or to your phone company for letting you hook up your computer to the phone network? That's Skype's program!

But that's not the worst of that deal. It's that Skype's BizDev team is driving for tactical profit but creating a strategic disadvantage. I'm tempted to say they're trying to think like a mobile service provider but Bill says it looks like simple opportunism.

This deal is an innovation killer.

This type of deal, cherry picking three players out of an entire industry, only reinforces Skype as a "walled garden," a private, tightly controlled place with one master. The other way to do it is to set things up so anyone who wants to compete can do so. Publish protocols and specs and some common tools for call termination (SkypeLite, maybe?) and for commerce. Set rates comparable to what credit card processing companies charge for debit transactions; Skype minutes are risk free since all funds are prepaid cash.

By the way, do you understand what Skype Voice companies do? They are middleware. You call a number. Their computer picks up the phone and answers with a recorded message. It creates a user experience for you using a library of prerecorded messages, a little speech recognition, Voice-XML to guide the conversation, and whatever database of content you're sharing. Like calling up for movie times and making it easy to search for the blockbuster playing near you.

Enormously helpful.

And these companies offer the service now, on regular phone lines, on toll free numbers. They make their money by selling their service to companies that want to engage their customers over the phone. Like banks for bank balances. Or a newspaper for delivery problems. Or a shipper for tracking problems. In none of these examples does money change hands. It's just my business process talking to customers in a convenient, narrow, well structured conversation.

They don't pay the phone company extra for the privilege.

Skype's partnership model doesn't allow this. If there's no revenue, nobody gets paid. And Skype must be paid before they let you pick up when a Skype caller rings you.

Skype's model doesn't allow public service implementations. The volunteers who put together KatrinaHelp would love to implement a service like this but will not charge the dispossessed to find a lost child.

And companies that want to plug in their own IVR systems are shut out too.

Like Bill said, it's a mess.

Instead of putting up a new api, protocols, etc. upon which vendors can innovate and add value the way tellme adds value (terminating calls and doing something with it), they are doing custom deals for a handful of players for short term cash, closing out the developer and entrepreneurial ecosystem including dozens of Tellme rivals.

Skype can fix it but, as it stands, the Skype Voice program is one step back.

How do you open up your software's user experience to outside parties?

It's distressing to hand your hard fought, crisply crafted, sophisticated design to imperfect strangers.

But you must.

It's key to learning new things. To multiplying the value you create by the curious, concerned, and committed. To meeting more customer needs. To lock-in.

So what's the best way to do it?

Prior art includes plug-in standards, high level human-computer interaction specifications and browser based methods.

With plug-ins, you parameterize everything within a few fixed guidelines. Think about Adobe Photoshop plug-ins, all looking more-or-less the same, but packaging different calculations in one consistent set of controls.

Sometimes a plug-in definition restricts too much. Kai's Power Tools went outside the Photoshop client to create user surfaces that better served user goals than anything possible within the plug-in UI spec.

"An interface is about hiding complexity from the user, It's about guiding a process, without cognitive understanding of what goes on beneath. Interface design is the art of enveloping the observer in an enticing, "try this" exploration with ever-new elements and designs as the tools to triumph in new territories." - Kai Krause

Ever wonder why it's easy to learn a new Macintosh program? Apple's famous UI specs for the early Macintosh OS guided the design of Mac apps.

Enter the AJAX era [wikipedia], a universe of loosely coupled, thoroughly decentralized, OS-independent applications. Where 14-year-olds can create toolbars for Firefox that produce new navigation of Flickr's photo site. Where users record and share Greasemonkey scripts that rewrite web pages so phone numbers become clickable SkypeOuts. Where Vonage users write and share desktop widgets to show Vonage status, minutes used, and performance. Where a weekend hack shows a Google map of a Craig's List of apartments renting near you.

Ten years' ago users were putting up words and pictures on the web.

Five years' ago users were storing them in databases.

Now we're creating applications, in a wave of design riding atop existing data, databases, and services.

The elements are straightforward, even if creating an effective platform remains an art.

So here's my first cut wishlist to open Skype's UI.

