Yesterday Phil Wolff at Skype Journal brought our attention to an “infographic” from the financial due diligence-minded Credit Score Blog for Focus.com. It attempts to provide a history of Skype both from the technology and financial performance perspectives. But, in addition to Phil’s Quibbles, I have found some others.

Click on the graphic to see a larger image.

Research and Design by Credit Score Blog for Focus.com

Accounts and Users – there’s a difference!

Skype now has registered somewhere beyond 700 million accounts, increasing by over 500,000 every day. But, as has been pointed out often over the past few years, this number in meaningless since over 75% of the accounts have not been used for quite some time for at least three months. Users die, they try out Skype and give it up, a business will register new business accounts for employees who resign or are otherwise terminated. The list of reasons for not using an account can go on forever. (Unlike direct mail lists that can lose 20% of their accuracy every six months, users who move geographically can continue to use their Skype accounts provided they have an Internet connection.)

Starting with the IPO filing last year, Skype finally started to give out a more realistic number – the number of users who actually made at least one call or participated in at least one chat session in the previous calendar quarter. Whereas there were about 125 million in the April – June quarter of 2010, this number has risen to over 170 million for the January to March quarter 2011. In other words this is the number of active users.

So while Skype had registered over 100 million accounts in 2006, they did not reach the level of 100 million users until late 2009 or early 2010. It’s those active users whom become interesting to Microsoft as they work with their Skype team to develop plans for Skype’s (and Microsoft’s) growth.

Skype’s history with Video Calling – Sorting Out High Quality Video and HD Video

Yes, Skype introduced video calling in early 2006; it first came of out beta with Skype for Windows 3.1 in early 2007 delivering 320 x 240 images @15frames-per-second . However, in November 2007, Skype showed it got serious about taking the lead in video calling with the introduction of High Quality Video which required a new line of Logitech webcams, new video codecs from On2 (since acquired by Google) and a new version of Skype for Windows (3.6) that could deliver VGA resolution (640 x 480) at 30 frames-per-second and over a 384 kbps upload speed Internet connection.

With its superior quality that delivered in-your-face real time video, Skype video took off to the point where today video calling represents about 40 per cent of all Skype calls.

In 2010, with the launch of Skype for Windows 4.2, Skype announced support for 720p HD video calling; at the time it only supported webcams from two vendors: the FREETALK Everyman HD and Facevsion N1 webcams. HD video was off to a rocky start; it required at least 1.2 Mbps upload speed on the Internet connection (above the upload speed of most broadband connections) and there were call reliability and stability issues. With a firmware upgrade in December (FREETALK, Facevsion) and the release of Skype 5.0 for Windows, HD video calling has become a much more reliable service. Recently Logitech released a line of webcams that support HD Video calling. Over the past few weeks I have received HD video calls from Logitech webcams where callers had only a 1 Mbps upload speed.

With respect to the Infographic:

• Skype released High Quality Video in late 2007; they did not release HD Video until 2010.
• A major milestone for Skype video calls was the introduction of video calling on iPhones at the end of 2010.
• Finally, in early 2011, Skype took Group Video Calling out of beta, increased its capacity to ten participants and offered it as one component of its revenue generating Skype Premium service.

Microsoft Anywhere Graphic – What Happened to Outlook and Office?

The infographic attempts to illustrate all the potential Microsoft products that could benefit from embedding Skype technology and services. But what happened to Office and, especially, Outlook? At the press conference there was, to say the least, a strong emphasis placed on how Skype could be integrated with Outlook for both consumer and business use.

For Windows users, Outlook has become the core resource for managing users’ contacts; many products’ address books and scheduling features rely on the user’s Outlook Contacts and Calendars as the primary source of contact and calendar information. Outlook is critical for synchronizing a mobile phone address book, keeping the user’s schedule current and integrating Outlook information into third party collaboration services as well as many other Microsoft and third party offerings.

Full disclosure: the author’s first association with Skype involved beta testing of the Skype Email Toolbar, an Outlook plugin that allows you to make Skype calls directly from Outlook. However, the Skype for Windows client now incorporates an optional feature for importing Outlook contacts into a user’s Skype contacts, so this plugin has become a secondary offering.

I’ll place my bets on Outlook being the first or second Microsoft product to find Skype embedded into it.

