Welcome to 2012 where Skype is joining Microsoft’s management culture. If we hearken back a few years, was politics one of the problems Skype had with eBay?
Skype in early 2005 was a mostly European team. They held what Americans would call liberal cultural values. Once sold to eBay, they tried to work with an eBay management team overtly embracing a conservative value system.
eBay’s management team strongly supported the US Republican party when they bought Skype in 2005 and in the years leading up to Meg Whitman’s support for 2008 GOP presidential and local elections and her 2010 run for California governor. Meg personally held eBay town hall meetings for eBay sellers across America, pressing the flesh and honing her retail political skills before declaring her candidacy. Much of eBay’s language invoked the rhetoric of populist and free market capitalism, rugged individualism, and small hands-off government. Meg and her management team donated heavily to Republican candidates, institutions and causes and many left in 2009 to work on her campaign.
In contrast, Skype avoided politics. Its lawyers were wary of telecom regulators. Its leadership was conscious that local politics didn’t fit its transnational scope and worldly staff. If anything, Skype started off embracing non-partisan geek culture, with an anti-establishment (“we’re taking on the phone companies”) and universal populism (“talk to the world for free”).
I don’t want to overstate the differences. Both teams cared about success, both spoke business, self-identified as leaders.
Yet something went wrong.
Skype was never properly integrated with eBay. I look to Whitman’s narrow charge to Skype’s founders and the technology myopia that followed. As part of the purchase, Whitman dangled a billion dollar payout to the founders if they met a few hard-to-meet goals relating to adoption, activity and revenue. The founders reacted by stifling all business and development activity that didn’t directly and quickly support those goals.
A side effect: strategic Skype technology was proposed but never seriously funded. If you want to integrate realtime conversation into eBay and PayPal experiences you need web services like cloud platforms for non-Skype developers. Skype desktop integration would never work in an environment where more than half of all eBay transactions passed through third-party applications. Had Skype had been thoroughly blended into the eBay buyer and seller experiences, would eBay have sold Skype?
Aside from executives desperate to make their gigadollar payday, eBay did little to promote integration. In fact, integration and synergy, while promised to eBay’s investors, was never a priority. eBay never appointed a VP, director, or even a manager to oversee their side of Skype integration.
With Skype’s third sale, (first being to VCs, second being to eBay), management was free from eBay culture but had private equity culture imposed. Politics wasn’t in the air; just decisiveness in preparation for sale.
And now Skype is at Microsoft, a company whose management is relatively quiet about politics, whose expedient corporate giving supports incumbents, and whose memories of painful encounters with the US Justice Department and many European regulatory bodies left a bitter caution for even talking politics.
Will Skype and Microsoft blend well? Do they share common geek and corporate values over more partisan and nationalistic ones? What core differences in world view could keep them from partnering well together? Could Skype be better off in the dynamic, rapidly growing entertainment division where radical innovation is ordinary or in one of the slow, staid and stable divisions where Skype might shine by contrast?
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?
I consulted with companies wanting to compete with Skype. Some, like Yahoo!, wanted to understand Skype’s technology and APIs so they could match it. Large telcos wanted a map of Skype’s ecosystem. Startups wanted to position themselves against Skype’s brand to secure funding. That’s mostly over.
Skype is much less interesting now.
Skype remains powerful, racing to keep up with growth and scale and new opportunities. But the Skype Stuart Henshall, Bill Campbell and I blogged about from launch in 2003 to eBay’s purchase in 2005 is only vaguely like today’s organization.
Skype is a top dog, not an underdog. Direct rivals all walked away from trying to beat Skype, looking now to coexist or even partner.
Skype is one-sixtieth of the Microsoft behemoth, its story chained to a broader narrative.
Skype is less unique, with hundreds of companies delivering high quality talk and conferencing services over mobile and internet connections.
Skype didn’t look innovative in 2011. Or 2010. Or 2009. Or 2008. The core products haven’t changed much. Nobody expects Skype to produce startling breakthroughs in 2012.
