Skype's All Business

Guest post by Dave Michels, Verge1 CEO, @DaveMichels

Want to know where enterprise UC is headed, take a look at Skype now. It seems counter-intuitive at first, but Skype is consistently ahead of the enterprise pack. Skype discovered IM before the enterprise, as well as softphones, presence, and desktop video. Skype has been a consumer service, but its impact on business is significant and growing.

Almost a year ago, when eBay declared its intention to host an IPO for Skype, I wrote the Case to Buy Skype. My logic was based on the fact that every voice communication equipment maker was working hard on desktop clients, presence, and telephony and what a great boost to absorb Skype's experience and user base. Skype is an usual solution, part carrier, part software, and increasingly (via partnerships) part hardware. EBay never got to an IPO with Skype, instead it spun it out and Silver Lake is now the majority owner. Silver Lake is also the majority owner of Avaya (and Nortel). My initial thought was Skype would be absorbed into Avaya, but I don't think so any more. Skype is becoming a very valuable brand in this Internet area of communications – and the company appears to be focused on rapid growth. Rumors of Avaya and Skype working closer together are strong, and such a partnership will likely result in strengthening both brands. It is unlikely the brands will be merged, but if they were it would be more likely Avaya (and Nortel) would be absorbed into Skype.

Skype is an amazing (free) service, amazing in its breadth, scope, and ability to monetize. The company is highly innovative and capturing a fair amount of attention at events such as last week's Mobile World Congress and the huge Consumer Electronics Show in January. Skype's service reach includes desktops around the globe, living rooms, mobile phones, and the board room. Skype-ready hardware devices include simple phones, televisions, cell phones, webcams, headsets, speaker saucers, and more (the PBX?). The service can be used for presence, audio calls, visual calls, and collaboration.

Skype's deal with Verizon last week at the Mobile World Congress shows how powerful Skype has become. Verizon and Skype made an exclusive agreement (sorry iPhone) to allow Verizon's smartphone users to access Skype over Verizon's 3G network with a new service called Skype Mobile. This is the first 3G calling plan with a mobile carrier's blessing to bypass calling plan minutes and Verizon's international calling rates. It serves as an admission by Verizon that VoIP is coming to wireless users (a voice plan is still required). But more telling is Verizon is using this as a way to differentiate and compete against AT&T and the iPhone. Andy Abramson describes the deal as a 'If you Can't Beat Them, Join Them' strategy by Verizon. Skype now represents 12% of international long distance traffic, and getting a slice of it is better than losing it all together.

As a consumer service, Skype has raised the expectations of corporate communications. Consumer services are supposed to be simple and limited when compared to enterprise class solutions. But at home with Skype, users connect with friends and relatives around the globe - visually and inexpensively. Incorporating Skype directly into the living room TV is a brilliant way to connect Grandma to her grandchildren. Not only is usage free, but it need only occur when both parties are at home (presence) and without overly complicated desktop computers. Can you do that with your customers and suppliers at the office? Possibly – but those ensuing conversations include words like "federation" and "H.323". Or just use Skype on the corporate PC (unless IT blocked it).

But Skype is not content with being labeled a consumer service. "Skype for Business" still sounds a bit out of place, but it's not. In fact, it is an established division of Skype recently headed by David Gurle. David reports directly to Skype President Josh Silverman and comes from Thomson Reuters where he migrated a messaging service into a collaboration service. Prior to that he headed (and created) Microsoft's Real Time Collaboration Group (NetMeeting, Windows Messenger, Exchange IM, Exchange Conferencing Server, Live Communications Server and Office Communications Server, as well as Microsoft’s acquisition of PlaceWare). In his first public UC appearance since hire, David will be a keynote speaker at the UC Expo in London on March 11.

It has been interesting to watch Skype's attempts to penetrate business mature. There was a solution with ActionTec called VoSKY which used a gateway to convert communications from Skype's packets to analog. This was a fairly simple solution, but it had issues with scalability and basic features. Scalability was a problem because it required PC type resources for just a few lines. Basic issues were a challenge because Skype does not support features like hunt groups, so it was best suited for outgoing calls. Then came a more comprehensive solution for Asterisk known as Skype For Asterisk. This Skype-to-SIP gateway offered the benefits of low-cost calling with Skype presence. It enabled users to make concurrent calls over one Skype account (from a desktop phone), transfer calls, and set/view status. Administration is done through a portal called the Skype BCP (Business Control Panel) where individual rights and prepaid balances are maintained. This solution was promising, but the Asterisk market isn't sufficient for Skype's appetite. Then came Skype For SIP. This solution requires much less custom integration and will be available to a large number of brands (initially certified for ShoreTel and Cisco). So far, it's just SIP trunking - no real integration to Skype's advanced features. The feature disparity between Skype for Asterisk and Skype for SIP is confusing. Matt Jordan, of Skype for Business, told me the disparities will be minimized and both will be rebranded as Skype Connect. Presumably, Skype Connect will be a SIP-based solution with various add-on modules for presence and potentially video.

Skype's influence over business communications is just beginning to be felt. It is increasingly used as a tool for direct communication and collaboration, and many enterprise communications vendors are beginning to see Skype (as Verizon did) more attractive as a partner than a competitor. Skype isn't just a communications network. It is a network of users that are pushing the capabilities of communication and collaboration. Skype is utilized around the world at the desktop (computer and phone), the living room, and the car – for audio, visual, and textual communications. Something few enterprise communications vendors can claim.

Reposted with permission from Unified Communication Strategies, an industry resource for enterprises, vendors, and system integrators

Phil Wolff's 67 Reckless Predictions for 2010

In 2010...

