His departure is bad for Skype, bad for Microsoft, and bad for Skype’s users. This is good for rivals who understand github culture, developer programs, cloud operations, and API business strategy. Here’s why:
Skype’s third-party development products are failures.
The Skype Extras program collapsed from tens of thousands of desktop apps to a few dozen before Skype shut the program down.
Skype tried for a UI-free Skype engine but SkypeKit is unattractive. It’s feature-incomplete. It’s a time sync requiring orders of magnitude more effort (about twelve thousand hours for the first Skype-on-TV apps) than alternatives (1 hour for a TokBox or Twilio integration). It’s burdened with outrageous defensive business terms: Skype can withdraw your license at any time for any reason and you may not run SkypeKit on servers, sell your service to business, or serve Chinese markets.
Skype is very late to the cloud communication market. Voxeo, Twilio, Jajah, TokBox, and Vidyo (powering Google Hangouts) have been offering hosted telephony and video conferencing APIs for mobile and web developers for years.
Skype’s few developer successes rely on cultivating personal influence, on sycophantic access to Skype insiders. Unless you know someone, you don’t get the resources to build or the waivers to release your product. This doesn’t scale and comes off arrogant and sleazy.
This post-Christensen senior management team understands finished goods. They even understand freemium models. But their hearts don’t beat faster at the thought of Skype powering a million web sites and apps. Their eyes don’t light up when talking platform economics. Their guts don’t tell them to bet on APIs, to open up and let a million designers and programmers plug-in to the Skype network.
So management lacks ambition for platforming. This shows in underfunded cloud projects, a closed (vs. public) developer program, staff defections, and belittling expectations. From management’s behavior you’d think outrageous success by Skype developer partners should trigger a publisher’s acquisition or sudden death. Ouch. Real platformers consider customer successes proof your network is attractive.
Skype’s platform-avoidance strategy will fail, probably this year. Skype cannot hope to deliver meaningful integration at Microsoft without the Skype versions of OpenTok and Phono; they will hit a technology wall. And new users from Skype’s Microsoft products won’t hide the overall slowing of Skype user adoption and revenue, or high defection to services that meet specific needs in specific contexts. As Microsoft’s Bing, Xbox, Kinect, Windows, and Windows Phone know, APIs bring you new revenue and new markets.
Circumstance will drive Skype’s managers to an open cloud platform architecture.
They’ll need entrepreneurial leaders like JC to take them there.
Google is building WebRTC into Chrome. WebRTC code and standards will let web developers and designers build realtime IM, voice and video into web apps and browser plug-ins. This milestone means we could see WebRTC apps in Chrome in the next few months. Nimbuzz and others are working on it. This removes one obstacle to Skype for Browsers, without downloading a fat client. How soon will Microsoft’s Internet Explorer follow Chrome? Or will it adopt another technology, making choices harder for developers and users?
For Skype management, more for the Skype everywhere strategy, it fills a gaping user interaction hole, and brings very active young users in many international markets. Skype’s owners don’t mind; this is equity neutral (Skype cash for GroupMe assets).
For GroupMe investors, this is their liquidity event when markets and economies are as uncertain in the long term as they are volatile day by day. For GroupMe management, they get Microskype marketing power and future replacement of Twilio SMS backend with a cheaper Skype texting/voice/video backend [take that, Twilio!]
Om, I disagree on Skype having a consumer vs. enterprise conflict. They believe technology consumerization will continue smuggling Skype into the workplace.
Skype’s does have two other identity crises. First, are Skype a communications company or will they take a leap into helping people be productive? I don’t think Skype can or will take that leap. The second crisis, are Skype willing to compete as a platform or must Skype control all elements of user experience? This struggle is in play now, as the new managers brought on by the Private Equity partners successfully contained and crippled SkypeKit, Skype’s first platform product in years.
Every startup founder is getting this question from investors, and customers. This wasn’t true in 2009. The question speaks to two of Skype’s strengths as it approaches its 8th birthday: brand and network effects.
The first strength is brand awareness. Everyone knows Skype. Literally half of Internet users have tried Skype. So Skype is no longer the domain of specialists in telecom, instant messaging, or video conferencing. More people know about Skype than know about Cisco’s telepresence or that Vidyo powers Google+ Hangouts. More people understand you can make cheaper calls on Skype than know of the hundreds of other services that offer even lower rates.
The second strength is network effect. The chance that someone you know is in Skype are vastly better than with any other communication or collaboration service. A user’s social network switching costs are not trivial. You lose history, you lose touch with contacts. You are adopting a weaker dialtone with fewer people you care about available for calls right now.
To be considered, challengers must do what Skype does.
Skype is the new vanilla, the new baseline, the ante for this round. Once you can “skype,” then you must offer something different, something more, something better.
Bonush will try to be Skype voice chat in a browser after it launches. (open for early Beta right now.)
Ooma Mobile was Skype on an iPad, before Skype’s own iPad app.