Skype staff don’t talk to the public. A wall of corporate silence sanitizes their conversations; Wall Street banks have more open bloggers.
Skype abandoned its revolutionary People’s Product identity, where it was destined to radically disrupt phone companies. It worked hard to become a GlobalConsumerBrand telco, just like all the other phone telecoms.
Skype is clearly pleased with being boring.
Skype should end 2011 with about a thousand employees, about a billion dollars in sales, a portfolio of more than a dozen clients and a few platform products, and hundreds of millions of users.
Most of Skype’s work in 2012 will be more of the same. Getting new users. Holding onto existing users. Inducing users to Skype more. Putting Skype on more devices. Keeping the network running. Boosting ARPU. Diversifying revenue.
Boring stuff.
Blogworthy only for investors, partners and direct competitors.
“A skypes B” was the non-M&A news story of 2011. Soldier with family. Classroom with sick student. President with campaigners. Orangutan to orangutan. The same generic story of people using Skype instead of a telephone.
Stories we didn’t see in 2011:
No new patents filed (they did file, but didn’t tell that story).
No jaw dropping technologies (Skype continues to invest in anti-POTS technology but doesn’t tell that story).
No shareworthy user experiences (Skype had a “hangouts” feature before Google but never told that story).
Skype keeps its product innovation stream burbling underground, submerged, hidden. It’s hard and useful stuff, improving Skype’s plumbing and availability. But users just don’t see it.
Skype is no longer a revolutionary or disruptive brand. Can Skype inspire again? Capture passion? Define a moral conviction for users to love and support? Should Skype try?
UK’s OFCOM drags it’s heels on mobile net neutrality, leaving Skype users banned by many mobile operators. Same in other European markets. Jonathan Browning interviewed Skype’s Jean-Jacques Sahel, head of European regulatory affairs at Skype.
I met a bunch of people at the Enterprise 2.0 conference who don’t use Skype, more who only use it for family video calls, a few who use it for international calls, and several who’ve never been interested enough to try it. It reminds me that, with roughly 180 million active users worldwide and likely only 30 million active in the US and Canada, Skype has a greenfield of more than 200 million North Americans who aren’t using Skype. Building market reach looks like an important strategic goal through 2015. Skype’s net adoption rates (adoption less abandonment) have been large but linear. How will Skype redesign their products and rebalance their portfolio so net adoption rates accelerate?
New rumors iChat may come to iOS. So far it looks like IM, not voice or video. I’d be more interested f iChat came to operating systems outside the Apple universe.
Pre-flight check in at Sheremetyevo International Airport over Skype. @svo_skype connects you to an operator for an interview, like a video call CAPTCHA. News release: Now for “flights operated by Air Astana, Royal Air Maroc, China Eastern Airlines, Estonian Air, Hainan Airlines, Hong Kong Airlines, Iran Air, Jat Airways, Turkish Airlines, Transaero Airlines, Aerosvit, Ariana Afgan Airlines, Belavia , Dniproavia, Donbasaero, Nord Wind, Oren Air, Air Algerie” although Aeroflot hasn’t committed. Yet.
Skype pays musicians to sing Happy Birthday to your friends in their Say It With Skype Facebook app. All the flavors are great but I like The Parlotones’ cover.
New betas: Skype 5.4 Beta for Mac and Skype 5.7 Beta for Windows, both approaching feature parity, both now with group screen sharing for Premium subscribers. You can IM and video call Facebook friends from within Skype, although this does not include voice calls (unless you unplug your webcam), conference calls or group video calls. Jonathan Rosenberg explains Skype is hosting supernodes on AWS EC2, is operating a gateway for Facebook identity/directory interop, the calls are flowing p2p through the Skype network, and Facebook is keeping some records about users and their activity. Darrell Etherington thinks this could make Skype even more popular, and Skype should integrate Facebook into Skype’s mobile and tablet apps. Skype promotional video for the release (QuickTime).
Sync contacts. Not just import, but synchronization. Keep my contacts fresh. TO DO.