1. A hot stranger will IM something inappropriate to you.
2. Skype's SilverLakeification will be complete, with a very short leash on strategy and operations at first.
3. Skype will serve 125 billion minutes of calls.
4. Second Life will serve 20 billion minutes of calls.
5. Oprah's television show will end as scheduled in 2011; lots of Skype calls in 2010 leading to the finale as former guests make cameo appearances, holding out for a spot on Oprah's last (highest-rated-ever) episode.
6. "The Tyra Banks Show" will end as scheduled in 2010. Nobody will Skype in.
7. UK police will allege terrorists use Skype (like everyone else). Parliament will demand the PM bring Skype under control.
8. Skype 5.x will offer multiparty video.
9. Skype 5.x will offer team features.
10. Someone will attend a family funeral via Skype video. And forget they are on camera.
11. Skype will release a "naked Skype" public beta. This Skype engine, no user interface, will be free/cheap. Hardware developers will like it; web developers won't.
12. Skypecasts will still be offline.
13. Facebook will add voice to chat.
14. Skype for Business will account for ten percent of Skype sales.
15. Nortel changes its name to Avaya. Or avice aversa.
16. The world economy will continue to suck. An American commercial real estate crisis will reinvigorate the Great Recession. Good news for Skype as more people work from home.
17. 24's eighth season will feature Cisco's new midrange video conferencing.
18. Skype won't offer a "Login with Skype" service.
19. Vampires still won't Skype.
20. Tencent will buy ICQ for its non-China userbase. Skype won't.
21. Google Talk will add multiparty video with On2 inside, and become a standard part of the Google office suite.
22. Skypers post thousands of videos of Skype calls on YouTube, thanks to recording software. Jeremy Hague's Vodburner outpaces Pamela as the bestselling Skype add in.
23. The US student loan crisis ($700 billion outstanding) strains consumer lending.
24. Skype starts a post-SIP standards discussion about communications protocols for the 21st century.
25. Avaya will make Skype for SIP the default setting for new switches they sell.
26. Skype manages to get a television commercial on the air.
27. China's troubled economy will boost Skype usage when families can't afford to travel home for the Lunar New Year.
28. A team will talk for 200 hours in an uninterrupted Skype-to-Skype call.
29. Wi-Fi phones will ship with Skype SILK inside.
30. Six former Skype employees will become CxOs.
31. Someone dies, unable to Skype for emergency help.
32. You'll be able to make iSkype voice calls on Verizon 3G before AT&T 3G.
33. 100 handsets will run on Google's Android.
34. Skype will release their homemade COTTON video codec, so they don't have to use the ones from Google's On2. Higher quality. Easy, free license. Independence.
35. Skype.com still won't let you log in with OpenID.
36. Windows Live Messenger gets a huge boost in new user signups from Bing, Office2010, Office Live, and Windows 7. Microsoft will rock in 2010.
37. LG ships a television with Skype inside.
38. Mobiletelco 3 ships its third generation Skypephone.
39. An angry entertainer tweets to a million followers her PC crashed and lost all her Skype history. So she's switching to...
40. Skype opens a mobile research lab in India.
41. Gizmo5 features migrate to Google's plumbing and Google Voice.
42. A Harvard Business Review case will feature a Skype-related issue.
43. A Fortune 500 company (not eBay) will provide Skype for Windows for their employees.
44. Volunteers phonebank using Skype on behalf of a national EU political candidate's campaign's.
45. A lobbyist slips a Skype-hostile measure into a US law on behalf of incumbent telcos before Skype can muster opposition.
46. The Skype store will sell a netbook with Skype preinstalled.
47. The BigTelco industry pressures Nokia, so it never preinstalls Skype on its Series 60 line for the US market.
48. Skype relaunches its software platform developer program mid-year.
49. Skype's unreasonable Broadcast Terms of Service keeps it off new dramatic television programs and out of movies all year.
50. A court will find Skype guilty in a class action suit related to collecting small sums of money from customers but not offering service or prompt refunds.
51. Skype will offer to buy Tokbox for its browser-based video.
52. Skype revenue per minute called will continue rising from $0.06 as Skype trunking starts to contribute.
53. Skype will top $900 million in revenue.
54. Skype will sell small businesses pricing plans making it easy to budget and buy.
55. An IETF working group publishes avatar portability protocols.
56. 23 million people will log in to Skype at the same time.
57. 180 million new Skype accounts, about 500k daily.
58. Someone Skypes from a Virgin Galactic space flight.
59. Skype loses juicy US government contracts over the TOM-Skype security compromises. You don't know when someone you're talking with is using a TOM-Skype client with monitoring software from Chinese security agencies. An audit will show Skype on 500K federal employee computers anyway.
60. Skype relaunches Skype for Android. Android Skypers have more dialtone per user than the iPhone or Skype Lite.
61. Zombies become the new Vampires.
62. Tom Green Show's corps of Skyping fans will continue to Skype into the show while he is on the road with his new Standup Comedy Tour.
63. Skype-like features become generic, included in every communications and collaboration product shown at Demo, TechCrunch50, Telephony Startup Camp and similar product launchpads.
64. BT/Ribbit adds video support to its platform for programmers.
65. Voicemail to email transcription becomes a standard feature in most markets for mobile and home phone service.
66. United Nations rescue and recovery teams standardize on Skype.
67. Skype sponsors a Festivus site for the public "airing of grievances" and videos of your "Feats of Strength."

Hudson Barton predicts a 2010 peak of 27,695,335 Skype users online, Total "real users" will be 67,596,505.

