Yesterday long time acquaintance Andy Abramson put up a post Skype on Three-Me Too, Me Also, No Longer Me Different where he states “Now 3 no longer has the same Skype service in the UK…” and concludes with “…. now Skype is back to being just a IM based calling service online with a few hooks to the PSTN”. I beg to differ.

Andy is talking about 3’s Skype service that was launched in late 2007 using a hybrid solution that allowed IM and call signalling data to be handled over the data channel while the actual voice call went over the carrier’s GSM voice channel. It provided a way to make free calls to Skype contacts worldwide while using SkypeOut for calls to the PSTN outside the home country. In fact I was on a 40 minute call with a 3 user on the INQ phone earlier today; however it’s lifetime as a service appears to be coming to an end.

Skype on 3 also was significant in building a customer base for 3 who was a fledgling 3G service trying to enter a U.K. market dominated by somewhat larger players. At the time all the reviews were positive; it was well received by a younger demographic keen to expand their social networking circles. Initially the service was offered on “brew”-based 3 Skypephones; later it also became available on the “brew”-based INQ phone with its social networking features. However, for infrastructure It did require “gateway” servers using iSkoot’s software that had developed this protocol. And, as pointed out in an iSkoot presentation at the initial eComm 2008 there were royalties paid to both Skype and iSkoot associated with the monthly subscriptions involved. From the carrier perspective, the economic key to providing this unlimited calling service was that Skype-to-Skype calls had no termination charges as they go direct to the end user contact without any requirement for termination by another carrier.

In the spring of 2010, Verizon launched its Skype mobile service using a similar protocol to much fanfare. Skype’s carrier-specific arrangement with Telus was very different with respect to the services offered, especially the Skype client and the associated Android phone.

But times are changing; the key for addressing these changes is how 3, working with Skype, can make a transition that keeps their customer base while offering Skype calling through alternative arrangements:

• Brew-based phones have been outsmarted by smartphones from Apple, Android and RIM. I would imagine today’s demand for an INQ or 3 Skypephone has diminished to a level that does not encourage further manufacturing.
• Skype has since launched full Skype clients on iPhone and Android phones, offering not only chat and voice but also video calling.
• Not only do these clients  use the data channel of wireless carriers for voice and video but they also support Skype’s SILK codec for optimum voice quality.
• Data plan rates have come down by orders of magnitude from charges four years ago; the launch of iPhone helped drive these down.
• There is carrier and Skype overhead in running the iSkoot servers at 3.
• I would imagine, partly based on some anecdotal information, that many of 3’s customers who had 3 Skypephone and INQ phones have migrated to other phones. While both iPhone and Android phones are market players in the U.K. that same youth demographic actually has been strongly attracted to BlackBerry and its BlackBerry Messenger feature.

The bottom line is that the entire mobile market has evolved and 3’s initial Skype calling service has been left in the dust. Skype says these services are still operating in U.K., Australia and Ireland, probably due to the current size of the user base yet they will go away in the near future.  However, at some point I would imagine 3 would have to be working on a strategy to phase out its initial Skype service and transition their customers to newer platforms.

As for “No Longer Me Different” it is too simplistic to say Skype only offers IM and voice services duplicated by others. From both Tony Bates’ post, Tony Bates Weighs in on Microsoft’s Acquisition of Skype, and the accompanying infographic, expect to see a heavy emphasis on Skype’s video calling where there has been no duplication that combines the available resolutions (VGA, HD), frame rates (30 fps, 22 fps) and minimum network upload speed requirements by any other service provider. Of course there is also the other strength of having over 170 million active users that remains a key differentiator.

While 3 has definitely demonstrated the demand for Skype services on mobile platforms, both the market players and underlying wireless carrier infrastructure have changed over the past four years. The questions that arise include:

• How long will Verizon continue with its Skype mobile offering? We have already seen Verizon’s plans for offering Skype over its LTE network using Android phones where the focus was on video calling.
• While Verizon’s service could be replaced with Skype for Android on its Android phones, what would happen to its BlackBerry customers who would not have a native Skype for BlackBerry client?
• Can Skype address the battery drain issue on both Skype for iPhone and Skype for Android to provide users with the same user experience as Skype mobile in terms of recharging frequency?

It’s easy to want to position a perception that other players can be competitors of Skype; however, the real challenge for MicroSkype is how to build a business that justifies a $8.5B purchase price, not how to skirmish over services whose usefulness and viability has been overtaken by the evolution of the market participants and carrier infrastructure.

Full disclosure: the author has made the only 3 Skypephone call on the Rogers network back in early 2008. Ten minutes cost me about $100 as Rogers did not have an iSkoot server available.

Announcement of the Skype – Verizon agreement certainly has generated buzz around both the Mobile World Congress and the blogosphere. Last Wednesday morning, one day after the announcement, several bloggers and mobile ecosystem players came together on a CalliFlower-hosted SquawkBox conference call to discuss both the triggers for the agreement and the implementations.

Co-hosted by Carl Ford and myself, participants on the call were Andy Abramson (who had been listening to the jungle drums on-site at MWC), Hudson Barton, James Body, William Volk, Alec Saunders, Thomas Howe and Moishe Maier.

Topics covered included:

• Verizon’s history of invoking VoIP; the “game” for Verizon (Carl Ford 00:30)
• Why Verizon finally had no choice but to do the deal. (Andy Abramson 02:15)
• What were the competitive drivers? (Andy Abramson 03:20)
• How does Verizon benefit from this agreement? (Andy Abramson 04:20)
• Who are the real winners (and losers) from this agreement? (Andy Abramson 05:00)
• How does this differ from what 3 is doing with Skype in nine countries (Andy Abramson 06:50)
• Lost in the announcement: final release of Skype for Symbian (Andy Abramson 07:50)
• Applications implications I: initial thoughts from Thomas Howe (08:15)
• Is Verizon missing a market segment through their smartphone offerings (James Body 09:05)
• Is this net neutral and no risk for Verizon? (Alec Saunders 11:00)
• How this agreement is a win for RIM (Andy Abramson 12:50)
• Dumb pipe or embedded intelligence: (Andy Abramson, Alec Saunders 13:50_ [Note that my last question to Russ Shaw was meant to be quoted as “When can I say ’Call Russ Shaw on Skype’?”, not “on mobile” as stated in this conversation; all four carrier friendly points referenced in this discussion can be found here.)
• Perhaps the most informative commentary: Applications implications II: a very interesting perspective on the mobile application store market from William Volk who has several of the top selling games on the iPhone. Backed up with comments by Mr. Mashup, Thomas Howe  (17:25) Terminology: ECPM – effective CPM. Bill makes some very poignant points about the uniqueness of Apple’s app store and why Verizon’s Get-It-Now app store that has no appeal to developers.

