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…
Qik for iOS is now out in free and $2.99 versions. The three bucks buys you video editing, real-time effects, “HD quality” video, file sync to your camera roll. Both let you point and shoot live video, streaming to friends or the web, and live video calling. Jim Courtney and I tested Qik Video Connect’s presence this morning and neither of us could see if the other was online. If that’s the worst of things, this is a fabulous product. More testing to come. Product tour, Skypenews release, Qik blog post from last week updated with a link to the free version.
Jim Courtney calls. His video looks funny. He usually calls in hi-def.
And his head is extraordinarily big.
That’s what your head looks like at arm’s length.
Turns out he’s calling from his iPhone 4 at almost one in the morning.
He didn’t sound that great; nothing bad but not that SILK quality we usually get.
So I pulled up our stats.
Resolution was low: Jim sent 160×120 @ 30fps. Tiny size compared to 640×480 High Quality, and not nearly as nice as Apple’s FaceTime.
Codec: SILK_WB_3. Sample rates: e-16000, d-16000. So maybe we’re getting SILK processing but without any wideband audio. The audio is definitely going out over the data channel, like earlier Skype for iPhone apps.
Latency was great, about one tenth of a second for a round trip from greater Toronto where Jim lives to greater San Francisco where I do. You start noticing you’re not in the same room above that.
Then I spent an hour in bed with James Body. Starting about midnight my time, 8 in the morning in the UK. James is one of the driving forces behind Truphone.
I’d tried to use the new Skype on my iPhone 3GS but it crashed. First iSkype, then after retrying, my phone. Restarted the phone and everything works well but we’d moved on to me on Windows and James on his iPhone 4.
We caught up for an hour or so before his family got up, talking SMS arcana, Skype video quality, how Three benefits when kids use Skype feature phones while their parents don’t, and keeping an eye on his iPhone’s power dial. An hour of video calling used 40% of James’ phone’s full charge. That puts a crimp in using Skype for video calls while away from an outlet.
Now might be a great time to drop in to the Skype for iPhone forum on Skype.com. After you download the new Skype for iPhone 3.0. The video commercial, then the highlights, first look, screenshots and walkthroughs to follow.
From the iTunes site:
Improvements:
Make Skype to Skype video calls on Wi-Fi and 3G* (*Additional Data charges may apply)
Call Skype desktop users (Mac OS X or Windows) and other iPhone users.
Two-way video calls supported on iPhone 4, iPhone 3GS and iPod touch 4th gen.
Receive only video supported on iPad and iPod touch 3rd gen, with no camera.
Skype promised Skype-to-Skype calls will be free forever.
Forever comes September 2010 for Skype for iPhone users. Skype is defining mobile apps as a new class of service requiring a separate “mobile subscription.”
You can now make and receive Skype-to-Skype calls and call phones over 3G from your iPhone.
To get you started, we’re offering you free Skype-to-Skype calls over 3G until at least the end of August 2010. After that there’ll be a small monthly fee.
Remember, you can always make free Skype-to-Skype calls from a Wi-Fi hotspot.
Skype now says its app for iPhone and iPod touch comes with “Free Skype-to-Skype calls from any WiFi zone.” [My emphasis.] A new limit emerges.
This breaks Skype’s promise that Skype-to-Skype calls will always be free. The pledge is fundamental to Skype’s brand, to Skype’s freemium model, to the simplicity of trying Skype before buying premium services. No longer can you say “Skype-to-Skype is free.” Now add “except when…” and hope you get it right.
I appreciate Skype’s need to drive new subscriptions.
Breaking faith with your core brand promise is not the way.
Several features announced at the OS4 preview event affect Skype. Multitasking, location services, data encryption service, and a user alerting service. David answered a few questions by email.
Skype Journal: Now that two apps can be running at the same time, will OS4 let Skype expose its own APIs to third party Apple developers to build iPhone or iPad plug-ins? Are apps now allowed to talk with each other?
David Ponsford: Co-operation between 3rd party apps was not something that was discussed at the iPhone OS 4.0 preview by Apple.
Skype in the iPhone’s background, shown on a second status bar, at the top.