What are your predictions? Can you do better? Prior years' predictions: Phil Wolff's 26 incriminating 2009 Skype Predictions, Phil Wolff's 37 Sketchy 2008 Skype Predictions, Predictions? Wish List? What's In Store for 2008 (Jim Courtney).

tags: skype, future, predictions

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private technologist roundtable, one of the longest running public Skype chats.

2009: The Year even Clooney lost out to Video Communications.

Guest post by Larry Lisser, the man behind the Telephony2Market blog, instigator of the first Startup Camp Telephony Edition (21 January 2010, Miami), and an Emerging Communications Conference alum. He's the go-to consultant for helping emerging communications startups position, package and get to market growth.

Recently, I made the obligatory trip to George Clooney's latest movie, 'Up in the Air.' Predictable results followed: Clooney played the same guy he often does and my wife was just happy to have watched his pretty face on the big screen for two hours. What I didn't expect was to see how central video communications was to the story line. This got me thinking.

There can be little debate that the year 2009 was the best yet for video communications. After years of false starts (i.e. before widespread broadband) and then a somewhat remarkably slow start even once its quality issues were no longer, video found its legs this year. Indicators of video's accelerating market momentum were everywhere, coming at us in the forms of mainstream media coverage, viral user base growth and of course M&A activity.

The acquisition roster proved to be the strongest evidence yet. By the time the year was done, we counted three buyers and four deals with bets aimed squarely on the future of video over IP communications. Grand total: in excess of $6B. No small bets by the buyers of Tandberg, Skype, LifeSize and SightSpeed (in order of transaction size).

Now back to Clooney. He played a hired grinch; someone who traveled the world every week to deliver pink slip news on behalf of his firm's corporate clients. Early in the plot, an upstart member of his own head office team tried to re-write his playbook though - and eliminate travel expenses - by introducing video as a means to fire people from afar.

Clooney pushed back (charmingly, of course), professing that what he did for a living required in-person communications and could not be done as effectively by camera. I'll let you discover the rest at the movies, but suffice to say that I came away with a few year-end revelations about video:

1. What we once thought to be the obvious and pervasive applications for video (i.e. travel replacement), may not end up being the ones that spur exponential growth. Think video as a component of a process and not just as an advanced form of communications.
2. The video enabled call center is coming. Actually, it's already here but few of us have experienced it real-time. Imagine for a moment the difference in empathy you and an agent might exchange during a heated customer service conversation about a canceled flight - if you were looking at each other.
3. I'm shifting terminology from 'Video-Conferencing' to 'Visual Communications'. The former has become too limiting. Conferencing implies just that, while visual communications can and will mean so much more.

So the year ends with bankers, end-users, the media and now Hollywood having told us that 2010 and beyond hold much more than just promise for video communications. As Andy Abramson put properly into context for us this week, if VoIP was the industry of the decade, the next ten year will belong to video over IP. Or Visual Communications, if you prefer.

tags: skype, video, trends, 2009, upintheairmovie, termination, firing

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
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UK broadband miles behind its counterparts

Guest post by Shahul Hameed, broadband analyst at VAC Media. Shahul reports on UK broadband provider performance, technologies, and markets for VAC's Broadband Suppliers site.

Will instant downloads ever happen here? Can we play online and watch videos without interruption? We have been expecting these changes with our UK broadband services a long time.

A recent study by Broadband Suppliers states our international peers, especially South Korea and Japan, are miles a head of the United Kingdom. Even though the UK ranks among the top thirty richest nations, the UK's telecommunication infrastructure is worse than rest of Europe and most of the countries in the world.

South Korea, for example, is the first country in the world to bring fiber optic cable connections to every school nationwide. Online games are a national event.

The maximum broadband speed offered in UK is 50 Mbps while the average monthly bill shoots up to 10 times higher than other countries. Expert analysis claims houses in most part of the country still connect to exchanges using old BT copper wires. Copper wires do not have better data carrying capacity compared to fiber optic cables. Moreover, the longer the wires are from the exchange, the slower the speed will be. The fiber optic cables have been laid in major cities while other parts of the country still wait for network expansion.

The Broadband Stakeholder Group (BSG) recently announced that the UK is worse on broadband penetration by standard measures. They also reported that one in every five users (21%) express dissatisfaction with broadband speeds. 16% are dissatisfied with the price of the plan and 13% with the reliability and performance of the connection. Almost 26% of customers say broadband providers set a wrong expectation about connection speed.

Some of the major factors affecting speeds include:

1. Line capacity of the ISP's
2. Cable quality
3. Distance between the residents and exchange

Awareness about the speed of the broadband is mixed. Many people are well informed about the factors affecting speed and choose the fastest ISP, while almost 40% are unaware of the head line speed. Broadband suppliers continue to mislead the public regarding download speeds and tag customers with higher prices. This was also reported and criticized by Ofcom this year.

The UK Government should speed up the process of laying fiber optic cables and increase the coverage of wireless networks. Else we will remain in the 26th position or fall further when it comes to the quality of broadband service in the world, while competitors like Japan and South Korea are future ready.

tags: uk, broadband, rok, southkorea

The rumored deal devalues Skype five percent

UPDATE: MORE TO COME.

The September 2009 deal valued Skype at $2.9 million. Post-deal, eBay would own 35%, Silverlake 50.6%, Canada Pension Plan (CPP) Investment Board 10.26%, Index Ventures Growth Fund 2.39%, Andreessen Horowitz 1.71%.

The new deal, as described by Kara Swisher, shuffles the percentages. Skype's founders get 10% of Skype in exchange for Joltid's intellectual property. (Does that mean the company? the software? permission to use the software? putting the software in the public domain FTW?). The founders can buy another 3% for $83 million cash. So 13% to the Z/F.