Download

Posts referenced during the call or subsequently relevant:

• Carl Ford: Jim Courtney & Carl Ford Converse about Skype & VZW
• Om Malik, GigaOm: Skype & Verizon’s Fear of the iPhone
• Andy Abramson, VoIP Watch: Skype, Verizon (and Andy) In the News
• Om Malik, GigaOm: Skype CEO: Skype Over 3G on iPhone Soon
• Om Malik, GigaOm: Skype-Verizon Deal: More Details
• Andy Abramson, VoIP Watch: Todd Carothers Point of View on Skype-Defining The Battleground

Thanks to Angelo Mandato at RawVoice for his assistance with getting my first “podcast” up and running using the BluBrry PowerPress WordPress plug-in. And, of course, our thanks to all who participated in the call.

Related articles by Zemanta

• Skype over Verizon: Skype Becomes a Marketing Weapon in the Wireless Carrier Arsenal – The Prelude (voiceontheweb.biz)
• Skype To Work on Verizon’s Android & Blackberry Phones (gigaom.com)
• For Now, No Skype on iPhone. An iPad app Soon (gigaom.com)
• Inbox Liquidation, Part 54 (phoneboy.com)
• Coming Real Soon Now: Skype for iPhone over 3G (voiceontheweb.biz)
• Reprise: Is WiFi Becoming the Unregulated Stealth Carrier of the Future? (voiceontheweb.biz)
• iotum’s Calliflower Conference Call Service Adds Skype Access (voiceontheweb.biz)
• That’s pure Horse Hockey, Om. (saunderslog.com)
• Did Skype delay the Push Notification/3G version of the iPhone client because of the Verizon deal? (9to5mac.com)
• Business Long Distance: Death By a Million PBX’s, Part II (voiceontheweb.biz)

Yesterday’s announcement that Skype will become available as a supported service on Verizon Wireless has to have sent a tsunami through the wireless operator world. To review the offering:

• A Skype client will be included on nine models of BlackBerry and Android smartphones in late March; current customers with these devices will be able to download the application
• Free Skype-to-Skype voice calling, both inbound and outbound, worldwide
• send and receive instant messaging (chat and presence) worldwide at no charge
• International SkypeOut calling; domestic calls come out of the customer’s voice plan
• Requires a Verizon voice and data plan
• Skype-to-Skype and SkypeOut calls as well as Skype IM activity will not impact a customer’s voice plan minutes and data plan usage.

The Background. Yesterday I wrote about the market environment and technology infrastructure that led to the ability to make this announcement

• It’s Verizon’s answer to AT&T’s forthcoming Skype for iPhone over 3G; however, given that planning and development activity have been ongoing for the past year, it’s a well thought out response with a focus on the user experience.
• The client will be a customized version of Skype Lite where the voice conversation is carried over the Verizon voice channel while presence indication, chat messages, mood messages and voice call signaling will be carried over the Verizon data channel.
• Launching a Skype voice call or chat session will be the same process as launching a traditional call.
• It’s integrated with the Address Book of the device such that all contacts can become Skype or SkypeOut contacts.
• Both the BlackBerry and Android smartphones can handle multi-tasking such that Skype “data” activity can continue to operate in the background while using other applications on the device.
• Client is optimized to take advantage of any battery life conservation features, certainly one of BlackBerry’s well known strengths.
• In response to one question at the press conference, Verizon stated they will not allow network quality to erode as a result of the additional load created by this service.
• Currently no video calling, file transfer, SMS messaging or WiFi access

Show me the money! Based on information provided by iSkoot at eComm 2008 and 3′s gradual expansion of Skype availability, it would appear at first glance that the business model involves:

• Verizon receiving a percentage of SkypeOut revenues (Skype has an affiliate program that provides referrers with 25% of SkypeOut revenues – an indicator of Skype’s margin for this service; 3 has offered SkypeOut since summer 2008)
• Skype receiving software licensing revenue associated with smartphone revenues (sales or lease) and Verizon voice/data plan revenues
• No termination charges for Skype-to-Skype calls (explains why Verizon can offer this as a free service to their data plan customers)

The implications:

• Has the potential to add 90 million Verizon customers to Skype’s user base
• Verizon customers can call over 500 million Skype accounts worldwide at no cost (probably about 100 million active accounts)
• SkypeOut becomes the de facto replacement for all Verizon’s other consumer international calling activity, especially for calls to those 44 countries on Skype’s Unlimited World Calling plans.
• Provides a subtle but significant carrier endorsement of BlackBerry and Android devices.
• Multi-tasking allows an “always on” user experience; the challenge will be when and how notifications are made of a Skype activity (presence status change, new chat message, etc.) when using other applications
• the underlying architecture takes advantage of the existing robust and scalable voice architecture while exchanging data over a wireless data service that is widely perceived as the best in the U.S due to the combination of its reliability and coverage.
• requires the installation of “Skype gateway” servers within Verizon’s infrastructure to terminate Skype calls under Verizon’s management and control, offset by the fact that there are no termination charges for Skype-to-Skype calls.

The downside: The architecture does not allow for WiFi access to Skype. As a result:

• one cannot readily make calls from WiFi access points outside the U.S. without paying roaming charges which can tend to be expensive. (Skype for iPhone on AT&T or T-Mobile’s @ Home service provide this capability.)
• calls cannot be made from locations without carrier network coverage (to a large extent Verizon’s U.S. geographical coverage addresses this issue but one can also be deep in a building with WiFi but no carrier).

The Questions:

• Will Skype Instant Messaging become a replacement for SMS messaging and cannibalize SMS revenues? Skype IM messages simply go out over the data channel as one application for the data plan.
• What happens when a Verizon customer is roaming in other countries?  Can visitors to Canada or Europe continue to use Skype at no additional cost while in Canada? or will a roaming charge apply?
• Verizon is currently offering these devices with a “Buy One Now, Get One Free” feature and a two year contract at prices ranging from $29.99 (Storm 1, 8530 Curve)to $179.99 (Storm 2). Will the lack of a low cost phone, such as 3’s Skypephone2, with Pay-As-You-Go impact adoption?
• What is the level of carrier exclusivity in the deal? Will we be seeing similar offers from T-Mobile US or AT&T any time soon? What portions of the embedded Skype software in the devices are  exclusive to Verizon?
• Who will be the first Canadian carrier to adopt the Verizon-Skype model? This will be interesting to follow given that:
  • there are no network quality issues with any of the three
  • the Bell Canada/Telus networks can not only support EVDO (same BlackBerries as offered by Verizon) but also GSM/LTE supported devices with their new HSPA+ network launched in time for the Vancouver 2010 Winter Olympics.
  • all three carriers now offer the iPhone; in this case Rogers was the original carrier with it.
• What level of support will Verizon provide for BlackBerry’s app store and Android’s market? Will Verizon facilitate and promote them or even provide an aggregated app store?

