BI reports Cisco’s telepresence unit is ending Umi, a webcam and set-top box for living room video calls. No patience for consumers to learn about it, no chance to iterate and find what works. Why is Cisco giving up on consumer products when the consumerization of corporate IT is at an all time high?
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HP’s Visual Collaboration businesses will have a much better home at Polycom. Polycom folks understand how people talk at work, their engineers build quality product, and their brand defined office conferencing long before Cisco or Skype. The deal is expected to close in the next few months, followed by quarters of product line consolidation, rebranding, some light reorganization, and a renewed marketing push to get the last of this year’s enterprise IT budget from existing and new customers. Everyone in this space is competing with Skype at the high-convenience, low-cost, network-effects end and Cisco at the high-touch, high-cost, tiny-private-network end. The extra talent, customers, and technology could buy them time to respond to video conferencing’s commoditization. When eBay bought Skype in 2005, Microsoft, Yahoo!, Google and AOL all added talent, bought technologies and beefed up their messenger products. Six years’ later, how will Microsoft’s rivals respond to Microsoft buying Skype? Apple. FaceTime gets more headcount, gets group video, comes out on Windows, distributed with QuickTime and iTunes. Maybe by WWDC. Google. Renewed commitment to build out Google Voice. Internal partnership with YouTube speeds up, seeking to enable live video conversation in comments, Ustream-style broadcasting, and WebEx-style video meetings. Salesforce. Has Chatter, buys TokBox for video chat at scale, developer channel dives in and video enables customer service. Facebook. Waits for Skype cloud services to power next generation of fb chat. Aol. Reinvests in AIM. For six months. Then partners with Microsoft/Skype for sign in and text chat interoperability. Comcast. AT&T. BT. Orange. Myopic attempts to squeeze old POTS into new media. (Think Morse code mobile app.) Cisco. Spins out video conferencing products as their own company, refocuses on networking products.
Cisco killed Flip today, although I’m sure they chose to divest months ago. 550 workers were cut. The things I love about my flip cameras, and I think I have four of them going back to early models:
4G handsets do away with many of of these advantages (except screw mount, battery, and free of interruptions).
So the gap, large when Pure Digital was founded in 2001, shrank. The flip slide HD, the latest generation, had some engineering/manufacturing problems. Videos came out with a noticeable pink cast. Following the iPhone’s form by putting the whole UI under glass, created huge usability problems; you rely on touch to control the camera while you talk to or look at the subject. These design problems were not going away quickly. They couldn’t keep strong retail positioning last Xmas. best buy displays didn’t have the same heavy prominence they used to, instead featuring cameras that shot 1080i video and 8 megapixel stills for the same price. The YouTube generation has moved on. One theory floated at the time Cisco bought flip was Cisco would turn the flip into a mobile phone handset, that it was C’s mobile play. If so, that never came out of the lab. Another theory: Cisco would turn a new generation of flips into Telepresence (now ūmi) endpoints for PCs, used for streaming live video over Wi-Fi. Again, never reached the market. A last theory: if Cisco bought Skype, flips would run Skype over Wi-Fi and USB. This would have been hot three years’ ago before the iPhone and Skype’s run-on-anything-with-a-CPU strategy. I’m sad to see flip go the way of all hardware. but when the deadpool calls… Recruiters pounce. Good luck, Flip alumni. We’re sure to see you soon. And when you interview, tell them you read Skype Journal. Cisco sells video calling and video conferencing as “collaboration.” Not true. It’s a medium for communication. Communication is not collaboration. Here’s what their pitch looks like: I interviewed Tony Bates, Skype’s CEO, the night before CES January 2011. Skype said they would not be making forward looking statements. Lightly edited YouTube video and transcript below; my own comments will come separately. Skype Journal: How did you come by your geek cred? I was part of the team, the very small team that ran the ARPANET gateways in the UK, I call it the right place at the right time. And my story about how I’m self-taught is that I’m from London and I lived at the end of the Tube line and it took roughly an hour and twenty minutes to come in every day and an hour and twenty minutes to go home. That’s a long time where you’re kinda sitting there and so I immersed myself in manuals and texts. Strange story about that, back in those days, manuals were a lot better then they are today. I self-taught UNIX through basically DEC manuals. And I really got involved in the infrastructure side of the Internet and so when people say a bit about being a geek, you’re seeing a bunch of RFCs around things like route reflection. Route reflection is an esoteric thing but it’s one of the things along the way that kept the Internet going. There were some other jobs after that. I helped start RIPE which is the main name registry similar to the Internic and so on. I wasn’t the first guy there but I was like number four and I worked on a thing called a route server. But I always knew I wanted to build product. And so after that I did Internet MCI which is how we transitioned the NSFnet which was a lot of fun and it was all different then. It was when in those days the nexus of the Internet was actually in Virginia, So PSI was there, UUNET was there, Sprint was there, MCI was there. And we actually used to meet, a bunch of kids, geeks and we would actually trade SLA agreements. We would go to the Tortilla Factory once a month and I would buy a circuit, you’d buy a circuit and that was how it worked. And in those days there was no settlement and all the discussions we have today. But I always kinda felt that the missing thing was how were these things going to evolve and scale. When I joined Cisco I worked in the CTOs group and we had these guys called “consulting engineers,” very smart people mainly more pragmatists who had been building. And I kinda ended up being the de facto product manager for the high end router space and we were redefining it and there were a lot of people involved. But my first big project was working with a thing called 12000. The twelve-thousand was the real first carrier class box. And then to cut a long story short so this doesn’t go on forever, the real big thing I got involved in was this thing called the CRS1 and what was brilliant about that was all aspects about building a system: which was hardware; we created this new operating system called IOS XR, which I drove and led and this you know; put it this way, pretty much any time that someone connects to your website you get sent one of these packets, it comes across one of these devices so it’s part of the infrastructure.