This means two things.

First, someone is giving 13% equity to Z/F. Beyond Index's 2.4%, where does the other 10.6% come from? Would the new investors devalue their stake? If eBay is paying off Z/F, they'll cut their ownership from 35% to 24.4%.

The rumored $83MM for 3% values Skype at $2.76 billion, discounted $157 million (5.4%) from the $2.92 billion when the deal was announced. Sweet for

No word if the investment is through Niklas Zennström's and Janus Friis's Atomico Ventures. Atomico's portfolio touches all around Skype without intruding. A maker of Bluetooth headsets, a Wi-Fi network that partnered with Skype, a phone speech-to-text service, a lifestreaming service, a payment service, a realtime conversation search engine, a live video streaming platform, an inbox relevance engine, a live video dating site. If nothing else, this shows Z/F understand Skype's adjacencies, markets Skype could enter or support.

tags: $skype, $ebay, Aliph, Fon, Heysan!, Jott, Kyte, Last.fm, mydeco, Seesmic, Technorati, TrialPay, Woome, Xobni

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
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Research Topics in Collaboration

I wanted to follow up on my Monday post about the importance of collaboration products to Skype's business strategy. The great thing about collaboration is that it is very hard. Collaboration is less a discipline than a catchall term. It's peopleware more than technology, anecdotes more than evidence. Universities have no Collaboration Studies department in schools of business, humanities, engineering, or medicine. Industry and governments study collaboration but produce narrow benefits, poorly shared.

Frankly, there's no Collaboration Science to inform the design of the next generation of tools like Skype.

Society needs it. The web needs it. I want to do it.

So what questions about collaborative behavior and collective productivity could investigations answer? Which avenues could radically improve the ability of live and time-shifted talk to become work effort? What collaboration patterns and social software designs can break down barriers and bridge teams and connect project stakeholders?

I made a list and called it Skype Journal - Research Topics in Collaboration (not attempting any creativity there). The research areas showed four themes:

• Talk is a component within larger relationships
• Talk systems are part of a larger interconnected network of information systems
• Work adds constraints that help focus conversation
• Collaboration as collective productivity

and the topics fell in three clusters:

• Getting Started (Ridiculously Easy Group Formation; Group Goal Forming; To Do Lists, Calendars, Personal Time Management, and Getting Things Done Together; Fame and Reputation)
• Being Better Together (Augmenting Inline Conversation; From Discovery to Action; Decision Making and Decision Support; Collaboration Afoot; Situational Awareness; How Collaborators Use Search and Personal/Collective memory; Gestures of Tomorrow)
• Crossing Boundaries (Intergroup Collaboration; Earning Trust and Using Whuffie; Collective Presence and Project Presence/ActivityStreams; Transparency and Collaboration; Backchannels; Scaling Collaboration from Tasks to Projects to Programmes)

It's a quick read, needs pictures and I consider this a rough, incomplete draft. The questions are a sample to get a feel for the space to be studied. 

How can we answer the questions? Research. Each topic is amenable to a different blend of usability testing, instrumented communication tools, prototyping, field ethnography of high function collaborative teams, and analysis of data from virtual teams.

I'd like to assemble a body of knowledge that turns our digital tin-cans-with-strings into engines of effectiveness.

Help me kick start this. (Yes, this is a bit self-referential.) What topics are missing? Prior art? Can this research occur in an open space or must it happen inside a corporate firewall? Of all the research topics, which ones are low-hanging fruit and which are harder to reach but outstanding value? Here's the pdf.

Skype Journal - Research Topics in Collaboration - 2009q4

 

 

 

tags: skype, microsoft, google, ge, collaboration, research, science

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Balancing power: Google v. AP, Yahoo! v. Geocities users, AT&T v. Skype

We try to be good to one another. Sometimes it's just about power.

The Associated Press newswire told search engines to pay for showing stories, or to stop showing them. [Ironic link above: AP story hosted on Google.] How quickly would AP enter bankruptcy if none of their stories showed up in Google News or search results?

Google's playing nice. They can, because they have the power in this relationship.

Yahoo! will kill Geocities later this month (26 October 2009). Millions of web sites, stores, online communities, blogs will vanish, along with their google juice. Geocities is a chunk of history for some, an online home for others. Yahoo! gave six months warning in its eviction notice. Yahoo! will move you to their paid hosting service. 

Yahoo! holds the power over Geocitizens in this landlord-tenant relationship. [Kudos to The Archive Team and the Internet Archive for trying to back up Geocities.]

AT&T blocked wireless access to VoIP on the iPhone for two years. Just to see what Skype and Google would do. They had power over Apple before the first iPhone launched. Less so now that Apple is a worldwide success.

Renters get power over landlords from their contract and from their government's landlord-tenant laws. Those laws rebalance power, create some process for notice and appeal, and define penalties for abusing process or power.

Skype is in the middle of a network of alliances, partnerships, antagonists, and dependencies. While some relationships are defined by market forces, many are driven by the struggle for industry and government power. Skype steps lightly. For every Skype government affairs person, the telecom industry has thousands. For every euro Skype spends on publicity and advertising to influence the public and regulators, the telecoms spend thousands. Skype is deft and agile, a guerilla going up against vested interests, avoiding brute force confrontations they could lose.

Meanwhile Skype earned its own power. Skype spent six years defining a global brand people love and trust. Skype quietly framed regulatory issues in Brussels and Washington placing Skype on the side of democracy and freedom. Skype proved its legitimacy as a profitable business (although still a rounding error in AT&T's 2009q2 Net Operating Cash Flow of $15.8 billion) and a competitor (8% of international minutes).