Final question: Skype stealthed its way onto AT&T 3G through the combination of supporting calling over WiFi access points (worldwide) and FCC lobbying; Skype is certainly helping to drive iPhone sales at AT&T. Can the combination of carrier-supported “free international calling”, full multi-tasking, a more robust and reliable network and the currently top selling smartphone brand in the U.S. sustain and build Verizon’s user base?

Bottom line: carriers are recognizing that Skype needs to incorporated into their infrastructure as a key element providing both uninhibited access and the network resources to ensure a high quality, positive user conversation experience. Most importantly they are discovering that Skype can become a marketing tool that drives market differentiation and user adoption.

For further commentary Carl Ford and I recorded a podcast conversation yesterday: Jim Courtney & Carl Ford Converse about Skype & VZW.

Update: Andy Abramson has been on-site at MWC and picked up some feedback: Skype, Verizon (and Andy) In the News

Photo: John Stratton, executive vice president and chief marketing officer for Verizon Wireless, and Josh Silverman, Skype’s CEO, announcing their strategic relationship to bring Skype to Verizon Wireless smartphones during a press conference at the 2010 Mobile World Congress in Barcelona, Spain earlier today. (Via Business Wire, accreditat[on not provided)

Related articles by Zemanta

• Skype & Verizon's Fear of the iPhone (gigaom.com)
• Verizon to allow unlimited Skype calling over 3G starting next month (engadget.com)
• Deal brings Skype to Verizon 3G phones (news.cnet.com)
• Skype Over 3G Now Ringing on Verizon Wireless (jkontherun.com)
• Verizon Swallows Hard And Embraces Skype (techcrunch.com)
• A Conversation with Skype CEO Josh Silverman (voiceontheweb.biz)
• Skype for Mobile: An Interview with Skype's Russ Shaw (voiceontheweb.biz)
• Reprise: Is WiFi Becoming the Unregulated Stealth Carrier of the Future? (voiceontheweb.biz)
• History Making Smartphone Skype Call During LeWeb Closing Session (voiceontheweb.biz)
• Traveling in a Bipolar Mobile Mode (voiceontheweb.biz)

Full disclosure: This post was prepared prior to today’s press conference using information that was publicly available prior to the conference. In the second post I’ll discuss the service as announced at CES today.

When you can advertise “Free phone calling internationally”, they will come! In the CES interview with Skype CEO Josh Silverman, Josh makes the point about how Skype draws in customers by offering a free service that is easily adopted by consumers and then offering “premium” services, such as SkypeOut calling, to generate revenues. This model has led to:

• over 580MM registered Skype accounts (probably 100MM are currently active)
• over 12% of international long distance calling minutes are Skype-to-Skype calls
• and revenues approaching $1B per year.

As mentioned in the recent CES interview with Russ Shaw, Skype’s VP & GM for Mobile and EMEA, Skype’s partnership with Hutcheson Whampoa’s 3 service in nine countries has delivered interesting carrier-friendly results from 3’s customers who take advantage of its free Skype-to-Skype calling:

• 20% higher margin
• 17% additional traditional voice minutes
• lower churn rate
• high ARPU (average revenue per user)
• over 1 billion Skype-to-Skype minutes delivered in the UK since Nov. 2007

Results that should get all wireless carriers’ attention! And Russ did emphasize these results to reinforce where some of Skype for Mobile’s current activities and resources are being directed.

Setting the stage in the U.S. market for today’s Skype-Verizon announcement:

• Verizon has a reputation as offering the best high speed (3G and faster) wireless data services within the U.S. and nobody’s complaining about their voice quality.
• AT&T’s major strength appears to be its iPhone arrangements
• AT&T’s network performance issues, especially with their data service, are well documented (even their voice channel failed me on my last two trips to the U.S.)
• The major failing of the iPhone that impacts Skype for iPhone is its lack of multi-tasking capability
• Skype has announced they will be making available Skype for iPhone running over 3G – a service that will only be available on AT&T for the duration of the current Apple-AT&T agreement
• Verizon needs an offering and drawing card that will compete with AT&T’s forthcoming ability to offer a Skype-based service on the iPhone.

So it should come as no surprise that Verizon is announcing an agreement to offer Skype on several devices including the BlackBerry line and the Android phones they support.

The Service Architecture

Based on information that has come out over the weekend and content archived on this weblog, this service is modeled on an architecture similar to the iSkoot architecture used for 3’s service whereby data (Skype chat messages, presence and call signaling information) go over Verizon’s data channel but the actual voice calls are connected to the phone via Verizon’s (robust and readily scalable) voice channel. As a result:

• Call quality is limited by the (3.7KHz) audio bandwidth of the voice channel (in particular, no SILK superwideband quality calls)
• Verizon has no termination charges for calls to Skype contacts (or what amounts to being a Skype-to-Skype call – a key factor in making this service cost effective from the Verizon perspective)
• There is no loading of Verizon’s wireless data network (and the associated backhaul demands) with the heavy demand that would be placed on it via a true VoIP client.
• The resulting “Skype for Verizon” Skype Lite client on the BlackBerry and Android devices  has no support of calls via WiFi access points.

So the Verizon-Skype announcement certainly builds on previous Skype technology and business model experience; it will take advantage of proven and demonstrably reliable carrier voice and data services. I’ll have more in the follow-up post covering the actual announcement.

Related articles by Zemanta

• Skype Comes to Blackberry & Android With Verizon Partnership (readwriteweb.com)
• Verizon to allow unlimited Skype calling over 3G starting next month (engadget.com)
• Coming Real Soon Now: Skype for iPhone over 3G (voiceontheweb.biz)
• Traveling in a Bipolar Mobile Mode (voiceontheweb.biz)
• Skype: the “Unofficial” Personal Communications Software for the 2010 Winter Olympics? (voiceontheweb.biz)
• Skype for Business: An Interview with Skype’s Matt Jordan (voiceontheweb.biz)
• History Making Smartphone Skype Call During LeWeb Closing Session (voiceontheweb.biz)

Hutchison-Whampoa’s 3 service in the UK has been the pioneer in offering Skype access and other data-based services, such as SlingPlayer, at low cost. For as little as £10 per month, one could have almost unlimited Skype calling and text messaging on the Skypephone and other selected mobile smartphones. Already 3 has said they are delivering over 1.5 million minutes of Skype-to-Skype calling per day. However, earlier this week 3 announced they were pushing the envelope for free Skype calling even further.

Effective May 1, 3 subscribers will be able to purchase a special 3G SIM card which will allow the user to download Skype software and start making calls to Skype users worldwide with no minimum monthly payment obligations. Come summer 2009, 3 will expand the availability of this offer; from the same press release:

During the summer, 3 will expand its offer making it possible for anyone with a compatible unlocked 3G handset in the UK, to take advantage of free Skype calls, whether or not their phone is from 3. Anyone that wants to talk on a mobile for free will be able to use a Skype-enabled 3 SIM to make and receive totally free Skype-to-Skype calls and to use Skype’s instant messaging (IM).