1. Open up your embedded browser to users
2. Let us open arbitrary web pages
3. Open up your tabbing and menuing navigation, subject to to
4. Expose its document model
5. Add JavaScript
6. Add Java
7. Support the web2.0 protocols: RSS, Atom, XML-RPC, SOAP, etc.
8. Support Flash
9. Open up the messaging/alerting system
10. Open up the help/documentation system
11. Build a toolbar system, so I can configure feature sets
12. Docking of external UI components/widgets with or within the main application
13. Skin the UI, so I can distribute my enterprise's branded skin or my Natasha Lyonne fan club skin.

Let

• engineers add functionality,
• designers adapt function to specific purposes,
• partners to channel their content, and
• users to make their copy of Skype their own.

Create a safe and flexible place, and they'll experiment and play.

www.flickr.com

Skype has an API. Flickr has an API. For the wishlist:

Before the conversation.

Flickr Caller ID. When someone calls or texts me, show me what they've posted on flickr. Show me their flickr profile in a "who's calling" browser.

Skype a Flickr user. Let me find someone to talk with through flickr. Show a user's Skype name in their Flickr profile. So I can chat or call them. The realtime version of Flickr Mail.

Sync flickr groups with my Skype groups. Groups of people are already defined in flickr. Let me sync a group in my buddy list to a flickr group.

Launch a group chat from flickr groups. One click, instant conversation.

Populate my flickr profile from my Skype profile. Location information, affiliations, home page, my "about me" box, etc.

Add my flickr interestingness rating to my Skype profile. So when people with interesting photos call, I answer.

During the conversation.

Social browsing of flickrspace. During a call, let one or more of the participants guide the rest through flickr.

Thread flickr log. Skype knows the Skype IDs of the people in the room, in the thread of conversation. Let me see a stream or collage of their recently flickrd photos. Add visual, topical and temporal context; the joy of flickr.

After the conversation.

Upload via Skype. Skype has encrypted person-to-person file transfer. Let me use it to upload pictures to my flickr account.

Flickr presence in Skype. Show when my buddy uploads pictures to their flickr account. And make it easy to launch from my contact list to their flickr page.

Flickr is, of course, now a part of Yahoo!. Will they be able to integrate openly with other communication services? Or will they succumb to the resources and convenience of Yahoo!'s Messenger platform?

Congratulations to the Jyve team who submitted a personal presence server with browsing and call forwarding to win the Skype Developer Competition. Full kudos to them. All the details can be found on the Skype site here. I certainly enjoyed supporting them during testing and constantly asking for more. Well done guys! Some of the others won't come as any surprise to Skype Journal readers, you have already read about them on these pages. Certainly shows the inventiveness and in some cases playful nature of Skype Developers.

Some of the other entrants. The only one I'm yet to try is the Dial MP3.

• Jybe, a simple and easy to use tool for sharing office documents and enabling real time collaboration over the web with Skype contacts.
• Dial Mp3, which allows you to listen to any mp3 in your collection on your phone.
• Pamela Basic, a personal assistant for Skype that answers calls and chats for you in 32 languages when you are away.
• Gizmoz, which lets all Skype users communicate with animated, 3D talking headz. :
• YapperNut Answer Machine for Skype ("Amy"), which offers voicemail, delayed messaging and allows you to receive and send messages when away from the computer.
• Spontania Video4IM, a high-quality video solution

Commercial Mentions:

• KhaosLabs - Free ActiveS COM wrapper.
  
• Columbus CRM (Skype integration with CRM solution)


• ISkoot (free call forwarding)


• Audiomatic (voice activated macros including Skype commands)


• SalesForce CRM integration

1.4 Windows Beta released.

Bunch of cool new features including:

• Free Call Forwarding
• Expressive content
• Improved Search
• Application to Application Messaging
• New API improvements
  • Application to Application Messaging
  • Skype Window Control
• Skype URI links (skype://) for email and web pages

Get it on the Skype for Windows download page.

Cautions: We've had some difficulty with promptness of presence. What do you think about the new features? The look and feel changes?

Change notes...