Skype is investing in its power. Geek cred will come if its Skype as a Platform service is successful. Skype is spreading its political attention to smaller governments. Skype has new PR, advertising, marketing partners to reinvigorate Skype's brand for what the company will become. Skype is building products to diversify its business model and create new sources of income.

Skype is approaching a half-billion users. Skype will no doubt be a US$2 billion a year company by 2013. Skype will sit at the table with Internet and telecom giants.

So I'm left with an incomplete thought.

Will Skype be as tender with its power as Google? Will Skype be as courteous as Yahoo! with trusting customers? Will Skype abuse market power through partnerships as AT&T?

Winston Churchill said the price of greatness is responsibility. What in Skype's cultural DNA says do no evil?

tags: skype, power, politics, ethics, morals

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AT&T caved on Voice over Cell. 12 Attacks To Come?

AT&T loathes Skype. Skype costs them international calling money and changes consumer expectations in ways mobile carriers cannot respond. So AT&T forbid Apple to permit Skype voice calls over the wireless network. It worked for two years. Now that barrier is down, how else can they slow or stop Skype? To bring a humble Skype to the negotiation table? Three anticompetitive strategies:

The Parity Strategy: Get government to treat Skype like a fat incumbent landline phone company.

• e911. Emergency dialing is expensive, unreliable with softphones like Skype, and different in every country. Skype says it is not a phone company, so the US FCC should not require Skype to offer emergency dialing. The incumbents would love to saddle Skype with this requirement.
• Assistance to the Hearing Impaired. Require Skype to offer interpreters for the deaf.
• Skype and US, State and Local Phone Taxes. Lobby for Skype to collect federal, state and local value added taxes and fees. Blur the distinction between Skype and phone companies. Complicate Skype's prices and products.
• Metro/State/Provincial Regulation. Encourage non-Federal governments and agencies to entangle Skype in hearings, compliance procedures.
• Administrivia. Phone companies file detailed reports with state and federal regulators. In triplicate. Ask local agencies to swamp Skype with requests for information.

Attack Skype's Brand.

• Pollute Skype's Security Brand. Skype has a reputation for being very secure, relatively spam free, and a safe way to communicate. Invest in academic challenges to Skype security. Publicize every stalker, lawsuit and robocaller. Host "ethical hacker" contests and spread the results.
• The Weapon of Evildoers. "Criminals and terrorists use Skype." Host conferences for police and intelligence agencies on threats posed by Skype. Urge them to compel Skype to give up encryption. Force Skype to rebut law and order politicians.
• Reframe Net Neutrality. Net neutrality improves Skype user access to networks. Supporters of net neutrality use language like freedom and choice. Instead, blame Skype for slow pipes, limited coverage and congested bandwidth.
• Not Invented Here. "Buy American," don't give your hard earned money to that foreign phone empire. A little astroturf goes a long way.

Divide and Conquer.

• Sponsor Class Action Suits. Pit dissatisfied customers against Skype. Force Skype to invest in lawyers, not engineers.
• Start the Skype-Killer Adventure Fund. Confuse Skype's customers with a market full of Skype clones. Pay peanuts to attract entrepreneurial talent to your war on Skype.
• Raid Skype Talent. Half of Skype's employees are paid Eastern European wages. Aggressively recruit them, stalling Skype's projects.
• Repeat Worldwide. Share with telcos in every market a template for attacking Skype. Make Skype struggle in every country.

tags: skype, competition, att, at&t

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illustration: LuMaxArt

New high watermark: 19 million concurrent users with Skype dialtone

Guest post by Jean Mercier, the Skype Numerologist

Only three weeks, and the second time this year that Skype adds a million concurrent users online in only 3 weeks, (this is a record speed) and also the fifth million milestone this year, another absolute record. And the growth goes on despite competing products, lawsuits, new owners, eBay, police and intelligence agencies threats and unhappiness, ...

I am really interested to see the quarterly results of Skype within eBay, and perhaps one of my previous earnings predictions will be way too low.

Skype dial tone: 17 million simultaneous online, 23 March 2009.

tags: skype, statistics, stats, trends, simultaneous, online, concurrent, dialtone, charts

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Skype dialtone record: 18 million online at the same time

Guest post by Jean Mercier, Skype Numerologist.

The best measure of the growth of Skype users is still the top "concurrent users online." After the "usual summer recession," we finally reached today a new top of 18 million concurrent users online at about 16h GMT.

I am really happy to see that Skype is still growing as expected.

tags: skype, stats, charts, trends, statistics, online, dialtone, simultaneous

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
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Labor Day thoughts on the 2009 Skype sale

1. eBay's post-Whitman management gets credit for doing something right. Staffing the right executives in 2008. Letting the new leaders turn the startup into a company worth selling. Sending the right signals to potential buyers. Getting the deal done. Not rewarding the founders for their Joltid extortion. Nice way to turn things around!
2. Silverlake controls everything. With Silverlake Partners owning more than 50% of Skype Ltd., it's their call when to float Skype stock in the future or sell Skype to another company.
3. Skype will fund its own expansion. Don't expect cash infusions for acquisitions, infrastructure, labor intensive services, or advertising. Skype has been producing more than $10 million monthly in free cash. Skype's roadmap will chew up all of it just for internal growth and to create cash reserves.
4. Skype will keep its overall direction and product strategy. Skype doesn't need to rethink its business anytime soon.   
5. The SEC pipeline of data will be gone. eBay's 2009q3 10Q report (coming this October) may be the last detailed reporting of Skype operations and finances ever. Privately owned companies need not report performance unless they float stock.