Vonage’s Time to Call is the voice part of Skype while paying for international calls at Skype rates with pay as you go billing to your iTunes account. Convenient for some.
IsCoord’s is-phone conference for iPad is Skype with SIP without video on an iPad available for white-label OEMs.
Toktumi’s Line2 is Skype with better SMS and telephony features, without video, instant messaging or presence.
FriendCaller is Skype on many devices and in browsers, with a Facebook voice app.
ChatTime is SkypeOut international calling for less money, showing what time it is where you’re calling.
Voxer is Skype without PSTN, adding voice IM and location check-ins.
Apple’s FaceTime is Skype just for Apple and without PSTN service.
Skype still wins. Explicit or not, every time we discuss a product in this space, we invoke Skype.
Rivals (and even the term “rivals” invokes Skype) have four choices:
Do less. Cut features to increase focus, convenience and usability.
Do more. Add features to serve unmet needs.
Do different. Reconceive the problem, delivery, pricing, psychology.
Niche. Serve an underserved market, add insight into a specific context.
Two things complicate matters.
1. Skype is a moving target.
They left an opening for iPad apps for two years, letting others define themselves as Skype+iPad before entering the space. We will see Skype@Microsoft co-brand all sorts of products, from Sharepoint services to gameplay add-ons. This adds danger to filling in a gap in Skype’s product family.
2. Skype is become platform.
Microskype will offer real-time communication components to developers on nearly every Microsoft platform. Mobile, web, desktop, server, you’ll be able to build Skype into whatever you imagine over the next few years. APIs make “do less,” “do more” and “niche” easier for everyone, right down the long tail.
For example, blogs like Skype Journal will offer group video chat for readers of this very page, the site paying a tiny monthly subscription for the feature, free to visitors. It will be part of every “would you like to talk with a customer service agent” widget. Peer-support graphs like WeightWatchers, Quantified Self, and Twelve-Step programs will guide with whom you talk and when.
Platformers like Skype, Voxeo, Tokbox, Jajah and Twilio will power them, commodifying voice and video chat as hundreds of thousands of apps and web sites add realtime talk to their user experience palette.
So what works now? Less, more, different and niche are all viable. You just must be extremely persuasive on why the “better” you offer is worth the customer’s switching costs. Investors will want you to spend toward achieving network effect critical mass.
What works in the long term? Dominating a defined niche (there’s room for only one Grindr) or changing customer expectations, as Skype did to Plain Old Telephone Service.
Someone will change the paradigm, displacing Skype as the iconic reference. Until then, product managers, buyers, investors and the press will ask: how are you different from Skype? Your answer is…
Product management has a natural tension between features and elegance, the richness of more and the simplicity of less. This is true for APIS as much as for user interfaces. Telecom technology is complex, a high learning curve for outsiders. In the last year I’ve seen Voxeo, TokBox, Skype and now Twilio expand their reach to web developers by simplifying the programming experience, hiding the details of making connections and streaming media.
With minor code variations you can build call center, conference call, intercom, softphone, audio recording apps, and text-to-speech apps in the browser. Promoting the launch, “five developers who write the most awesome Twilio Client apps in the next 2 weeks will win new Macbook Airs, tickets to the Twilio Conference, and Twilio Swag.” I’m loving the t-shirt. For those who use the Client, Twilio is cutting the cost of audio to a quarter penny per minute.
There are similar examples. A tiny Skype client powers Facebook’s first video calling app. Its API was also dramatically simplified, removing even usernames. TokBox embeds video calls and conferences with a few lines of javascript. Voxeo launched Phono last year, also a few lines of javascript to invoke their telecom APIs.
The gold standard for realtime communication: can you reduce your cloud service to a few lines in a language four million web programmers use every day? Can you simplify the object model, prune your parameters, and limit option so what is left is pure, elegant, beautiful and useful?
The U.S. House of Representatives (the lower half of the United States Congress) approved the use of Skype and ooVoo today. Thousands of electeds and staff can now use video calling do the people’s business. The Committee on Administration opened its public Wi-Fi networks to these services after a year of debate and discussion and an intense bout of security testing in the last few weeks. The House’s secure local area networks and secure Wi-Fi networks remain off-limits.
A year is instructive. Organizations with more than 1000 employees typically adopt technology more slowly and deliberatively than small ones. They are more familiar with security and business risks and consequences, so they are cautious. They are responsible for fixing things and supporting users, so they have procedures and methods for managing IT lifecycles. In this government’s case, they must also be careful to follow laws and ethics guidelines for procurement. Stacy Pies and the rest of Skype’s government affairs team has been working with Members of congress, their staff, security and IT people for years.
My take away: technology consumerization and video calling’s intrinsic value brought Skype and ooVoo in the door. Skype GA’s ability to cultivate relationships over years, understand specific workplace subcultures, adapt to changing organization priorities, and to apply resources when needed helped internal champions close the deal.