Basic cost of the SIM will be £1.99; revenue will be generated via associated pay-as-you-go or 3’s other mobile phone services contract offerings. In addition new subscribers will have to purchase one of the supported phones, such as a Skypephone 2 (or, later this year, a new Skypephone 3 which is speculated to have a QWERTY keyboard).

According to 3’s website, their focus from the beginning has been to provide services built around their purpose-built data network using the HSDPA protocol. And, of course, any VoIP-based service requires a high speed data network. However, questions remain:

• What will be the impact on handset battery life? This has been a major factor hindering the provisioning of VoIP over 3G networks.
• Will this service be available to 3’s UK customers when they are roaming in other 3 countries, such as Austria, Denmark, Italy, Sweden and Ireland?
• Which smartphones will be able to take advantage of the expanded offer coming in the summer? Does this mean i can bring my BlackBerry to the UK, buy the 3 SIM, and have free Skype-to-Skype calling while in the UK (or even other 3 countries) and using 3’s service for other calling, messaging, email and browsing requirements?

A hint of 3’s business reasoning is given further down the press release where they provide some information on existing services:

3 UK has found that regular Skype users:

• Are less likely to churn than non-Skype users
• Use more traditional voice minutes than non-Skype users in addition to calling their Skype contacts
• Use Skype IM, but also send more SMS than non-Skype users
• Are more likely to browse the internet on their mobile
• Are higher margin customers
• Are twice as likely to access social networking sites as non-Skype customers

In addition, with the support of SkypeOut calling from 3’s various Skype-enabled phones, one can expect that 3 will share with Skype revenues resulting from SkypeOut minutes generated by this change in services.

3 is also lobbying within the EU for reduced termination charges and “fair pricing for roaming”. In practice they are really pointing out, very pragmatically, that a wireless carrier can generate significant customer recruitment levels, satisfactory revenues and improved ARPU when adopting Skype support with properly structured services.

Which raises a cost advantage of 3’s obligation-free Skype-to-Skype calls and chat messaging: there are no termination charges involved. Skype’s secure peer-to-peer technology has essentially eliminated the need for termination charges along with the associated business development, call record tracking and billing infrastructure costs.

At last fall’s Mobilize 08 Conference organized by GigaOm, 3’s Frank Meehan, Director & GM, 3G Handset and Application Group, stated (hat tip to Om for the reminder):

The Skype phone makes us more margin than any other phone in pre-paid with the exception of the iPhone. About 65 percent of the UK market is prepaid and only 5 percent of those are using data. Smartphones are not as relevant. We also have a massive churn in prepaid in all markets where prepaid exists. So we basically told people, if you spend 10 pounds a month and top it off every month, you get Skype for free. That’s driven incredible loyalty to the device. We have a huge level of top-offs and we’re seeing growth on voice and text on those devices.

3 is certainly providing wireless carrier leadership in the adoption of Skype as a mobile accessible service, demonstrating that there is a business model for the wireless carrier that not only drives subscriber recruitment but also can generate increased ARPU (and revenues) while lowering the overhead costs associated with supporting international calling. Would it be fair to also say that it has the potential to drive down international roaming charges?

Other posts:

• GigaOm: GigaOm: 3 of UK Marries Itself to Skype; Shakes Up the Mobile Market
• Andy Abramson, VoIP Watch: Skype Winning With 3? Actually It’s 3 Winning With Skype

Related articles by Zemanta

• Skype 101 for Carriers: A “Voice On The Web Primer” (voiceontheweb.biz)
• Accessing Skype on the iPhone and BlackBerry (voiceontheweb.biz)
• Skype COO Scott Durchslag Outlines Skype’s Mobile Strategy (voiceontheweb.biz)
• Skype Everywhere: Nokia and Skype Announce Ongoing Partnership (voiceontheweb.biz)

Yesterday eBay held an analyst event at its San Jose headquarters location with a keynote by eBay CEO John Donahoe followed by presentations by various eBay executives and Skype President Josh Silverman.

Josh’s presentation broke a lot of new ground for Skype addressing issues such as:

• How does Skype generate revenue?
• What drives Skype’s cost model?
• How will a software company change real time communications in ways that legacy telcos cannot?
• How is Skype structured to address its various market opportunities?

In a long-term financial outlook issued by eBay in conjunction with this event, they state:

Skype is expected to more than double its revenue to over $1.0 billion in 2011. With more than 400 million registered users currently, Skype’s metrics continue to accelerate as the company further establishes leadership in free and paid Internet-based voice and video communications, with growth opportunities in core consumer, mobile, businesses and platform. Skype’s leadership position has strengthened over the past year, driven by a new management team and the launch of many innovative products.

The overriding aspect of Josh’s presentation was repeated emphasis that, fundamentally, Skype is a software company. As verified by many of the presentations at eComm 2009 last week, Josh stated that there is a communications paradigm shift going on where hardwired networks and devices are gradually being replaced by software-based networks and flexible devices. Skype’s “opportunity is to become the world’s leading communications software company.” Josh’s analogy: It was not the railways that invented air travel; in a similar manner, software will drive the future of real time communications innovation and efficiencies going forward, not the existing telcos. To reinforce his point, Skype will not simply be on familiar telephony devices, it will show up in intelligent TV sets, car dashboards and intelligent public access terminals such as bank ATM’s all tied to a common network.

Josh continued: Communications is no longer just about voice; it’s now multi-modal: mood messages, chat, voice calling, multi-party calling, video calling (did I also hear him mention multi-party video calling?) and online screen sharing. Where and how we communicate is expanding: laptop, mobile phone, flat panel TV’s – “any connected computing device with the addition of software becomes a communication device”.

He went on: With hardware and network access becoming a commodity, the opportunity for margin is to capture it at the application layer. Software companies will drive the innovation in the industry, drive the demand for new hardware and better access. (Did he effectively read from the Voice 2.0 Manifesto?) Solutions must be device and network agnostic.

How big is the market? The $300B EBITDA of the $1.4T communication industry revenue is almost equal to the total revenue of global ecommerce and Search.

How did Skype build its business last year? Inherent reliability; it “just works”. While so much of Skype’s operating environment stands outside Skype’s control, yet Skype must try to provide the ability, through its software, to readily adapt to these conditions, especially at the user end point.

How does Skype make money?