Five product changes I expect from Skype in the next year.

1. Better P2P. Skype will first deploy a simple functional replacement of the Joltid P2P engine. They will improve it, building in six years' of real world experience Joltid never had. Skype should be able to make its P2P network more resistant to Internet outages and blocking, more resilient in the face of damage to the peer fabric, more efficient in finding and routing connections between users.
2. Better video. Perhaps their own video codecs. Higher resolution video as cameras and PCs catch up. Multiparty video calls. Better use of processors, including video digital signal processors. 
3. Skype Inside. A clearer platforming strategy, building on their experience with Skype Lite (clouds of Skype supporting thin, mobile Skype clients) and Skype For Asterisk (adding UI-free Skype clients to someone else's servers). Think "Communications as a Platform," where you can build Skype messaging, presence, and calling into mobile, desktop, and server applications.
4. ID anguish. Skype has an immature user identity model, left over from instant messaging services in the mid 1990s. We'll see greater conflict between Skype's two identity systems. Skype's consumer and corporate Skype names (user IDs) aren't interchangeable although their users and markets overlap.
5. A little less anti-social. Skype's great at talking with people you know. It does nothing to help me find interesting, entertaining, or useful strangers. Almost nothing (do birthdays count?) at helping me curate my friends and cultivate my relationships over time. Skype backed off from supporting its Skypecasts service (hosted calls with moderated Skype chat backchannels) and Skype public chats (web links to group text chats). Skype will research how to help people do more during a conversation (collaboration) and how to add more of the value found in other social media (discovery, ridiculously easy group formation, social gestures, non-conversational messaging).

tags: skype, silverlake

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private roundtable, one of the longest running public Skype chats.

photo credit: underlying photo CC BY 2.0 by Casey Serin.

Managing the Google/On2 merger at Skype

I don't work for Skype. Here's advice I'd give to senior management on how to respond to Google buying On2, which makes Skype's video engine.

1. It's a threat. It may not have been Google's intent, but Skype should consider this an attack by a rival. While the media and the blogosphere have been focusing on On2's value to YouTube, Google could also apply these resources it to its realtime talk properties (Talk, Voice, Wave) and to the Chrome browser (the better to play/capture videos without an Adobe plug-in).

2. The deal isn't done. I'm sure the lawyers can cook up ways to interfere, contracts and regulatory influence (monopoly power), perhaps raid the company for talent that doesn't want to move. The low road. Better to engineer your way out of this exposure by making/buying the talent/technology/IP so you no longer rely upon On2 products.

3. It changes the video codec industry. Google hasn't had a strong competence in codecs. Until now. They have the potential to promote On2's codecs by licensing them freely or open sourcing them. That's how industry de facto standards are made. Two effects: This could drain the swamp as all the small video codec makers starve, going out of this business. Frozen standards may also limit Skype's ability to innovate around video codecs or strike interoperability deals as Google assumes industry leadership in that technology.

4. Act yesterday. While the deal's effects are not immediate, Skype's learning curve may be substantial and you'll want every day possible to own your core IP. I'm sure you've started already.

5. Keep focus. Skype has a diverse product portfolio. An audio/video/signal engineering initiative (a center of excellence? a subsidiary that licenses the technology?) (The Skype Immersive Reality Institute?) could take resources and attention from other strategic investments. Keep balance. The right workflows around product lifecycles and product mix should help keep balance.

6. Short term, this may be a time to negotiate a better deal with On2. You can always leave them behind, but you may want to secure promises of technical support, ongoing maintenance, best prices, continued improvement in the product, etc.

What advice would you add?

tags: skype, video, m&a, google, on2, googletalk, googlevoice, googlewave, adobe, googlechrome, competition, strategy, management

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private roundtable, one of the longest running public Skype chats.

Skype sets new performance records, preserves margins in 2009q2

eBay reports $170 million Skype revenue for the quarter, 25% year over year growth. 20% of revenue was from the USA (green line below). Management kept margins stable at 23.6% (the big purple line below).

8.4% of all revenue ($14.3 million) is from marketing services and other revenues. These include licensing Skype's brand for Skype Certified products, certification fees, and Skype Prime fees.

+37.3 million new accounts, 414k daily (the red line below). This brings Skype to 480.5 million cumulative accounts. The adoption rate fell slightly this quarter.

25.5 billion Skype-to-Skype minutes served in Q2 (blue line), 3.0 billion Skype-to-PSTN minutes (red line). Is the rate of growth slowing or is it just seasonality?

This puts Skype's freemium rate at 8.5 (8.5 free minutes for every paid minute). Still within Skype's historical range and very low (lower is better) compared to other services. Some companies have freemium rates around 20-1 or 50-to-1. The curvy line below is Skype's freemium rate over time.

tags: skype, skypejournal, stats, financials, revenue, profit, margin, minutes, freemium, trends, charts, statistics, performance, ebay

Call me at +1-510-455-4384, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private roundtable, one of the longest running public Skype chats.

Why Skype doesn't offer phone support

"What's the phone number for Skype customer service?" is the most common question I've been asked this year. 

There isn't one. All support is provided through Skype.com.

Why not let customers call?

The back of the napkin arithmetic is simple.