Sync user profile data. My Skype profile is shallow and often stale. Sync my profile data semi-automatically: “Do you approve this update?” TO DO.
Sync availability. Online, Offline, Busy, In A Call, Do Not Disturb. Facebook has some presence indicators too, from their own chat and from their mobile clients. TO DO.
Sync currency. What’s the exchange rate between Facebook credits and Skype credits? Let me pay for a long distance SkypeOut call with Facebook credits. TO DO.
Facebook updates in the Skype contact list. Give me fresher social objects for talking with my contacts. Make it easier to sort contacts by the last time they updated, not just by alpha or the last time they talked with you. DONE.
Skype history in Facebook’s timeline. Show my friends’ Skype history with me in my Facebook updates. Make it easier to dive back into a Skype conversation from the timeline. TO DO.
Sync personas. Skype is already asking people to create multiple personas, so they log in with one ID for each job and another for home. Facebook will probably offer something similar so you can choose to keep your professional friends from learning too much about your hobbies and dating habits. Skype and Facebook will negotiate the data models and privacy policies that go with it. TO DO.
People search. For all the importance of the Global Index to Skype’s operations, the real value is being able to find the right person to talk with. Both parties could do well to blend their search technologies to improve result relevancy and speed. TO DO.
People recommendations. Skype can’t suggest people you might like or people you might know. Facebook can, so build recommendations into Skype. Skype has very specific data about times of day and places you call from and call to, which Facebook could use to improve recommendations. TO DO.
Events and scheduling. One of the best social objects is an event. Before the call or chat we often plan and invite and schedule our talk. Skype should integrate with personal calendars and with public and semi-public event listings. Facebook’s have taken off as one of the top event directories along with Eventful and Upcoming. TO DO.
Chat interop. My facebook friend chatting with me on facebook while I’m in my Skype chat. We each get the medium we choose. Lots of things to work out including persistence, behavior for adding people to a chat, privacy rules, encryption, archiving policy. STARTED.
Groups sync. Facebook lists and groups should sync up with my Skype contact lists. Define once, update everywhere, always fresh.
Voice enable facebook chat. TO DO.
Video enable facebook chat. STARTED (No group video, no screensharing).
Advertising exchange. Skype has a small but rapidly growing yellow pages business directory, the better for prospects to Skype and SkypeOut your salespeople. Faceskype can cross-sell ads, offer buy-once-and-show-up-everywhere campaigns, improve the sociability and relevance of Skype client ads, offer click-to-call features to Facebook advertisers, etc. TO DO.
Location check-in sync. Start showing my Facebook Places check-ins in my Skype history and offer to let me check into Facebook Places using mobile Skype. TO DO.
Workplace editions. Is Facebook’s Yammer-killer just a rumor? Skype is committing to the enterprise too, so both teams should be imagining together. TO DO.
Comcast briefed GigaOm on their new Skype product (720p@30fps webcam, RF remote control, adapter box with HDMI) and an app designed for television, coming early next year. Some integration with your Comcast account for importing contacts. Skype will only partner with Comcast for the next few years, so too bad if you are one of the 81% of customers served by other ISPs. You’ll have to buy a television with Skype inside or dedicate a computer to running Skype on your television.
Licensed family counseling and psychotherapy over Skype. The BC practice says “the new virtual service removes the factor of geographical proximity, and caters to clients who find traditional settings limiting.” Don’t miss your session because you’re in a small town or far from home.
Skype’s stock changes hands. Sometime soon employees may get new badges. Payroll processing and PR firms may change. But, for the most part, Skype’s employees will stay the course, building more Skype in more places.
Skype division President Tony Bates must make good on his promise of synergy to Ballmer.
The first step is to build up the team that treats the rest of Microsoft as major account customers. Each division and many Microsoft product lines will get their own account manager.
They will be responsible for helping the Entertainment division, for example, bring Skype to Xbox Kinect. This is a “Skype inside” approach, building on Skype’s platform products.
Bundling Skype with Microsoft products is the low-hanging fruit. Preinstalled in Windows. An IE toolbar. A home presence on Windows Phone. One more element in Microsoft Office. Low integration cost, low product risk, massive distribution.