31.08.2005 version 1.4.0.45

• Feature: 21 new emoticons
• Feature: My Pictures: possibility to choose pictures from Expressive Content
• Feature: RingToneManager for Expressive Content of audio files
• Feature: API notifications for contactlist selection and focus
• Feature: Call forwarding
• Feature: Contextual tool tips
• Feature: Multilingual EULA
• Feature: Possibility to disable file transfer

• Change: Improved Search and AddFriend functions
• Change: Getting Started Wizard: new layout
• Change: Profile: month names are translatable
• Change: Import Contacts: new layout and process improvements
• Change: Improved Emoticons
• Change: API: Allow sending voicemail to myself
• Change: Skype client can now be maximized
• Change: New Korean translation

• Bugfix: Some optimizations during call initialization, should be a little more responsive now
• Bugfix: Import Contacts: mass authorization is back
• Bugfix: Skype does not start for some users
• Bugfix: API: support expressive content files SET RINGTONE and AVATAR
• Bugfix: API: enchance GET RINGTONE to report status
• Bugfix: Prepopulate Skype Test Call Service on new user's Contact List

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.

I had an interesting discussion a few days ago. One of those rambling international ones with a fellow who like me has watched Skype from the beginning. I jotted a few notes down, ideas and points that were made or fleshed out.

• Skype 4 Million Active Users Online
• Is Skype Netscape
• More than Buddies
• Free Calls
• Voice Differentiator
• Developer Program
• Skype Video?

Skype 4 Million Active Users Online

The Skype client shares how many are online. Currently I see just over 2.5m. Before the summer arose, we saw this number peak around the 3.25m point. The numbers have been at best flat or declining since then. So if Skype numbers are soft and college kids return to school in September, then we would expect a jump. Conclusion: if Skype is at less than 4 million users online by end of September then somewhere we have all miscued on growth. In that case, Skype may rush video to market to bolster numbers.

Is Skype Netscape?

Microsoft ignored Netscape for a good year, then turned everything around to kill it. Microsoft's IM client sucks. Skype is not Netscape, and there are several voice/IM clients in the play today. Yet, some believe that Microsoft can still turn the corner on Skype. Here's their challenge. Skype, unlike other IM replacements, has created a new "collective" cross-platform buddylist, including phone numbers and people that had never used IM before. The shaping of these new buddylists are now well underway. The more numbers, more names and more buddies people have on Skype the more difficult it will be to jump back to an old client. I have to move the majority for it to be successful. Otherwise I am again using dual clients. Unless there are new features that materially affect the way I work or socialize, the desire to shift won't be there. Just look how long people stuck with the old telephone.

More than Buddies

In my case I have over 250 buddies/numbers on Skype. I never collected the same number (or even came close) on any other messenger system. I'm sure it is an extreme (although my SmartPhone mobile has even more contacts in it) Migrating back to an old IM system even an improved one will not be easy. Add to this hardware (like RTX dual-phones) say $150 in misc hardware that one buys over the next year. Will that work with the new IM system? Will I have to write it off or will I be able to download a software upgrade that will allow it to now work with another IM system. How long will it take the manufacturer to catch up? Hardware represents a potential psychological lock-in.

Free Calls

Voipbusters is providing a free calls almost anywhere service that I reported on last week. Skype isn't working hard enough to reduce call costs. On the one hand, one voice in me says that isn't necessary and why antagonize Telecom's further. The other voice shouts "Free" is a fundamental part of the business model. So how does Skype make all my calls free? How does Skype reduce my broadband cost to zero? Is this an advertising mechanism? Does Skype empower me to sell some data? How can Skype create a better conduit for information exchanges between buyers and sellers? Can Skype more economically deliver the mail.... so to speak? Skype's economic opportunity is to reduce the cost of connecting to the net to free. They are getting there on interconnecting (PC to PC). If Skype doesn't do it the next new entrant will. Does it make sense? Should one use subsidies from one industry to fuel the growth of another? Why not?

Voice Differentiator

So far the only real differentiator Skype has had is voice. It's that part that really made the difference. While firewall busting and installs are important it is the stickiness of voice that created Skype and keeps it growing. However, we've seen no real advancements in voice since Skype launched and GIPS provides the majority of the audio solution. It's now been duplicated and adopted by others. So where is Skype's innovation? Where is the next generation features that will be harder to duplicate and more compelling? I'd look to presence and location information. Concurrently, identity - profile provide an interesting possiblity for leverage. The challenge will be how to enable and gain consumer trust.