• From user services:
  • What’s free (at no cost to Skype)? Skype-to-Skype calling, video calling, Chat/IM, Multi-Party calling, File Transfer
  • What’s Paid? Subscriptions (unlimited calling), SkypeOut (pay-as-you-go), Online Numbers, Voicemail, SMS
• From a partner perspective, licensing opportunities. The Skype-Nokia and Skype-MySpace relationships are two examples. Hardware royalties are another source. Carrier relationships, such as the 3 Skypephone example discussed below, are a third source for what are effectively licensing revenues.
• The third leg of revenue generation comprises some advertising opportunities that have arisen.

Yet Skype has inherent fundamentals that have made it profitable for the past six quarters:

• negligible customer acquisition costs (mostly word-of-mouth; compare with Vonage whose customer acquisition costs are in excess of $250)
• negligible capital expenditures and network maintenance costs (being peer-to-peer it’s Skype’s users who invest in capital items, such as PC’s, routers and Skype hardware, and in network maintenance through their Internet subscriptions)
• pre-funded accounts which result in negative working capital where subscriptions and Skype credits are paid up front but the revenue is recognized on a pro-rated quarterly basis (Have you ever noticed there’s no “phone bill” sent for payment once a month? – Skype has no collection costs)
• strong free cash flow conversion ($1.00 of EBITDA for Skype is almost $1.00 of free cash flow)

The results: Skype’s profitability has grown to the point where they achieve 20% “segment margin” an amount that Skype contributes to eBay’s overall profitability (segment margin makes no allowance for allocation of eBay corporate costs).

Additional data provided:

• Skype continues to add over 350,000 new account registrations per day
• account registrations are distributed geographically as shown on the map to the right; he labelled North America as a “developing” market with rapid growth
• A year ago Skype celebrated support of over 100B cumulative calling minutes since its launch; in 2009 Skype expects to do this same number within the year
• Over 8% of the world’s international calling minutes are on Skype
• from December 2007 to December 2008, video calls increased from 27% to 34% of calls
• due to its peer-to-peer architecture only Skype can deliver a video experience for free, and at performance levels unequalled elsewhere.
• while active users rose 39% in Q4 2008, engagement, defined as ‘calling minutes per active user’, rose by 72%
• while calls under 2 minutes duration dropped from 41% to 33% comparing October 2007 to October 2008, calls in excess of 10 minutes rose from 37% of calls to 47%. Josh attributed this to higher reliability and call quality.
• small changes make a huge difference:
  • increasing penetration of paid products by 1% brings in $60MM of additional revenue
  • to be a billion dollar business, Skype needs its existing paying users to make just one more call per day
• Skype’s marketing approach was to drive awareness through embedding Skype into the “popular culture”, where it has been used on Oprah, Who Wants to Be a Millionaire?, CNN and other news reports.

Going forward Josh talked about three markets where Skype has barely scratched the surface: core consumer (size: $240B), mobile (size: $603B), and business (size: $203B).

For the consumer market, Skype has four approaches:

• continue driving new users (by building “communities” or leveraging social networks)
• better promote its paid products (make it obvious, upon registration, where paid products can be found – not buried three levels deep in the “My Account” tab)
• increase revenue per paying user (encourage adoption of revenue services based on calling patterns; continued focus )
• monetize free users via advertising (but be smart about it, do it tastefully and carefully all the while protecting the core business)

[Author’s note: Execution on the last will be interesting, given some experience with “free” voice services that have attempted to “blatantly” introduce advertising into calls themselves.]

Josh went on to discuss mobile, but that’s the subject of a separate post. However, take a look at the Skypephone on 3 success story:

• Over 500,000 units have been sold; this generates a monthly revenue stream to Skype
• 3’s margin on Skypephone is 20% higher than their average margin across all handsets
• 79% of Skypephone customers are new 3 customers

As for Skype’s business offering:

• 35% of users use Skype primarily, or often, for business
• adoption into business often grows out of individual employees using  Skype to call friends and family when on the road, start using Skype for multi-party calls, do video calls with customers and vendors
• leads to a call to Skype from IT managers who are getting pressure from their colleagues’ experiences (and, by the way, you can charge for it)
• needs to expand from being a product to being a solution that fits with other PBX and software solutions they are already working with
• create the infrastructure required to provide service and support services (revenue opportunity)
• build out a channel that reaches out to businesses that are familiar with dealing with VAR’s

Going forward:

• Act 1: (completed) one platform (PC’s), one revenue stream (SkypeOut), one market segment (long distance calling), one primary service (voice), one primary market (mature Internet markets – Europe and Asia) and one target user (consumers)
• Act 2: (now to 2011) is about “Many” – many platforms (PC, mobile, TV, web), diversified revenue streams (subscriptions, licensing, advertising), including business subscriptions; many conversation modes (voice, video, chat, collaboration tools), many regions and many target markets
• Act3: (2012 and beyond) “Any” – any mode, any platform, anywhere, multiple market segments, established products, regional ubiquity and mature target markets.

Josh’s forecast for 2011:

• More than double revenue in excess of $1B annually
• Maintain segment margins of 18% to 20%
• More diversified revenue streams: telecom, service and licensing fees, advertising)

His summary:

• Accelerating growth, outstanding fundamentals
• Attacking an enormous opportunity and positioned to win
• Business is getting stronger

Bottom line: For the first time a CxO level Skype executive has put out an extended set of benchmarks and guidelines against which their activities can be measured by all; the challenge now lies in the execution. And analysts finally get a more detailed view into this “mysterious” and oft-questioned Skype acquisition by eBay in 2005.

The audio recording and complete sides can be found for 30 days: click here and then select “Analyst Coverage” in the left sidebar. (viewer registration and Windows Media Player or Real Audio Player required). Or go directly to this link. Josh’s portion starts at 2:37:15 into the recording.

Related articles by Zemanta

• Nokia to preload Skype onto handsets beginning in Q3 (mobilecrunch.com)
• eBay: Good in Parts (readwriteweb.com)
• Is Skype for sale? (news.cnet.com)

Yesterday UK web publication TelecomTV put out a post “Skype claims mobiles are involved in a quarter of its calls“. But a “correction” comment by the author, Tony Chan, disclaims his basic premise:

CORRECTION: As the original author of this story for CommsDay, I am corrected by Skype that the 4 billion minute figure is actually for Skype-to-Skype minutes with video, NOT mobile.

Turns out to be a confirmation of what we have heard in the past: 25% to 30% of all Skype-to-Skype calls invoke video calling.

So how can one generate Skype-to-Skype minutes from a mobile device? What % of Skype-to-Skype minutes are generated from a mobile device?