Flash Player 10.3 enables developers to create real-time online collaboration experiences with high-quality audio, telephony, in-game voice chat, and group conferencing applications for desktop PCs. Developers can take advantage of acoustic echo cancellation, noise suppression, voice activity detection, and automatic compensation for various microphone input levels. This feature is only be available for desktop OSes. End users will be able to experience higher quality audio facilitating smoother conversation flow, without using a headset.
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.
“We will make an announcement on VoIP and hopefully this service will be available in the second half of this year,” Farid Faraidooni, chief commercial officer of du, told Khaleej Times. …
“The VoIP service will be a part of du broadband service and it will have its own features and qualities,” Faraidooni said.
Asked about the proposed price structure for the VoIP service, he said: “I don’t want to speculate on pricing even before we launch the service. I don’t think VoIP service on Skype, Yahoo and other networks come free of charge as the users first have to get the broadband connection to log in.”
Whythe fuss? Apple is hiringcloud engineering talent. They should. Everyone with a digital side to their business should. That’s how infrastructure works today. Web sites? Cloud. Entertainment for sale? Cloud. Storage to rent? Cloud. Apps to license? Cloud. Data portability features to host? Cloud. Universal identity services? Cloud. Nearly all of Apple’s non-hardware lines of business have an online component. Cupertino staffing cloud talent doesn’t signal revolution or new strategy. It’s an everyday tale of ordinary business adjusting to swings in technology architecture. And if you didn’t notice, Apple’s had cloud operations for years. So. Whoop. De. Doo.
Toktumi founder Peter Sisson talks right into the camera and says Line2 is better than Skype on iOS or Android.
He’s pitching Line2 as a phone service, positioning Skype as weaker in at least three features.
Where Skype works where you have data service, Line2 also works where you only have cellular, so you always get through.
Line2 offers call waiting and conference calling. Businesslike compared to Skype’s approach.
Line2’s SMS texting capabilities work in both directions, and come with your phone number as caller ID. iSkype’s don’t (without extra payment and an online number).
“Never miss an incoming call. Skype does this through call forwarding when no data connection is available. Although Google Voice supports simulring, to receive calls you must have cell reception or access to a landline.”
“Look more important and professional. Line2 includes business calling features like call waiting, transfer and conference, an optional auto-attendant (Toktumi Unlimited), and no branding, advertising, or other announcements.”
“Free number porting – move your existing number.”
Yet when you talk to Skype’s leadership, they are all about the video. These types of apps are not especially interesting when a new frontier of video calling, messaging, conferencing and collaboration lies ahead.
Irrawaddy reportsBurma’s Myanmar Posts and Telecommunication (MPT) ordered a stop to competitive over-the-top services. From the order: “The increasing use of the VoIP overseas calls via the Internet services such as Skype, G [Google] Talk, Pfingo, VZO, etc. given by PACs [Public Access Centers] and cyber cafés have caused official overseas calls through the [junta's] communication services to decline, affecting state revenue.” The real target seems to be Singapore’s StarHubPfingo, hugely popular for talking with Burmese expats via email, IM, and voice on PCs and mobiles.
Salesforce spent millions launching Chatter.com on yesterday’s Super Bowl. This video is Yammer’s prepared response. Yammer argues Chatter is where Yammer was two years’ ago, when Salesforce CEO Marc Benioff praised Yammer at the September 2008 TechCrunch50 unveiling. The newly public Chatter offers the same things now Yammer offered then. To the tune of “Copycat”, Yammer says it spent the last three years “developing, creating, growing, organizing, learning, enhancing, inventing, evolving, influencing, stimulating;” building new applications, new enterprise features (“virtual firewall, two-factor authentication, custom branding, custom usage policy, Active Directory sync, SharePoint integration, keyboard monitoring, multiple domains, data export”), and serves 100,000 companies (including eBay, Skype’s partial owner) and two million “passionate users.” That’s 20 users per company, for you doing the math at home.
Let’s hear what Chatter.com has to say about the comparison.
More interestingly:
Let’s contrast the ability of both companies to bring higher levels of excitement, engagement, platforming, and adoption to workplace communication and collaboration.
Let’s see to what degree they bring live, realtime communication (voice and video, simulation and immersion, mobile and augmented reality) to collaboration.
If Salesforce made a Skype for intranets, it would look like Chatter. We’ll talk more about it in the days to come but here are some of their television commercials which aired during halftime at Super Bowl 45. The style is fun and enthusiastic. And, like Skype, Salesforce loves the blue skies, clouds, and rounded sans serif typefaces visual identity.
His departure is bad for Skype, bad for Microsoft, and bad for Skype’s users. This is good for rivals who understand github culture, developer programs, cloud operations, and API business strategy. Here’s why:
Phil Wolff designs and positions realtime collaboration products for effective people. Phil advises the Personal Data Ecosystem Consortium and is a director of the DataPortability Project. Email editor@skypejournal.com, Skype evanwolf, tweet @evanwolf, G+ or call +1-510-444-8234 to talk with Phil. Skype Journalis independent of Skype.
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