SJ: What does Apple’s encryption service add beyond what Skype for iPhone does now? Could there be efficiencies? Will OS4′s encryption protocols be compatible with Skype’s? Aside from encrypting Skype-to-Skype and Skype-to-Server communication, might they be used to increase the privacy of Skype data stored locally on an Apple mobile device?
DP: We are still evaluating Apple’s new enterprise features. All Skype-to-Skype communications are encrypted, as a matter of course. Our users’ privacy is of paramount importance to us.
SJ: Which of Skype’s features will be turned off when running in the background? Will Skype’s SILK codec be available during background calls?
DP: We are still evaluating all the new features available to us as part of the iPhone OS 4.0 developer preview that was released on Thursday. Early indications are that that Skype-to-Skype calls will still use the full capabilities of the SILK codec, even when they are in the background.
SJ: I haven’t seen any Skype alerts on the iPhone so far. Does Skype use the existing alert service? For which notifications? Will you change the types of alerts Skype uses to communicate with a user? The frequency?
DP: Thursday’s technology demo of iPhone OS 4.0, in which Skype participated, used the new local notification system to show that an incoming Skype call was happening.
SJ: Apple is creating stronger technical and experience design differences between the 3GS and earlier iPhones, the iPod Touch family, and the iPad. Will Skype need to offer different software for the platforms or will you be able to offer one OS4 app that adjusts to each device?
DP: It is too early for Skype to give a definitive answer on this specific point; however, it will be our goal to make a single download available to all iPhone users that want Skype, making it super simple to get Skype for your iPhone, with all the features available for it.
SJ: Now that location services are available to Skype through APIs, what will you consider before making it easy or automatic for users to pipe their location into their Skype’s presence?
DP: If Skype believes there is a significant benefit to our customers to offer location-based services, we will look at how these can be offered, while making sure that privacy and other customer experience issues are taken into account at the same time.
SJ: Skype on Verizon Android and Blackberry phones is promising betting integration with native address books. Do the OS4 APIs make it easier to offer similar sync, data population, and dialing features in Skype?
DP: Skype will be evaluating the new APIs available to all developers in order to understand what new features they offer us in order to create the best user experience possible for our users.
SJ: How did you wind up on stage in Cupertino?
DP: My dashing good looks, confusing accent and need to get Gold status on Virgin Atlantic…
Skype For Asterisk "is available to download now from Digium for $66 USD per concurrent call or from Digium Authorized Resellers and Distributors worldwide, and comes with 90 days of installation support from the time of purchase."
Om interviews Brad Garlinghouse, formerly the Yahoo! exec who owned Yahoo! Messenger, lately an in-house advisor at Silver Lake Partners (soon to own 50%+ of Skype), and soon to be president of AOL’s email and AIM service. Interop with Skype is on the table. Mmmmm, peanut butter!
Exabytes per month worldwide in our mobile broadband future. 1,000,000,000,000,000,000 bytes. How much will be people lifestreaming video? Skype video multicasting?
No-VoIP Clause (Wi-Fi tethered). Apple’s deal with AT&T (and presumably Apple’s other carrier partners) forces Apple to force Skype off of mobile networks for voice or video calls. So Skype can only make or take calls when connected to the Internet through Wi-Fi.
No background apps (no Skype dialtone). Apple’s iPhone OS prevents multiple apps from running. So I can only have Skype dialtone when it is in the foreground. You need Skype dialtone, connection to the Skype network, to share presence, to get chat updates, to receive Skype calls. When iPhone OS 3 launches at the Apple WWDC, this may get better.
No eye (no video). Apple doesn’t have a camera looking at the user. Needed for video calls.
So Skype for iPhone is less than what it could be. Will customer pressure change AT&T’s and Apple’s attitudes?
Over the past few years we have seen the evolution of several conversation communities, some simply employing instant messaging; others employing both instant messaging and voice. Skype is the primary example with its support of IM, voice and video as well as auxiliary features such as file sharing (and, as announced tonight, basic screen sharing) but we are also seeing these services diffuse into Google, via GTalk’s voice and chat capability, MSN Live via Live Messenger, and, in spite of its trying to define who they are, Yahoo.