• iSkoot: sets up a Skype session on their server using information delivered from the iSkoot client on a supported mobile device, such as BlackBerry or Nokia N-Series. When you make a Skype call, it’s Skype-to-Skype from the iSkoot server to your called Skype contact.
• Skypephone: uses iSkoot’s algorithm with the one difference. 3 has set up their own “iSkoot” servers to support this service. As of October 1, 3 customers using iSkoot or a Skypephone can now make SkypeOut calls from any 3 Skype-enabled phone also.
• Skype for Windows Mobile: here the limitation is the small, and decreasing, market share for Windows Mobile devices. It requires either a WiFi connection or 3G but the former is favored but both call quality and robustness reasons. But you can make both Skype-to-Skype and SkypeOut calls from this client. (And it’s the only instance of a true Skype VoIP client on mobile device — challenging both processor speeds and battery life.)
• Skype for Mobile – currently at a beta stage with limited outbound calling; this service fundamentally uses the same architecture as iSkoot. (I suspect iSkoot has any appropriate intellectual property protected under this. After all, Skype and iSkoot are working together on Skypephone, etc. But it is interesting to experience the difference in user interfaces between iSkoot and Skype for Mobile) Again this does not put the full VoIP client on the device but rather back at a server. Probably not too many minutes here yet.
• Update: Mobivox CEO Peter Diedrich emailed to remind me that their voice-enabled service also has the ability to launch Skype-to-Skype voice calls. From any landline or mobile handset worldwide the caller makes a “local” call to VoxGirl who, in turn, launches and connects to a Skype session on a Mobivox server. Effectively creating a landline- or mobile-to-Skype call, Mobivox requires no downloads or client software. VoxGirl will determine presence information to decide whether to proceed with a call; however, there is no IM/chat capability.
• I have described my experience with Fring for iPhone when it launched almost two months ago. My problem with any iPhone application of this nature is that there is currently no background processing such that you can allow an IM session to run in background while executing other applications.

And how successful has 3′s Skypephone service been? We initially heard some qualitative information at eComm 2008 last spring. But, information supplied by Skype’s PR this morning provides us the basis for an order-of-magnitude guestimate:

“…. since Skype launched the 3 Skypephone in November last year, there have been over over 100 million minutes of Skype-to-Skype calls by users of the 3 Skypephone and other mobile handsets with Skype and there are currently more than a million minutes of Skype-to-Skype calls each day on 3 mobiles in the UK.”

So out of 16 billion Skype-to-Skype minutes each quarter (as reported in the last eBay quarterly analyst call), it would appear that, at the current > 1 million minutes/day on 3, 75 to 100 million minutes per quarter are via mobile handsets. Hmmm, that makes about 0.5%  to 0.8% of all Skype-to-Skype minutes.

Why can 3 offer this service at such low prices? As explained by iSkoot CEO Mark Jacobstein at eComm 2008 last March, there are no termination charges for Skype-to-Skype calls, even when one Skype session is on an iSkoot server.

P.S. – Want to keep up-to-date on these issues? opens a week Monday.

Full disclosure: the author uses iSkoot on a BlackBerry Bold when out of the office; he has also experienced successful use on a Nokia N95.

Tags: Skype, iSkoot, Skypephone, Skype Mobile, eComm2008, Mark Jacobstein, Tags: TelecommTV, Tony Chan

Mobile carrier pioneer 3 has taken another step that reduces costs for mobile calling worldwide from any of the Skype-enabled mobile phone handsets in their offering. Effectively it means that 3′s customers can not only make free calls to other Skype contacts but also to any landline and mobile worldwide via an implementation of a SkypeOut type of service at SkypeOut rates. Skype-to-Skype calls remain totally free as well as Skype Instant Messaging activity.

As a result 3′s pricing plans and policy covers monthly subscribers and pay-as-you-go customers. For the latter a top-up will now provide ninety days of free Skype access. Most importantly there are no extra charges from 3 for using SkypeOut. And the fair use policy still applies. These plans apply to the two Skypephones as well as several models of both Nokia E-series/N-series phones and Sony Ecrisson phones.

What is 3′s motivation to do this?

• They have no connection charges for Skype-to-Skype calls
• 3 will receive revenues through Skype’s affiliate marketing program or a similar arrangement for SkypeOut calls.
• It is a key marketing tool for low cost recruiting of customers, building on their previous “Free Skype call” marketing activities.

With the forthcoming launch of Blackberry Bold at 3, similar customer benefits can be obtained using iSkoot, although without carrier support, there may be additional charges to access an iSkoot point-of-presence.

3 continues to pioneer development of business models for the incorporation of Skype into the mobile conversations world. 3′s services are available in U.K., Ireland, Sweden, Denmark, Austria, Italy, Hong Kong and Australia.

Tags: Skype, SkypeOut, 3, Hutcheson-Whampoa, Blackberry Bold, iSkoot

Powered by Qumana

Andy Abramson at VoIP Watch travels a lot to keep up with his ever expanding list of clients. And he has been having his home office renovated for the past few months. So he gets more experience than most of us dealing with all the trivia of travel, including keeping his communications costs down. Check out his post “Mastering Better Working Anywhere” for the details including:

7. For places you visit regularly, buy a pre-paid SIM card, avoid roaming rates. If you visit multiple countries get a travel sim from SIM4TRAVEL or MaxRoam. If you are in WiFi environments a lot, get an account with client Truphone. Bottom line is you will save money and be more connected.

He failed to mention his overall mobile strategy but Saturday he called me from a new Skypephone 2; I initially took the call on my Blackberry Bold (to which my Skype account is forwarded). Perfect call quality for a 5 minute conversation; when I arrived home we continued the call over my PC Skype connection with excellent voice quality. Andy thinks 3 sets the standard for carrier services; the final confirmation? He actually bought two Skypephone 2′s (the second one for his wife) on prepaid plans for a total of £99. His conclusion:

Bottom line, if you’re heading to the UK or any country 3 serves, you can expect this kind of a great experience. That makes 3 a Working Anywhere Approved carrier.

Tags: 3, Skypephone, SIM4TRAVEL, MaxRoam, VoIP Watch, Andy Abramson

Powered by Qumana

Over the past few months there have been a few Skype Journal posts about iSkoot and how they provide mobile device access to Skype’s services. Of course, iSkoot also provides the software behind the Skypephone on the 3 network in nine countries. Recently iSkoot has been getting some accolades from third parties:

Nokia named iSkoot for Skype as a featured Application of the Week earlier this month on both the Nokia site and the S60 site.

iSkoot loads your Skype contact list right onto your S60 device display screen, and with just a quick click of a button, you can call your contacts. With Skype online status information, you get the benefit of Skype’s awareness of user presence. You can see who is available to call or chat, and also change your own online status to let others know that you are free to interact with them. iSkoot allows you to talk to anyone around the world from your S60 device and offers network service in over 40 countries. Calling is as easy as just clicking on a contact on your S60 device.

Two weeks ago, John Halamka – Chief Information Officer at Harvard Medical School and the CareGroup Health System (to name a few)– named iSkoot for Skype as his “Cool Technology of the Week.” Using his Blackberry Curve 8320 he has also figured out how to use “local” pay-as-you-go: SIM cards to reduce or eliminate roaming charges while traveling abroad.