Skype users call billions of minutes yearly. That customer behavior is stolen from phone companies. Skype accounts for more than 12% of long distance and international minutes after seven years. Those phone companies can’t fight back using their PSTN phone system: 40% of Skype calls have video, and your local phone company can’t offer that. Mobile operators (like Skype partner Verizon Wireless) are migrating users from minutes to megabytes but haven’t shown any apptitude [yes, that’s how I meant to spell it]. Apple’s FaceTime video calling products compete directly with Skype. Skype 5’s group video calling serves more than the first FaceTime beta, but it’s only been a few months; Apple will catch up. Andy Abramson thinks an Apple+Cisco partnership could bring WebEx-style video conferencing to everyone with a Mac or an iOS product. Andy nails it: the hard parts are client distribution and getting the messaging and video streaming right. Both are easily within Apple’s grasp. If they want it. Will Apple wait to cement their new, ruthlessly simple calling behavior before extending the product family to group calling, webinars, presentations, TV apps, and video meetingware? Probably; they are a consumer products company first and foremost. The opportunity to pick up a billion dollars in Confabistan could well override their sense of purity. Cisco is in the best position to help Apple’s consumer products sell to business. They sell at every end of the conferencing spectrum except at the most democratic, consumer level. So FaceTime might close that gap for Cisco and lend some of Apple’s brand magic to Cisco’s B2B identity. As attractive as Apple may be, Cisco may have greater opportunities partnering with Skype. Skype has a focus on communication, like Cisco. Skype is much more amenable to integrative partnerships than Apple. Skype is looking for ways to boost its valuation before IPO, so they’ll be looking at things Cisco’s way. So Skype would be easier to work with. Skype has a serious enterprise agenda. Skype is pushing into business through trunking, where inbound and outbound calls travel over Skype’s network. This is an important point of control. While SkypeOut brings in the money today, Skype can help companies bypass the telephone system altogether using the IETF VIPR protocols developed by Skype’s Jonathan Rosenberg and Cisco’s Cullen Jennings. Skype should be able to extract large payments for producing even larger savings. Skype’s video calling network should fill in Cisco’s low cost retail gap, a gateway drug for Cisco’s more expensive WebEx, ūmi, Tandberg, and TelePresence lines. And Skype can be bought outright, unlike Apple.  Until Cisco buys Skype, chat with me on Skype. Call me at +1-510-343-5664, follow on twitter @SkypeJournal (just the posts) and @evanwolf (everything). Visit our Skype Journal private technologist roundtable, one of the longest running public Skype chats. Tony Bates is taking over from Skype CEO Josh Silverman at the end of October. Getting a board seat too. No interviews for now but we’re boiling over with questions. Vision. Josh Silverman has a reputation as an excellent manager and strategist but isn’t known as a visionary. Have you been the guy with vision or the guy who executes? Consumer brands. Skype has been a global consumer brand. Cisco is a brand people trust and need but Skype is beloved. What experience have you had leading a consumer product family? Fighting Cisco. Some of Skype’s features compete directly with Cisco’s. Cisco also plays in markets adjacent to Skype’s. Are you prepared to go head to head with your former employees? Managing Post-IPO. Skype has been free from the stock market’s quarterly pressure. How will going public change Skype? Growth plans. Skype is growing rapidly but the rate of growth is slowing. What will it take to bring Skype from $1 billion revenue to $10 billion? From 150 million active users to 1 billion? New business lines? Marketing? New technologies? M&A? Values. Skype walked away from some of its core values under Silverman, like lowering its expectations of privacy with Chinese spyware through the TOM-Skype joint venture and the unprotected conversations for Skype mobile on at Verizon. How do you see Skype’s core values as a business and a corporate citizen? Google. Google is building highly scalable technology pointed right at Skype’s users. What can Skype do to outperform Google’s new platforms and the ecosystems they will draw? Competing with telcos. You’ve been arming phone companies with the tools to migrate to VoIP and compete with Skype. What can Skype do to fight back against the operators who seek to ban, block and beat Skype through advertising, regulatory roadblocks, competitive pricing, retail presence, and convenience? Skype at work. You learned a lot at Cisco about serving enterprise customers. Workers are changing, their work and their workplaces are changing even faster, and the world where those companies struggle is bafflingly uncertain and complex. What role could Skype play in the enterprises of 2015 and 2020? Talent wars. Skype always fought hard for the best consumer Internet software engineering and design talent in Silicon Valley and the world. Where have you had success with the kind of agile, speedy, iterative, and open processes Skype uses? How will you define Skype as the place everyone wants to work? Bonus: If you’re going to be Skype’s Ballmer, who will be your Gates? Elsewhere: Mark Spencer’s speech to the Spring 2009 Emerging Communications Conference at the San Francisco Airport Marriott. His slides on Slideshare. eComm2010a looks hot and may sell out. I’ll be speaking, and so will thought leaders from Skype, Google, Cisco, and a host of others. |
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