These two strategies will change the Skype Division and the Skype products more than the change in owners. Skype will be learning from users and customers indirectly, through the lens of Microsoft’s divisions. So Skype must hold on to end-customer relationships to keep understanding new users. Microsoft will pull Skype in even more directions, with multiple conflicting world views. Skype will learn to hold its own world view and mission.
The coolest things will be the small leaks. Microsoft has great depth of process, experience with scale, reach in the workplace, research on the frontiers of computing. Those will spark deeper insights and innovation at Skype and those will be delightful to watch.
For those still working at Skype, congratulations on the new chapter in the Skype story.
UPDATE: WHOOPS! Financial Times says EU Commission will approve deal, no strings. I guess it still managed to slip through. “Competition reviews are still under way in Russia, Ukraine, Serbia and Taiwan.”
Less than 100 hours from Europe ruling on the Microsoft-Skype purchase, Skype’s Jean-Jacques Sahel shareda Plum report on the economic value of an “open Internet.” (pdf). It’s an argument for net neutrality, including mobile net neutrality. Sahel’s post is Skype asking regulators to protect Skype’s access to the Internet from companies with the power to harm that access. I believe in net neutrality too. Skype wants government protection from powerful carriers but is struggling to avoid similar obligations of access, openness, and giving back as it finds its own power.
Decentralization of power was at the heart of the Internet’s design and architecture so the net would survive a nuclear attack. "Network neutrality" is a way of repeating that principle. It is unhealthy for the Internet when companies further down the IP stack exploit their power and play favorites among users from higher up the stack.
They are willing to disrupt landline and mobile operators, but unwilling to enable public services like e911, fund relay services for the hearing or vision impaired, or contribute to funds for improving Internet access.
They are eager to distribute Skype by bundling software with Microsoft products, but are unwilling to do so in a way that offers a level playing field to rivals.
They are open to API integration with friends of Microsoft like Facebook and, presumably, Microsoft’s divisions, but they burden their developer program and APIs with untenable terms of service, prohibiting use of their network by use, location, and device and requiring prior approval of any app using their network.
A measure of oversight, ensuring responsible use of power, is fully within the mandate of those approving the acquisition.
Some, like my friend Jim Courtney, worry the EU has been ineffective, citing their failure to protect Netscape from Microsoft’s Internet Explorer in the late 1990s browser wars. Maybe.
Ben Lilienthal suggests switching costs are lower with Skype, so their power may not be as absolute. Sure, but Skype is not a personal data portability champion.
Many want Skype to play fair. Alon Cohen IM’d he’d want Skype to “Support 911, collect and pay taxes like everyone else, or stop offering PSTN phone numbers. (Gov can remove the taxes, which will be just as fine from my perspective). Open up to SIP, provide every Skype with a phone number or URI accessible to other companies..”
So what does Skype’s post, “The open Internet: platform for growth. The open Internet is an essential platform for growth and benefits for all, including telecom operators: it has to be safeguarded” really mean? Regulate Skype and it will cost jobs. Really?
Here’s what the Europe could do:
Have Skype be a fair platform provider, enable third-parties to plug their own software and hardware into the Skype network, preserve consumer choice, support citizen safety like other phone companies, let your users leave with their phone numbers and data, support local and regional consumer rights, tilt the balance toward personal power over state power in this transnational Internet, and collect taxes. Specifically, quoting from my earlier post:
Microsoft must expose to the developer community all those plumbing features that make the Skype network so effective on the same basis that Skype and the Microsoft app developers receive access.
Divide Skype departments between the communications infrastructure and the app layer. Make them operate as two separate businesses.
Compel the Skype Network business to treat all customers at least as well as it treats Microsoft and Skype Apps Division customers.
Mandate “platform network neutrality” where bits from third-party apps travel through Skype’s network as well as bits from Skype’s own apps.
Skype must publish protocols so anyone can connect whatever software or service they like to Skype’s network so long as that end point doesn’t harm the network.