• 100 Skype customer support representatives (roughly) serve 400,000,000 user accounts (roughly). So each rep has about four million customers.
• Let's suppose Skype has the happiest customers on earth. In any given year, 99 out of 100 don't have any problems with recovering passwords, payments, fraud, harassment, hardware, networking, or anything at all.
• That leaves one percent of account-holders per year with a problem. One percent of 400 million is 4 million accounts with a problem sometime in the year. Let's assume all the problems take the same effort/time and that they arrive smoothly throughout the year; so no need to allow for demand spikes.
• If 1% of customers have one customer service issue per year (a low, conservative guess), then each rep works 40,000 issues each year.
• That's about 160 issues per day (assuming fifty weeks of work, no holidays), or 27 issues per working hour. At six hours worked per day, that's about 2.3 minutes to solve a customer's problem; 135 seconds.

Voice calls in call centers don't work at this scale with these resources.

So what does Skype do?

• Avoid problems. An ounce of prevention is worth millions in call center operations.
  • Design your software and web site to minimize customer issues. 
  • Improve self service. Help customers help themselves through help pages.
  • Help customers help each other. Skype's forums are very active.
• Efficiently solve customer problems.
  • Text takes less time and effort than voice or video.
  • Asynchronous text takes less time than interactive chat. No hold times or waiting times.
  • Structured, templated complaints find their ways to the right people more often and trigger appropriate scripts for the reps.
• Tiered support.
• Registered developers and enterprise customers can purchase priority engineering support from Skype.
• How much would you pay per user account per month for a Skype customer service rep to pick up the phone (or Skype) when you ring?
• Add resources smartly.

Demand for support will grow. Skype's user base continues to grow with millions of new customers every month. Skype opens up platforms, runs on more kinds of devices and computers, as Skype operates in more countries with many languages and cultural views. Demand for support will grow in volume, intensity, and variety.

The pre-IPO stakes are high. Skype wants to avoid customer dissatisfaction breeding more class action lawsuits, like the class filed in December 2008 on behalf of Washington State Skype users.

tags: skype, customerservice, support, techsupport

Call me at +1-510-455-4384, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private roundtable, one of the longest running public Skype chats.

Ever Fresh: a data portability approach

Caveat Lector: this is a rough draft of my thinking on what a Portability EULA/TOS should say/do/include. Please comment. – Phil

"Hey, hey, hey, hey-now. Don't be mean; we don't have to be mean, cuz, remember, no matter where you go, there you are."

 Buckaroo Banzai from The Adventures of Buckaroo Banzai
Across the 8th Dimension (1984)

So you start your data portability relationship with Open Arms, end it with a Graceful Exit. What happens in between? What are our portability concerns during our relationship?

Ever Fresh is a combination of policy and technology.

The policy says:

We will consume and share your onlife with other services. So everywhere you go, you have all of yourself, as appropriate. As we change, we'll let you know.

Breaking it down...

We will consume and share. "Consuming" is a software syndication term. It brings data by/about/for you into a system. Sharing flips the direction, data by/about/for you moving out of the system. Synchronization systems (sync or synch for short) compare the data they have with data others have, find the "best" version of that data, and update each other.  Synch services keep your experiences up-to-date using the freshest, most trusted versions of your data.

Your onlife. Shorthand for everything digital created by your behavior. Your IDs, your profiles, your stuff (like photos and messages), and collective works you've created with others (like annotated photos or a wiki page).

Your onlife isn't just what happens at one web site. It's what happens with your mobile phone. It's your email, your browsing, the documents you create, the videos you shoot, the IMs and texts you send. It's you and your stuff and the stuff you make with others.

Other services. Here we come to portability. This site, the one with the portability policy, will consume and share your onlife (data you make explicitly, data you make with others, data others make about you) with other services.

• Enumeration. Which ones? Is this site going to disclose to you a list of those sites before sharing? After the fact? When will they get your permission and when won't they?
• Transitivity. Will they agree to these same portability and privacy terms of service?
• Jurisdiction. Are they covered by the same laws as you and this site?
• Agency for Enforcement. What steps will this site take with partners to enforce side agreements? Will they always act on your behalf? When won't they? 
• Remedies for Breaches. What steps will this site take on your behalf to fix breaches by partners?

Let's look at two examples of data  passed through a third party.

Case 1: Flickr, part of a US company, shares your photos with Moo, a UK company, so Moo can print your flickr photos on business cards. Moo, in turn, shares your home address with several shipping companies.

• What should your Portability Policy say about this?
• What should Flickr demand of Moo on your behalf?
• What information should Moo require of Flickr before or upon receipt of your data? How would Moo know Flickr had done a complete and thorough job? What risks does Moo
• What should Flickr demand Moo demand the shipping companies do with your data, especially when Flickr may not know anything about Moo's other partners  (printing in Mexico for Canadian customers)?

Case 2: Skype, a Luxembourg subsidiary of a US company, partners with MySpace, a US subsidiary of a company, to integrate MySpaceIM instant messaging and voice calling with Skype's instant messaging and voice calling. Skype shares personal profiles with another company for directory services, including my birthdate and where I live. Skype is sharing my IP address to help connect calls and status updates.

My email address and birth date are sensitive data, useful in identity theft. So I have a stake in knowing with whom and where Skype shares that data.

Everywhere you go. Dataportability is device, connection, and location agnostic. This service's portability of your stuff should apply to all the sites, software, and devices you use. You may have web browsers on multiple computers and your phone. You may talk on your mobile, your desk phone, your MySpace IM or your Skype. Your experience should be seamless across systems. When this service is unable or unwilling to port your data, they should say so and say why.

All of yourself. It's tough being incomplete. So where you produce data, we'll manage as much as we can.

• Your browser or operating system could make your bookmarks, browsing history, saved passwords and tabs available across devices.
• Your communication tools could share your address book, contacts, conversation history, contact groupings and metadata, things shared.
• Your medical services could assure your records of care, diagnosis, treatment, prescriptions, imaging are available where, when and as you need them.