Developer Program

Cynicism around the developers program remains. This may stem from Skype's willingness to do deals with "big names" e.g. Motorola, Logitech, Plantronics, (even when some of them have yet to launch a product) and yet completely ignore the small companies and individuals. This leaves one to wonder where it leaves a company like VoipVoice who make the CyberphoneK and provides one of the best software API integrations for usb hardware. It would appear inevitable that Skype just absorbs their plug-in and builds it into the product. Thus any Skype certified hardware device will be supported.

Skype Video?

It may be a question of when. It may also be a question of for what? Will Skype Video be limited to Windows only? Have they choosen a codec that will enable video to follow into OSX, Linux and Symbian? A video solution that stops at Windows won't have the same impact.

"When will Skype open access to their codecs?" Doc Searls asked me at the Always On picnic. It's not clear they will. If they do, the Jerk-O-Meter is an example of the kind of application you could build. A project of the MIT Media Lab, it analyzes voices during the call, telling users how much they are paying attention. Per their project page, "The current version of the application runs in Linux on the Zaurus VOIP phone. It uses Ron Caneel's code to extract the activity and stress levels in real-time."

The Skype API doesn't expose the audio stream; you must work through the operating system to get at it. The same is true of the upcoming Skype Video.

There's money in analyzing and transforming media streams, whether for call centers (like the Jerk-O-Meter), annotation services, call/video quality boosters, semantic content detectors, translators, relay services, or simple stress/lie detectors. The Skype API should safely expose the media streams, and provide mechanisms for user authorized manipulation and substitution of that media by a friendly application.

It won't be easy, but the market value is huge.

João Brogueira writes:

On 1 June 2004, Jean Mercier posted an article on SkypeJournal making an analysis of how many users are online at a certain our within a 24 hours period. This raises the question of how to register the values without being waked up during all night.

The same Jean Mercier as per request of Bill Campbell, of SkypeJournal, shows how to make a video to register the Skype window and the number of users online.

I was surfing the Web today and I found this very interesting post claiming to have miniSkype, a small program that can not only register these values but also export them directly to a database for later analysis.

In short:

1. Jirong Zhou posted a test program on his blog, likely written by others.
2. It logs in to the Skype network, without Skype.
3. It gets data from the Skype network, like the number of people online.

Let me describe the screenshot for you...

It is a Windows XP desktop and three windows are open.

Two stacked on the left are titled "miniSkype v0.0.0.01". They each have a Log In/Out dialog panel on the left, showing "shantou001" logged in with a five character password and a "Log Out" button. To the right of the dialog panel is a text box showing a log of miniSkype's activity.

The first window's log shows:

Login
listen on random port
connecting SkypeNet ...
SkypeNet connected

The status bar shows a "1", "3", "login success", and "305271 Online".

The second window's log shows:

Login
listen on random port
connecting SkypeNet ...
SkypeNet connected
Logout
SkypeNet not connected
Login
listen on random port
connecting SkypeNet ...

and then scrolls out of sight.

The second status bar is the same as the first except that the number of people online is 3047812.

The third window is an application, what appears to be a utility from Gunagzhou's http://www.sky.net.cn/, makers of personal firewall software. It shows open applications and their network connections. One of the instances of MiniSkype.exe (running on drive E:) is shown with both a TCP connection (open on port 1389?) and a UDP connection.

Accessing the Skype Cloud Without Skype?

So does this mean...

• Skype's access to the cloud can be reverse engineered? If so, we can write applications that can write and read to the cloud from servers or clients. So if Skype doesn't write a version for your platform (let's say the PalmOS, for example) you might write your own.
• Cloud data is posted in the clear? While conversations are encrypted, it isn't clear that profile data and presence status is. And, I'm assuming that MiniSkype didn't encrypt the login process beyond common https.
• The MiniSkype client successfully logged in through Skype's own admin servers? If so, can Skype be selective about which clients have access? Should Skype publish a Terms Of Service about touching the cloud? In other words, how should Skype sanction access to the cloud?
• Having accessed the cloud, what other data from the cloud is available? Everything described in the Skype APIs? More?
• Can MiniSkype ask questions about other people, the way the Skype client can see buddy list presence and profile information?
• Is this intensely cool? Widely important? Or dangerous?