Skype cannot tax, register or otherwise control end users or third-parties connecting to the network.
Require compliance with emergency service access laws and rules, subject to user opt-out and local law.
Promote comparable third-party communication products on Microsoft platforms as least as well as you promote Skype.
Prohibit restrictions on bundling third-party Skype-compatible products with Microsoft products.
Require compliance with emergency service access laws and rules, subject to user opt-out and local law.
Skype must accept the transfer of a customer’s existing phone numbers to Skype’s service.
Skype must enable customers to transfer of a Skype-connected phone number to a competing network.
Skype should not be allowed to take away company phone numbers once in service.
Skype must let third-parties extract all customer created and co-created data on behalf of users.
Forbid Skype from banning “class action” suits by customers in its terms of service.
Compel Skype to report statistics on government requests by type and country of origin, the way Google does.
Compel Skype to promptly notify users when they are being surveilled or requests for information about their activities have been demanded by authorities. This should be subject to the laws of the country where the customer claims citizenship. So a US or Chinese government agency could not order Microsoft to spy on the conversations of a French and German national without the consent of the French and German governments.
Require that Skype APIs and clients disclose to users the jurisdictions of their contacts. You can only make informed choices about whom to talk to or not, what to say or not, if you can assess the consequences.
Compel Skype to collect fees and taxes from its customers as required of telephone operators. At a minimum, contribute to the fund that pays for relay services for the deaf and blind.
It’s time for Skype to step up.
Corporate citizenship comes with benefits. This is a rare moment to review, renew, revise and modernize the duties that come with that privilege. The United States missed its moment. Will Europe seize theirs?
Skype was all promise in 2003. Now it is achievement. They are no longer the tiny underdog fighting the phone companies. They are a billion dollar a year business with a thousand employees serving nearly two hundred million people 255 billion of minutes of live conversation every year, rounding slightly. They’ve pulled so much hard currency from national phone companies that Russia’s Chamber of Commerce declared Skype an enemy of the state. They’ve changed consumer behavior and become the default way to talk across borders for anyone with Internet access.
When should regulators consider this a threat?
Now, when an ounce of prevention matters most.
Microsoft wants to multiply Skype’s reach and impact. Microsoft seeks to combine Skype with its other communications properties and bring realtime communication to its non-communication products. Skype, along with Nokia, completes Microsoft’s vision for the Windows Phone operating system. We’ll see Skype inside Microsoft games, Lync business phones, Bing click-and-call adverts, Dynamics call center solutions, Office, Internet Explorer and Internet Explorer.
As huge as Skype is, they could be ten times bigger in a few years with Microsoft’s help. $10B in revenue, 2 billion users, trillions of minutes of live conversation. That comes with market power.
US regulators cleared the deal. A decision by EU authorities is days away.
Who is affected?
At least one Italian VoIP company is reported opposing the deal, per EurActiv. Messagenet asked the authorities to require Microsoft not to bundle Skype with Windows and to compel interop with other Internet presence, IM, telephony, and video chat services.
OPSWAT reported market share of installed Windows instant messenger apps for 2011Q2 (pdf). With Windows Live Messenger at 40.67% and Skype at 27.39%, that would put Microsoft’s post-acquisition share of the desktop side of the market north of 68%. Should this affect the EC’s merger approval? Does this market consolidation justify anti-trust restrictions?
The report is incomplete on a few fronts.
OPSWAT’s data source is specific to Windows desktops. So it leaves out web IM services like Google Talk, Mac clients like iChat, tablet apps like Skype for iPad and mobile IM clients like Skype for Android.
It also wouldn’t register the millions of Facebook chat browser extensions connecting to the Skype network, newly released since the report.
Microsoft’s other IM clients – MSN Messenger and Office Communicator – are not listed at all. Defunct or not reported?
The measurements appear to be biased toward Europe and the Americas since products like Tencent’s QQ, with roughly four times Skype’s active user base, are dramatically undercounted.