Truphone is a mobile voice calling service that I have used for a couple of years from a Nokia N95-1; it became critical in a situation I encountered in Germany two years ago. I have liked both the quality of the voice calls as well as the user interface, especially its use of the device’s native address book for initiating a call. While they have had some hiccups with their recent product launches, Truphone has become the leader in providing low cost calling from the iPhone while breaking the carrier barrier via Apple’s App Store. I will soon be reporting on Truphone Anywhere for BlackBerry. Now, under recently appointed CEO Geraldine Wilson, Truphone is making a move to grow their user base rapidly by leveraging the user bases of other services.
This evening at the MacWorld Showstoppers event Truphone announced an enhanced Truphone for iPhone providing connectivity to these four conversation communities. Supporting both instant messaging and voice conversations, voice calls to, say, Skype contacts are free provided they go over a WiFi connection. Calls to these communities can also be made over a carrier’s 3G network, usually at the cost of a local call. In addition Truphone is providing access to Twitter as one additional messaging service accessible via Truphone’s iPhone application.
In my interview this evening with new Truphone CEO Geraldine Wilson, she pointed out:
Using Skype as an example, Truphone’s enhancements set up an appropriate Skype client on a Truphone gateway and complete the call to the Skype contact, taking advantage of Skype’s peer-to-peer architecture such that there are no resulting termination charges.
By introducing instant messaging, Truphone is recognizing the key role IM is taking on in IP-based conversations where a conversation may start over a chat session and migrate to a voice session if deemed appropriate.
Truphone sees the introduction of these enhancements as a key to building the Truphone user community; Truphone generates revenue through offering low cost calling to/from the landline and mobile PSTN network.
Truphone is looking at adding BlackBerry and Android to their supported platforms for this service over the next few months. Key here are devices that support an application store in order to make user access to these services simple and trivial.
To avoid high roaming charges it is recommended that Truphone for iPhone be used either over a WiFi connection anywhere worldwide but only over a user’s home country 3G carrier.
These new features go live on next Monday, January 12.
Some outstanding questions:
Given that the Truphone application needs to be active for conversations, how will this work when other applications are open? Currently if I have Truphone as the open application on my iPhone, I can receive free Truphone calls and my presence will be indicated to other Truphone for iPhone users if I am in their “Favorites” tab. However, if I am in another iPhone application, I cannot receive “free” Truphone calls over WiFi; nor is my presence indicated to others. I look forward to seeing how the enhanced Truphone handles Instant Messaging when Truphone is not the “open” application on the iPhone. This is where BlackBerry’s full multi-tasking capability is a major advantage over the iPhone.
Calling Skype contacts involves providing your SkypeID and password. What security is in place to maintain the confidentiality of this information. What other security aspects are compromised as a result of placing the calls via a connection to a gateway that supports the caller’s Skype client.
What is Skype’s reaction to having Truphone siphon off what could otherwise potentially be SkypeOut revenues while leveraging the Skype user base and using the “free” aspect of Skype? We know Skype is working to launch mobile phone applications, probably this week at CES. With iSkoot and the Skypephone on 3′s networks, as we learned at last year’s eComm 2008 iSkoot presentation, a portion of carrier revenues are shared between Skype and iSkoot.
A major step forward in making low cost calls worldwide, Truphone’s moves once again emphasize that WiFi is becoming an ever growing alternative connection option to making wireless calls. At the same time it will be interesting to see how the business model plays out in a world where the cost of voice calling continues to move towards zero.
If I ever had any doubt about the value of Twitter as a commercial social networking tool, it evaporated this weekend as a result of following some Tweets on the subject of smartphones that appeared this weekend. They certainly provide an independent perspective on issues that I’m sure others are wondering about:
Luca Filigheddu has just gone through the process of evaluating the BlackBerry Bold and iPhone over the past few weeks. Saturday he sent me a Twitter direct message to say that he had acquired a BlackBerry Bold; after he had had a few hours experience Saturday I see this on his Twitter feed:And when I came home yesterday evening I see that my acquaintance Olivier Chaine has put up this Tweet (earlier yesterday I had suggested, in response to his request for smartphone Twitter client recommendations, that he look at Slandr.Net as a mobile platform Twitter client):
First I would suggest that the mini-computer industry died many years ago, to be replaced by the microcomputer era, especially server banks. Trust me, I spent a major part of my career relying on mini-computers. I think I would need a backpack to be mobile with a mini-computer.