The iSkoot client places a regular local phone call to an iSkoot gateway server, then the gateway server places a Skype call, bypassing all long distance charges. While connected to the iSkoot gateway, the iSkoot client enables you to

* See who is signed in and view their online status
* Manage your own online status
* Click to call a contact
* Click to chat with a contact
* Make low-cost calls to any phone number, anywhere in the world using SkypeOut
* Receive calls from Skype users
* Add or remove friends from your contact list
* Refresh your contact list automatically or on demand

And finally, Alec Saunders of iotum where, amongst other titles he is Chief SquawkBox Officer, recently spent three weeks in Europe traveling with his family. Having been supplied with a 3 Skypephone, he came home saying that he found the 3 Skypephone was the most consistent means for him to maintain the limited degree of connectivity he required while on a family vacation.

Previous iSkoot posts:

• Skype on Mobile: North American Carriers’ Backhaul is the Ultimate Bottleneck
• What VoIP on Mobile Can Learn from SS7
• iSkoot – Providing Carrier Friendly Access for Skype Calls.
• eComm 2008: iSkoot Presentation
• Mobile VoIP Services — The Ergonomics of Making a Call Counts…
• Skypephone 2 at 3 August 18?

Hat tip to the iSkoot blog for pointing us to these recognitions.

Tags: iSkoot, Skype, John Halamka, Nokia, S60, Alec Saunders, SquawkBox, iotum

While I can find no press release from any of Skype, iSkoot or 3, it appears there was some 3 media event yesterday where it was announced that 3 will be introducing a new Skypephone 2 on August 18. Key new features include:

• 3G mobile broadband supporting HSDPA
• a 3.2 Mpixel camera (vs the current 2.0 Mpixel)
• integration of Skype contacts into the phone’s address book
• support for email (post-launch date)
• software to allow the Skypephone to be used as a modem when plugged into a PC (tethering)
• slightly larger screen (2.2 inch QVGA)
• RSS feed support
• a built-in Facebook application
• pricing of £69.95 on Pay-As-You-Go or free for contract customers

Chris Dawson at TameBay saw one yesterday:

The Skypephone however is the only handset in the world that has Skype built-in as an “always on” embedded tool rather than as an add-on application. That means it doesn’t eat into your data allowance and 3 allows a generous 4,000 Skype minutes and 10,000 Skype chat messages a month for free on the Skypephone.

At this same event it was also confirmed that 3 will be carrying the Blackberry Bold (where you have a full QWERTY keyboard for handling email and other keyboard-intensive activities).

Not exactly a quiet summer for smartphone introductions!

Tags: Skype, Skypephone, 3

While returning to the home office from my workout yesterday morning, before I started driving, I pulled out my Blackberry 8820, selected the iSkoot icon to open iSkoot (which auto logs into Skype), selected a Skype contact in the U.K., clicked on Call, heard a message asking me to “please wait while the call is completed” and within seconds I was talking to my contact in the U.K.

We talked for 15 minutes (over my nXZen Bluetooth headset for obvious safety reasons). A simple, straight forward, familiar user experience — total cost was a 15 minute charge against my Rogers wireless monthly subscription for a local call (from iSkoot’s Toronto POP to my phone). Even the callback operation itself was transparent to the user. In fact, it meets my “Truphone test” for user experience: Look up a contact in a device address book, select which phone number, press the Call button and the call is connected with no further user action.

If this sounds similar to the 3 Skypephone experience, it is. In my case the Skype button is replaced by the iSkoot icon on the Blackberry. Bottom line is that whether via 3 Skypephone or my Blackberry over Rogers a connection is readily made and there are minimal, if any, charges. And it is a very familiar user experience, comparable to making wireless calls via the service provider’s native (GSM) voice network. (Photo above: Blackberry 8820 running iSkoot and Skypephone together at Fall VON session on Goin’ Mobile with Skype.)

Since the introduction of the 3 Skypephone two weeks ago I have seen many commentaries attempting to find issues with the offering. Very simply stated the 3 Skypephone offers:

• Free Skype-to-Skype calling worldwide, reducing or eliminating international long distance charges, provided your contact is also on Skype (on any platform)¹.
• Free Skype IM (presence and chat)
• Unlimited Internet browsing

provided you contract to purchase a monthly minimum of £12 of traditional voice and SMS text messaging services from Hutchison Whampoa’s 3 Service. on an 18 month contract; the phone itself is then free. Alternatively you can purchase the Skypephone for £49.95 and do a minimum £10 monthly Pay-As-You-Go top up.

The Skypephone hardware is a quad-band GSM/UMTS² phone over GSM/EDGE 2G and GSM/UMTS 3G networks. It includes a 2MP camera and video camera along with music services including a (MP3) media player as well as a voice recorder. Think of the additional Skype button as an iSkoot icon on any other iSkoot-supported device such as the Blackberry 8xxx’s and Nokia N-series phones.

Fundamentally, the 3 Skypephone is a promotion to encourage generation of traditional mobile voice business over the 3 network. As a result there is no SkypeOut included whereas with iSkoot I can access SkypeOut numbers. In fact the lack of SkypeOut on the 3 Skypephone service will virally encourage Skype adoption by users’ contacts who are outside the 3 network service areas.

A key benefit of the 3 Skypephone to the rest of the mobile user world is that it is a pioneering carrier-supported service that threatens to be another crack in a disruption of the traditional mobile voice service business models.

Using my Blackberry I get my equivalent voice service with only the requirement to have a Rogers wireless subscription for a set number of minutes per month (I am not on contract at the moment), which I need anyway.

But there are some other comments in the blogosphere that also can affect the user experience³:

1. Having the Skype client on a server (and not on the Skypephone) means longer battery charge lifetimes for the mobile device and a more robust, carrier grade overall platform for connecting to Skype.⁴
2. Roaming on other networks is expensive regardless of your carrier. In fact, this was the number one issue discussed at a recent blogger dinner at Fall VON.
3. Should you have a Blackberry 8xxx or Nokia N-Series phone you can install iSkoot and have a similar user experience on any GSM network worldwide. In fact, 3 itself encourages the use of Skype for their X-Series customers using any of the Nokia: N73, E65, 6120 and N95; Sony Ericsson: W950i; or LG Shine U970 smartphones.
4. UMA/GAN provides an alternative path to low cost, familiar voice calling through its seamless transition of voice calls and data between GSM/2G/3G wireless and WiFi access hotspots.
5. Whether using VoIP or UMA/GAN carriers will still want to have some revenue generating plan, even if it is fixed rate. Both 3′s Skypephone offering with the promotion described above and T-Moible USA’s Hotspot @ Home unlimited use, but fixed rate, service represent the type of plan we can expect to see going forward.