As appropriate. You are too much for any one site. So, while a site may agree to take and share "all of you," it wont' know what to do with everything outside its scope. Photo comments on flickr aren't the same as your restaurant reviews on Yelp. While Monster might build a team-job search for you using some of your LinkedIn friends, Monster doesn't need your IMDB movie ratings. So sites will take what they can use on your behalf and ignore the rest.

As we change. We change our policies and behavior all the time. We modify our terms of service, our license agreement with you, our privacy policies, agreements with third-party developers who may have access to data by/about/for your, and this portability policy. These contract revisions, these changes in what we promise and what we expect, adapt us to changing situations. We acknowledge your stake in those changes.

We'll let you know. Since you have a stake, we'll give you meaningful notice of changes, notify you through the channels you prefer, help you separate changes with small impact from those with large ones, and ask you to opt-in when the changes are substantial.

Ever Fresh: We will consume and share your onlife with other services. So everywhere you go, you have all of yourself, as appropriate. As we change, we'll let you know.

See also:

• Mozilla Labs Weave Sync 
• DiSo Project
• Xmarks

Original photo credit: backpackphotography. Photoshopped version.

tags: dpp, dataportability, openarms, everfresh, gracefulexit

Call me at +1-510-455-4384, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private roundtable, one of the longest running public Skype chats.

Optimizing Skype.com for growth and sales

UPDATE: A Skype executive asked Omniture to ask Skype Journal to take down this post, said Kristi Knight, Omniture senior director of corporate communications. "It was information that wasn't meant to be made available to the general public" said Brian Watkins, Omniture's public relations manager. Omniture removed the Skype part of the webinar from the site after an employee accidentally sent a link to it to prospective customers in an email prospectus. Skype gave permission to use their story at The Omniture Summit in Salt Lake City this past February, a closed pre-sales pitch and customer education event. Someone at Skype was apparently very upset that this high level case showed up on our blog; enough to persuade Omniture to take a PR hit.

Before I explain what I'm going to do, let me explain why this information is blogworthy, maybe even newsworthy.

Skype Journal helps its readers understand the Skype universe. Skype's product features, business model, financials, performance, product strategy, technology, user stories, design philosophies, and everything that explains this rapidly changing, growing, influential company. This ongoing Skype story affects hundreds of millions of people worldwide.

Today's story shows Skype uses state of the art practices to get more out of each customer visit. This is not rocket science (social science, actually) and we'd expect to learn a little about the active management of one of the most visited sites on Earth.

While the information was released by accident, it was released nevertheless. As a courtesy, I'm removing the slide screenshots. 

The post:

Omniture helps web sites get visitors to act by testing variations on a web page's design. (Omniture has a pretty great home page.) Skype.com was featured in a workshop that showed tests comparing different home page and returning page layouts and content. The slides are from a pre-sales briefing but they offer some insight into Skype's day-to-day operations.

The overall goals: improve downloads and sales by adding or subtracting "branding" intensity.

Test one was for the Skype.com home page:

Three versions of the page are offered randomly to users, their behavior is logged and compared. In this case, A was heavily branded (more screen space devoted to art, people, and slogans.

1A was the existing design, "Heavily Branded," used as a control. About half of the page was a large horizontal block with a lifestyle photo showing a young couple on a swing, a screenshot of Skype for Mac contacts list, and a "Download Skype" button.

1B was simpler, with a lighter branding touch. Everything "below the fold" was cleared off, the screenshot removed, and the lifestyle photo down to half its previous size. The number of words on the page was cut in half. 

1C was very light, no photography or screenshots, word count cut in half again, focused on the transaction ("Get Skype Now").

Test 1 showed less is more with newbies. Recipe B improved click throughs by 1.4%. Recipe C increased downloads 4.6%. If all you want to do is drive new visitors to download, then simple, elegant, and focused could work.

This adds up. By constantly optimizing site design, Skype's visits to download.Skype.com rose 235.76 % year/year, twice as fast as visits to www.Skype.com, which rose 93.59 % in the same time according to Compete.com. More than 3 million people visit Skype.com monthly, and most of them land on the home page.

So Skype is now doing a better job of converting prospects into users of free Skype services.

What's the best way to convert users of free into paying customers? Skype uses a landing page for returning users. 

For test 2, can design alternatives improve the sale of minutes and gear? Again, three flavors of the same page. 

2A is the control again, minutes in a big, dark Skype Pro block on the left, a Phillip cordless phone package ad on the right. Below the fold was a row with "download Skype" and "Skype SMS" ads, and a row with three columns beneath that with seven different offers for gear and services.

2B is all about the minutes. The dark "Skype Pro" block is lightened and expanded to two-thirds width of the page. To the block's right are Skype Credit and SkypeIn links. Gear ads below the fold were cut to three bigger ones with photos. 

2C also de-cluttered like 2B. The right hand credit and SkypeIn ads swapped places with below-the-fold gear ads.

Unlike the home page test, the results were mixed and had no confidence score. 

So they dug deeper by seeing how different segments behaved. 

It turned out that weekday users liked 2C a lot, improving click-throughs by nearly 14%. However weekend users disliked 2B and 2C so much they offset weekday users.

Segments behave differently, even when you compare something as mundane as day-of-week. So the big lesson is to test how customer segments react to design ideas. 

I haven't really thought of Skype.com as a product, but it's clearly part of the Skype experience and contributes directly to Skype's growth, customer retention, and sales.

tags: skype, design, testing, omniture, home page, landing page, statistics, trends, growth

Call me at +1-510-455-4384, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private roundtable, one of the longest running public Skype chats.

see also: flickr photo set