So I’ll assume Mark is really looking to have a mobile microcomputer or PC experience on a smartphone. Having had several months’ experience with both an iPhone and a BlackBerry Bold, here are my criteria for a mobile microcomputer or, more aptly, a “Laptop for the Hip or Purse”:
Minimum 480 x 320 graphics display.
Full QWERTY keyboard.
Web browser capable of supporting PC-type browsing.
Supports “Cut & Paste” (of significant value more often than one would initially imagine until it’s not available)
View and edit MS Office documents (Word, PowerPoint, Excel) with potential to add document creation.
Supports video recording and MMS
Background processing (especially after experiencing both Truphone for BlackBerry and Truphone for iPhone)
Supports true Instant Messaging in background while running other applications
Equipped for memory upgrades through a removable memory card.
Supports both Both WiFi and 3G wireless protocols
A great set of specifications but the key question here is: “How does it change the user experience?”. In particular does it eliminate the “urge” to turn on, or always carry, a laptop to keep up-to-date with real time activities?
As I have mentioned elsewhere, after a month’s experience with the BlackBerry Bold, I found I had lost that tugging “urge” to turn on my laptop for keeping current with real time (and often mission critical) information. This change did not just involve email and web browsing but also Instant Messaging, Twitter and attached document editing.. RIM would do well to position Bold as a “Laptop for the Hip or Purse”, bypassing all the technical comparisons and moving on to succinctly promoting Bold based on the actual user experience.
I like my iPhone for many of its personal information delivery features; it gives me a feel for what is appealing about the iPhone. I can find Toronto Transit streetcar times, do unit conversions, find the nearest Tim Horton’s or Starbucks; it has lots of great information delivery features. On the media side it’s definitely an extension of the iPod although it does not have the full audio performance of the Bold.
However, a mobile microcomputer the iPhone is NOT! Yes it uses a modified Mac OS; it uses Safari browser; it has an iPod variant.
However, I find myself turning to my Bold much more often than my iPhone for real two way interactivity. Just as important as the keyboard is the ability to track instant messaging sessions, whether on iSkoot (for Skype chat), Palringo or BlackBerry Messenger in background while carrying out other activities. On the subject of low cost international calling I find I can make much more use of Truphone for BlackBerry than Truphone for iPhone (that’s the subject of a future post).
I am encountering more and more acquaintances who have no use for a touch keyboard; certainly my typing error rate is much worse on the iPhone. For this reason alone I consider the iPhone to be a very good one-way information delivery device whereas BlackBerry is a true two-way communications device.
As for applications, suffice it to say that over the next six months, where feasible, business savvy developers will publish applications running on both devices. For instance, The Hockey News has just released mobile applications for both the BlackBerry and iPhone. I mentioned Truphone above; Mobile Google apps are another example.
Keeping up with iTunes music via BlackBerry MediaSync is a trivial operation. Frankly from some video and audio streaming experiences I have had, BlackBerry Bold provides superior stereo audio performance even without earbuds or a headset.
Bottom line: when I leave my home office or hotel room with my Bold, I no longer have to take my laptop to keep current.
Yes, at the moment, the iPhone browser a superior user experience but rest assured RIM is not ignoring the issue. At this point the Bold’s browser issues have sometimes been frustrating but they not been an inhibition to my browsing activities in any major way – I still get the information I am seeking. The critical parameter here is the 480 pixel display width, which is sufficient to view most websites and weblogs without the need for horizontal scrolling via a ribbon bar. When RIM releases carrier-specific versions of their upgraded operating system – including browser enhancements, the Bold will live up to its full potential as “A Laptop for the Hip or Purse”.
(As for pricing on Rogers, both the Bold and iPhone are C$199 with a three year contract.)