Ignore nuance: Just look at that huge block of red. Roughly two out of three IM clients will be Microsoft’s. What does that mean for consumers? To competitors?
Does the desktop IM market still matter? Yes.
Desktop IM has been Skype’s gateway drug for eight years. It was the most straightforward way to bring friends in to your contact list and download the codecs and other software needed for voice and video. Ringing, alerting and other attention-grabbers make realtime desktop apps successful.
That is changing. Standalone desktop IM apps will lose share over the next three years to browser, tablet and mobile apps. HTML5 and WebRTC are becoming real and platform makers are baking live calling into browsers and operating systems.
For now, desktops remain how most people IM most of the time. And Microsoft will soon own that market.
Jim Courtney has a complete report on the European Commission’s review of the merger. News early next month but Jim works through how they’ll get there. Think the Commish will call for public comment? Is Microskype good for telecoms competition in Europe? What do Europe’s big telcos have to say? Is Skype a bigger threat on its own or with Microsoft’s backing?
Dear Dan Primack, thanks for further explaining how Skype employees and alumni can be screwed when it comes to the Microsoft payday. And your conclusion that “Skype and Silver Lake were petty and vindictive” would be on the mark except that is supposes emotional engagement.
Dear Brian, “You’ve got to be in it to win it.” A sports metaphor? A lottery tag-line? Really? That’s the best excuse Skype could gin up?
Dear Jackson Diamond, Are you hiring? Unionizing? You urged “The rest of the Skype employees who are about to get screwed out of their paychecks should leave and take the company with them. Anything short of unified action is a failure. Anybody that stays behind at Skype will never work at any business I run in the future, because they’re pretty much useless parasites if they don’t act.” via the BusinessWeek article.
These execs don’t want to work at Microsoft? Not true. Most of those laid off were taken by surprise, and assumed they were at least part of the Microskype transition. Those I’ve checked in with were ready to dive into partnering and integrating with Microsoft, taking Skype to a new level.
These execs wouldn’t fit in at Microsoft? No. Gurlé was a Microsoft alum. And they just need to fit in at Skype.
Performance below expectations? Possible in some cases but this didn’t apply to many. Some, like Americas GM Don Albert, were pulling enormous wins with few resources against strong adversaries. Others, like Skype for Enterprise GM David Gurlé, had only received their first real headcount in 2011Q1. Campa and Sunkara had just joined the company.
Tony wants his own team. These team members were at Skype before Tony Bates took the job last fall, with the exception of the Qik team. The Board and previous CEO Josh Silverman picked the newest; the rest came under earlier Skype leadership. Has Bates been recruiting leaders who fit better with his communication and leadership styles? Is there a long list of candidates from Microsoft’s bench?
Microsoft has better teams/talent in those departments. Imagine an IM backchannel at Microsoft where leaders question why Skype should have its own regional distribution channel, its own business account execs, its own telco relationship team. Imagine a conversation about leveraging large and proven Microsoft resources. Imagine a RIF list. This looks like the first serious reason. Let’s line up the jobs and see.
Gurlé. SMB and large enterprise products and sales. Microsoft’s enterprise teams sell Windows, Office, networking products, collaboration tools, phone systems, and accounting software. Their customer relationships took years to develop and bring in billions from around the world. Better, faster to add Skype’s products to their portfolio than to maintain a separate sales arm. Gaps to Fill: 1. Skype will need to set up corporate sales support (marketers, analysts, specialists) and large account customer service functions. 2. SMB self-service and channel-partner support. 3. Fearless product innovation to make Skype invaluable in the workplace and the muscle to move it through engineering.
Dean. Corporate development, partnerships, alliances. I really haven’t followed how Microsoft operates in this area. The overlap theory may not apply to Christopher Dean.
Shaw, Sunkara. Mobile telecom products and partnerships. Microsoft has its own phone company, selling the Phone operating system to handset makers and carriers. Their partner-relations team has a better history of getting cooperation from wireless operators than Skype, seen as a competitor until recently. Gaps: 1. Skype needs visionary and inspiring product leadership in mobile, Augmented Reality, and gestural interface apps. 2.