Skype and Its Competition

That competition bar misses a couple of key aspects of Skype:

• Internationalization: Google Voice really only works  if you live in the U.S.; after all these years it still has no offerings for the rest of us around the world. Personally I have set up a Google Voice account during a recent visit to the U.S. but it’s of no use to me when at home in Canada.
• Technology: Over time Skype has developed some very unique technology that delivers a unique conversation experience; for example,
  • the SILK codec provides crystal clear voice on Skype-to-Skype calls, even when calling from/to iPhones and Android phones.
  • Video: Skype is unique in providing 640 x 480 video calling @ 30 fps via a simple user interface. Since its introduction in late 2007, there has been no competitive service with such a large network of users that can deliver this quality of real time video calls. And now HD video capability is starting to penetrate the user base.
  • Network connection: Skype has introduced features that monitor and adjust to the conditions of a call’s network connection such as to minimize the chance of call failure.

Bottom Line: While the infographic is a good attempt at outlining both Skype’s financial background and user experiences, it is missing some key elements that have the potential to contribute significantly to Microsoft’s ability to benefit from a $8.5 billion acquisition.

The key risk lies in how effectively Microsoft’s various product teams can work with the Skype teams to develop world changing communications-enhanced offerings. It’s a challenge to Microsoft’s ability to support real innovation. This represents the best opportunity for demonstrating Alec Saunders Voice 2.0 Manifesto where talk is the baseline, the meter is “off” and communications-enhanced applications are the value creators.

Related articles

• Microsoft Acquires Skype – The “Amber Mac Test” (voiceontheweb.biz)
• Microsoft Acquires Skype – A Most Interesting Marriage (voiceontheweb.biz)
• Microsoft Acquires Skype – Steve Ballmer Does Skype Europe (voiceontheweb.biz)
• Microsoft Acquires Skype – An Investor’s Perspective (voiceontheweb.biz)
• Skype’s Rollercoaster History [INFOGRAPHIC] (mashable.com)

For over a year the author has been a keen user of Skype for Windows 5 as a Skype client that has simplicity, yet flexibility. It’s easy to manage contacts, follow conversations, handle video calls as well as archive and search conversation history. Yet, with the release of Skype for Mac 5, there has been a “Skype for Mac 5” fever outbreak on the Internet due to its lack of consistency with these features. Bottom line is that users are confused and, in many cases have gone back to Skype for Mac 2.8. On the other hand the Skype for Mac team says they are listening.

In the previous post in this series, Skype for Mac 5: Returning to Ecstasy – Step 1 – Consistency, after pointing out how widely Skype for Windows 5 has been accepted, I went on to discuss some consistency issues including the use of the left Contacts pane. It is primarily used for managing Contacts and selecting a Contact or Group with whom the user wants launch or monitor conversation activity, whether chat, voice or video. One key recommendation here was that, in Skype for Mac 5, not only individual Contacts but also Contact Groups should be managed in this pane.

This post focuses on the right Conversation pane which, for the most part, manages and, as appropriate, archives content associated with the user’s conversations such as chat text, call detail records and file transfer information.  During Skype for Windows 5.x voice and video conversations it also displays, in the upper part of the pane, not only other party’s Skype profile graphic or video associated with the call participants but also user “controls” to manage how the call proceeds:

• a Call Bar beneath the image allows the user to manage the call activity, such as adding people, bringing up a dial pad, opening a chat window, sharing a desktop or file and, via the Call Quality Information  tool, monitor associated hardware and Internet connection conditions. This latter tool has been discussed previously with a recommendation to adopt all the features of this call bar in Skype for Mac 5. Also note that, from the CallBar, there is an obvious icon from which you can open a chat window below the video image.
• during a video call you can select whether you want to continue to view the video within the Conversation pane (with an option to zoom in on the image), in a separate “pop-out” window or Full Screen. There is also an option to capture a snapshot.

Recommendations for the Conversation Pane

1. Use the right pane solely for conversations; move all the Contact management activity, especially Contact Groups, to the left Contact pane.
2. Invoke all the features of the Skype for Windows call bar, including the Call Quality Information tool; this has been a most useful tool during calls in ensuring that all the audio and video hardware is working during (or prior to) a call.
3. Include the larger blue Chat icon, not a barely visible down arrow to open the chat window.
4. Invoke the Snapshot/Zoom/Full screen/Pop-out feature bar. When in an HD video call with Full Screen Skype is approaching a telepresence effect that will be even more useful with newer (HD) webcams that can pick up an entire small board or meeting room.
5. Invoke these changes while leaving available the existing View options to have a small Call Control bar that remains visible while in other Mac desktops and to have a list of contacts online. Useful options but they should be “Mac” enhancements to the feature set of Skype for Windows 5.
6. As with Skype for Windows 5, invoke a “Home” screen for viewing some conversation history information and manage the User’s Skype profile.
7. I’m neutral on whether to invoke Facebook; occasionally I find it useful.
8. Keep the indicator on the left of the panel for expanding the video image to the full width of the Skype window.