In future posts I’ll cover in more detail some of the issues mentioned above, including my Truphone evaluation on each device, some very amazing real time video and audio experiences, the range of third party applications available on each device and why both background processing and WiFi is becoming critical to any smartphone.
And, Mark, if you’re looking for a mobile microcomputer, I would suggest serious consideration of the BlackBerry Bold. As a final determinant, have a look at the Bold’s display – it’s been universally acclaimed as “stunning”; I can only agree.
In closing, can we expect Skype to include BlackBerry as one of their supported platforms for Skype for Mobile? Or will iSkoot improve on their user interface to take advantage of some new BlackBerry developer tools? (Most Skype executives I meet are sporting a BlackBerry – it’s supported by eBay IT.)
Update: Luca published a post this afternoon, A Bold New Experience, and asks about his Tweet above: “Why Did I Say That?”
1) Always on Experience: the BB is offering me a realtime always-on experience never found in any device I used before 2) Multitasking – It lets you receive IMs while writing an email or making a phone call, for example 3) Stunning display 4) Wide availability of apps 5) Crazy speed 6) Great usability
Truphone’s announcements last week overcame a significant carrier resistance barrier to using VoIP-enabled services to reduce international calling costs. The key secret here was that it required the combination of Truphone’s iPhone and iPod Touch applications along with the Apple Application program that leverages Apple’s established carrier relationships to break this barrier.On Friday I was finally able to complete provisioning of Truphone on my iPhone. It happened at this time for three reasons:
The association of my original Truphone number and account with a Nokia N95 handset and the “416″ number I eventually transferred to my iPhone whose acquisition as an upgrade on my carrier account minimize my iPhone costs over the term of the three year contract.
The original iPhone application only supported outbound calling; I would have lost the Truphone inbound calling feature I had on the N95.
For this reason I left Truphone on my N95 (using a deactivated SIM and my home office WiFi access point) pending the arrival of a Truphone for iPhone application and service that supported both inbound and outbound calling.
Recall also that the original Truphone for iPhone only allowed calls over WiFi access points with no ability to pass them through the underlying 3G wireless carrier. Truphone’s two announcements last week addressed three issues:
Over the course of the past week it has become possible to make low cost international calls from any iPhone or iPod Touch mobile device worldwide. Truphone has demonstrated how the underlying service provider can can eliminate the need to have a multitude of individual “carrier-service provider agreements” with the 79 carriers currently offering the iPhone worldwide. Yet carriers still benefit through increased local minutes used to provide the connection to/from Truphone calls. To quote from Ted Wallingford’s “Heartburn Chuckle: The telecom industry can blame itself”:
The Carriers
The carriers are firms like AT&T, Windstream, Verizon, BT, and so on. Their obsession with the billing unit (the almighty minute) has made them helpless to see the possibilities of a software-rich, application-based global ecosystem. Consequently, the most successful apps to arrive on the carriers’ networks, the ones most embraced by the public, overwhelmingly have one purpose: to steal billable minutes from the carriers. The innovation disappeared and the scrappy new players in the market, the ones with the power to transform the public’s thinking about telecom, instead got stuck doing the same old thing the big telecoms do to put bread on the table: bill minutes. [Author's italics]
It was the second part of this announcement that is most significant. Previously VoIP-enabled services, such as 3′s Skypephone, required working with individual carriers to establish the appropriate business and operating agreements. However, in one move, Truphone was able to leverage Apple’s relationships with 79 carriers worldwide to bring about commitment free international calling. Apple, through its Application Program has become a disintermediator, facilitating a business model disruption, once again.
In a future post, once I’ve had some more Truphone for iPhone experience, I’ll do a comparison of services available over Skype and over Truphone. But one obvious difference: Truphone is about voice conversations only; Skype is about voice and text conversations.
Over the past few years we have seen the evolution of several conversation communities, some simply employing instant messaging; others employing both instant messaging and voice. Skype is the primary example with its support of IM, voice and video as well as auxiliary features such as file sharing (and, as announced tonight, basic screen sharing) but we are also seeing these services diffuse into Google, via GTalk’s voice and chat capability, MSN Live via Live Messenger, and, in spite of its trying to define who they are, Yahoo.
Join the Skype 6.X Text Chat Room