There are three advantages to using the Blackberry 8820 and iSkoot:

• Having a QWERTY keyboard makes it a much easier to enter text messages, whether in Skype IM or SMS
• The WiFi inherent to the 8820 (or 8320 Curve) can significantly reduce carrier data plan usage, especially important when your carrier has no “unlimited” data plan.
• Blackberries inherently have the best battery management and charge lifetime of any mobile devices.

The only issue I cannot fully address is the Skypephone’s voice quality. Certainly the Blackberry-based call I made was limited to the <~3 kHz audio bandwidth of a cell phone and did not inhibit the conversation. Until I know the voice engine within the Skypephone and with no experience using it, I cannot comment. (Link to an experience using Skype on a mobile device with a wideband voice engine.) However, the reviews linked below speak favorably of the voice quality.

Bottom line: it’s the user experience that matters. In architecting the service its goal has to be ease-of-use, robustness and reliability along with a service plan that will be very attractive to generating customers. Using my criteria for evaluating mobile Skype services, it stands up quite well in both in terms of features, especially Skype features, and the user experience. And may it contribute to driving lower mobile user costs for both voice calls and mobile web activities.

Related posts:

• Time Online: On test: the 3 Skypephone

The other great feature of the phone is the ease of use. You sign in on the handset with your Skype account details at the outset. This takes less than a minute. Once signed on, you press a single Skype key and the screen shows all your contacts and their status, exactly as you would see on your computer. You can use Skype to chat or call them. Pretty simple.

• Technical Itch: 3 Skypephone Review

The Skype phone is all about free phone calls, and opening Skype to a whole new mobile audience, and for that purpose it does a good job. With a sub £50 price tag on PAYG it represents great value for money.

• A Primer for Skype’s Direction: Mobile Conversations

¹ Note there is a cap of 10,000 IM messages per month (333 messages/day) and 4,000 Skype minutes per month (2 hour 20 minutes/day). With a T9 keyboard you would be hard pressed to generate 100 chat messages per day.

² 900 MHz, 1800 Mhz, 1900 MHz GSM and 2100 MHz UMTS. Without the 850 MHz band, it is not suitable for North American GSM use. Yes, as evidenced by the photo above, I saw a Skypephone running on AT&T while at Fall VON.

³ Normally I would refer to a press release received by many bloggers in the past couple of days but in this case the release was quite pretentious and misinformed with the result that I don’t want to give it any publicity that it really does not deserve.

⁴ Today a very significant portion of all long distance calls use VoIP at some stage in the connection between end points; the carriers just don’t want to announce that they too have figured out how VoIP can reduce their service costs. The key here is that the VoIP interface does not have to be on the end point device to achieve a cost saving, whether for the user or the carrier.

.. in the UK at least. Today, as one partner participating in the 3 X-Series service announcement by Hutchison Whampoa’s 3 Group, Skype has announced its first truly mobile offering where Skype users can make “free” Skype-to-Skype calls on a mobile phone. Starting December 1, 3 Group will launch a new flat fee mobile broadband Internet service in the UK. In the press release related to this announcement Skype CEO Niklas Zennström said:

With 3, I am very proud to say that for the first time, our users can now try out making Skype calls on the move using a mobile phone. We always want to delight our users by letting them try out new ways of keeping in touch. This is a real milestone for Skype because now you can use Skype beyond the PC, no matter where you happen to be.

CIO Now has an excellent detailed description of the impact for Skype; the key points being:

• 3 Group will launch the new X-Series service December 1 in the U.K. and roll it out to the other countries in which 3 Group operates (including Ireland, Austria, Sweden, Denmark, Italy, Israel, Australia and Hong Kong) in early 2007.
• While it will be a flat-fee mobile broadband Internet service, no pricing has yet been announced.
• Initially it will only offer Skype-to-Skype calls; however SkypeOut and SkypeIn services will become available “next year”.
• It will require the much-anticipated Skype for Symbian client to run on the Nokia N73 multimedia personal communicator which will be offered as one of two handset offerings for the service.

The X-series service will also provide:

• Sling Player to watch your (home) cable TV on your mobile phone.
• Instant Messaging with text messaging via Windows Live Messenger or Yahoo Messenger.
• Mobile eBay connectivity
• Access, via Orb Networks, to the digital content that users have stored or accessed on their PC at home, including music files, playlists, digital photos and videos.
• Mobile Google

My comments:

• A flat fee service that includes a data plan is the only way Skype will make economic sense for users given the amount of “data” and associated overhead involved with Skype’s packets. Will this be the trigger that has other wireless carriers consider flat fee data plan services which could potentially cannibalize their legacy (GSM) wireless phone services?
• 3 Group will apparently be using the 3.5G HSDPA data protocol for this service. Do the costs associated with this protocol provide reduced carrier costs such that flat fee data plans become economically viable?
• As the Nokia N73 is the only device that will include Skype, it confirms that an initial Skype for Symbian client has to be available in December.
• In the web-based collateral (free registration may be required) that includes an interview with Niklas, there is only mention of Skype calls and Skype presence. Specifically there is no mention of text chat. (Will Skype IM suffer a split personality on some mobile devices?) Yet chat will be available in the X-Series Windows Live Messenger and Yahoo Messenger services.
• As for Mobile Skype evolution, it appears that Skype for Symbian will initially lack the full IM (presence plus text chat), SkypeIn and SkypeOut features of Skype Mobile for Windows.
• Latency has always been an issue for mobile VoIP using 2.xG data services; VoIP-based push-to-talk services on 2G can have up to 8 second latency. While my contact network tells me that 3G speeds resolve that issue, it will be interesting to monitor if there remain any latency issues.
• Sling is obviously about to announce a Sling Player for Symbian which I look forward to also trying out.
• When can we expect similar full featured services in North America from Rogers, Cingular and T-Mobile?

I close with this quote from Niklas’ interview produced by Cantos, 3 Group’s video public relations agency

Q. So what’s in this for Skype?

A. Over the last three years, we have changed the way people communicate with one another. We also want to continue to delight our users by innovating new ways to communicate, so this offering is the first major offering to bring Skype to a mobile phone, which makes it possible for the 136 million Skype users to use Skype when they’re on the go, on their mobile phone, so they no longer have to sit in front of their PC. That’s a major step for us. Over time, we also intend to improve this offer to include other Skype services. We start with the Skype calling between Skype users, online presence and the contact list. Over time, we hope to also offer Skype Out, Skype In, chat features, and other Skype services.

Interesting times are ahead for the evolution of Skype on mobile services. 3 X-Series is certainly a viable model for mobile Web and VoIP services going forward. Now the challenge is to make this type of service truly available to all 136 million Skype users worldwide – not just the millions who have access to a 3 service!

P.S.: my thanks to SparkPR for providing the 3 X-Series release in advance.

IntPowered by Qumana