Albert, Bewsher, Campa. Distribution, marketing, and advertising. Whatever they accomplished at Skype or Qik, Microsoft has massive operations in place with one of the largest advertising and promotion budgets in the software industry.
Gillespie. Human resources. Gillespie completely rejuvenated Skype’s recruiting sites, advertising, promotions and put Skype Palo Alto on the path to add nearly 500 more employees this year. This in an intensely competitive climate for Silicon Valley engineering talent. Yet Microsoft has one of the largest HR organizations in all of IT.
These roles will shift from building and running Skype teams to persuading Microsoft’s other divisions and headquarters services to serve Skype’s mission.
This leaves us with…
Investors want their stock back.Bloomberg interviewed an analyst who speculated preemptive firing was motivated by Skype’s investors wanting to get stock back from employees before the deal goes through.
There’s a kind of employee stock purchase agreement loophole which permits company owners to buy back stock from non-executive employees at a low fixed price before a merger or acquisition. All the appreciation in company value moves back from employees to investors. This kind of buy-back was rumored (reported?) when Steve Jobs sold NeXT, Inc. to Apple in December 1996. It shocked and surprised NeXT’s hard working, sweat-equity employees.
That event is why nearly all Silicon Valley employment agreements comes with a clause protecting from take-backs, even when they fire you.
Did this happen here?
I haven’t checked the few executive agreements on file with the SEC but I recall several of the departing have clauses protecting them from missing out on the payout from fully vested stock and options. Those who don’t have strong contractual protection are negotiating. Pick your jurisdiction. Bring your lawyer.
Is it about to happen to other employees?
I’ve seen no evidence to support this at Skype. Yet. While Silver Lake’s self-interest remains, getting back the small stock and options issued to non-executive staff may be less of an issue to investors than avoiding new litigation, more bad press, the defection of key employees and endangering partner relationships. Again, stay tuned.
Would Skype’s investors really try to screw hardworking Skype employees?
In a heartbeat.
Why now?
The no-engineers-fired mix suggests pre-alignment. Timing favors the “Investors want their stock back” theory.
See also:
setteB.IT: “Strange coincidence when a new owner begins to take possession of his new conquest, and at the same time, some executives go away.”
Om Malik: “Skype cuts senior executives. Why?” (originally subtitled “Smart or just crazy?)
Electronista: “the cuts are unlikely to assuage fears that Microsoft may reshape Skype in a way that hurts non-Windows platforms or Skype itself. Losing Shaw may be one of the deeper hits as Microsoft has historically had difficulty making strong deals with carriers.”
I’m an active Google office user. Gmail, calendar and docs are where I live and collaborate; as much as in Skype. Gcal keeps innovating ways to be useful before a Skype call. Reminders on my iPhone. Meeting invitations from Gcal and then from within Gmail edits. And now open office hours. I like the office hours concept where you state your availability and let others pick a time which suits them. I’m a huge fan of the Ohours.org service which pioneered an open marketplace for finding relevant people available for quick 15 minute Skype talks with qualified strangers. I’ve had productive chats via Ohours. Google’s “appointment slots” assumes you’ll take care of the introductions; each calendar has a slot sign-up page. This should be great for working with teams and outside partners. It skips the whole scheduling dance.
More important for Skype product management, calendar scheduling and alerting come before a call. This is a behavioral trigger. Exactly how long before Google makes it easy to jump from an event notification right into a Google conference call? Easier than into a Skype call?
So on the hypothetical Microskype integration agenda: calendar integration. This should include Outlook (hire and buy out the Skylook team, already; glad to introduce you), Outlook Express, Exchange Server, Outlook for Macintosh, whatever calendaring comes to the Live web suite, and take a look at CRM and workflow calendaring in Dynamics.
Meanwhile, I have some times Friday afternoon. Book me.
Phil Wolff designs and positions realtime collaboration products, finds useful pivots, sees both both forests and trees. 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 Journal is independent of Skype.
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:
Join the Skype 6.X Text Chat Room