For the last few days I've been trying out Skylook an Outlook integration that works with Skype. It's an effective integration, enabling easy chat and voice calling from Outlook while adding additional features not seen with other Outlook plugins for Skype. Eg Look2Skype, and Skype's own Outlook solution.

The benefits:

Archiving:
Skylook will automatically archive your chats into Outlook. It creates a folder Skype conversations and then records each session separately. I had hoped this would then be picked up by Google desktop search, however so far I've not been able to search them. Still the archiving feature is important. The downside - there are no real archiving controls. Topics, folders by person, etc. Additional work is also required for formatting.

Recording:
Skylook enables full recording and thus archiving of all conversations again into Outlook. The recording is effective and archived as an MP3. Skylook doesn't act as an answer machine, and while it provides warning when setting it to record all calls, you cannot control this on a record by record basis.

Message Forwarding:
Having the Skype records in Outlook makes forwarding a chat conversation or call easy. Simply forward as you would any email.

Presence:
Connecting to another Skyper is simple with click to call and chat options. Current online status is visible.

This product has not been Skype certified.

Overall an effective integration that goes further than others I've seen. Also a plus - it hasn't yet crashed my Outlook. On the reservations side I didn't like the privacy and profiling information that I viewed when I downloaded it. It said too much about cookies and gathering information for me to be comfortable. So while I've tested it, I'm uncomfortable about the data it said it may be collecting. So after testing it for one more day I'm going to restore my sytem to an earlier time. It doesn't yet have my trust. It will cost you money after 14 days.

This new whitepaper The Skype Payment API from Connectotel should wake up everyone in Skypeland.

I found it on the Skype Forum.

Summary:

The proposed design for SkypePay would allow any Skype user to make use of his/her existing SkypeOut account to pay for goods and services. At the most basic level, the process of making a payment via SkypePay can be considered as a transfer of an amount
between one Skype user’s SkypeOut account and another.

This whitepaper is an epic. If implemented, and the rumour mill says that it will be, SkypePay has profound consequences for everyone: The Skype Developer Community, for the users of the Skype Global Network and Skype. As well, it opens up a whole new developer community ─ those engaged in producing content. From home movies, games and porn.

It is a show stopper for MSN and Yahoo.

Niklas Zenström has always talked about delivering “services”. SkypePay would make this easy for everyone, not just Skype to get paid for services: consulting on any topic, teaching languages, just let your mind wander.

What an awesome way to build a community.

"How the hell can you make money with a system that is for free?" , asks Skype Forum member, tropicaljantie, the real-life Belgian Jan Geirnaert, residing in Kuala Lumpur, Malaysia.

That's a good question Jan. The big travesty in the growing Skype Ecosystem, Skype Developers Program, and the API is the lack of thought by Skype staff about how developers will make money.

We have had some feedback in the Skype Journal...

Here is a comment to Stuart's post Skype Developer Ecosystem Gets a "D-". Jason Terando, the developer of the Skype API COM Wrapper, had this to say:

"One unfortunate trend seems to be Skype adding functionality without regard to what has already been developed. One example is voice mail. A few parties went to great trouble to build voicemail apps, only to have Skype include it as an included feature (albeit not for free). Likewise, Skype has committed to an API/web-based mechanism for retrieving on-line status, which a couple of parties have already worked hard on developing, only to see the rug pulled out from under them."

In an interview about Spontania's Video4IM, CEO Enrique Dominguez talked briefly about his business model.

"As you say, Skype is free, but out of the free version comes premium services. We follow the same strategy. We are a private owned profitable company, and obviously we need to generate revenue to keep these black figures ongoing."

"Regarding Spontania Video4IM, in some weeks we will announce some cool premium features; among others, videoconferencing between PC users and 2.5 and 3G mobile devices. This would drive Skype-Out minutes and open the door for new subscription models."

Niklas Zennström created a market of 45M users who want just about everything for free. Niklas makes millions and soon billions by nickel, diming and Euroing his captive Skype Users with valuable services, while members of the Skype Ecosystem get economically pummeled.

Jan, let's hear how our readers might answer your question, "How the hell can you make money with a system that is for free?"