Bottom Line: Users are not only looking to have all the primary Contact, Calling and Conversation features available across Windows and Mac (and potentially Linux) platforms but they are most comfortable when there is consistency between the User Interfaces. In some cases there is a feature that is currently available in Skype for Mac 5 (such as viewing Full Screen) but it’s the User Interface triggering “button”  or icon that should have a base level of uniformity across all platforms.

One may say that most users have only one platform but I am in a family where some members run on Windows while others run on the Mac. Also during cross platform calls it is features such as the Call Quality Info or Sharing icon that I ask the other party to use or seek out when they are having difficulty with, say, their hardware or features such as screen  sharing.

Other posts in this series:

• Skype for Mac 5 – From Ecstasy to Agony
• Skype for Mac 5: Returning to Ecstasy – Step 1 – Consistency

Other views on this issue:

• Ignore the Code: Skype 5 Ideas
• Dan York, Disruptive Telephony: My 3 Main Issues With Skype 5.x For The Mac
• Balance Network: Skype 5 for Mac Redesign, “A little more than just a Chat Style”
• Attack of Design: Skype Beta for Mac’s Usability Failings
• Hudson Barton, Aaytch: How To Fix Skype-for-Mac 5.x
• Andy Abramson, VoIP Watch: Skype Has Another Set of Outages Yesterday
• Keith Lang: screen shot on how to organize Contacts
• Jaanus Kase: Skype 5 for Mac: spatial arrangement and inconsistent single-window design

And, for those design masters: enter the Mac chat style competition; competition announcement

Related articles

• Skype for Mac 5.0 Goes Gold: Incorporating Beta Feedback and More (voiceontheweb.biz)
• What’s New in Skype 5 for Mac? (appreaders.com)
• Skype’s "Easy Conference Call" – A Hidden Gem (voiceontheweb.biz)
• Skype for Windows 5.2 Released: Subtle Window Dressings (voiceontheweb.biz)

Last spring Skype launched Skype for Windows 4.2 with support for HD (720p) video calling at up to 22 fps using one of two Skype-certified HD webcams with an embedded H.264 processor to offload the video processing from the user’s PC.  However, it turned out the calling experience ranged from excellent (for example, the call referenced in the post linked above) to erratic depending on the endpoints’ network conditions and CPU load. In fact, support of the embedded H.264 processor quietly disappeared in the initial releases of Skype 5 for Windows; under the correct conditions you could still have HD video calls happening but using the legacy VP71 codec that used the processor (CPU) on the caller’s PC.

This week Skype released a Skype for Windows 5 update that, amongst other issues, restored support for the H.264 processor on these two webcams and provides other improvements to the Skype video calling experience. However, it also requires a firmware upgrade on the TALK-7140 FREETALK Everyman webcam and the FaceVsion Touchcam N1.

In my limited experience, to date, with these updates, the first change I noticed was that the webcam would open up much more quickly on launching a video call. A second change is the significantly improved stability of the High Quality Video mode (640 x 480 @ >24 fps) when conditions are not appropriate for HD resolution. And, most importantly, Skype no longer crashes arbitrarily during a call. Overall a much more stable, robust and reliable video calling experience, at both High Quality Video and HD resolutions, is the outcome.

The updated FAQ for the FREETALK Everyman webcam also includes some useful information on the requirements for HD video calling:

Make sure both sender and receiver have installed the latest version of Skype for Windows; HD video is only supported by Skype for Windows 4.2 or later.[Ed.: It’s Skype for Windows 5.0.0.156 that is required to take advantage of all the upgrades.]

HD video (720p or 1280 x 720) requires an Internet connection with a minimum upload speed of 1.2 Mbps. Where there is insufficient network upload speed the Skype program will set the webcam automatically to Skype’s High Quality Video (640 x 480) with a minimum upload speed requirement of 384 Kbps, which is supported by most broadband (cable, DSL) Internet services.

Also note that there is some negotiating between the Skype program and the network that occurs when you start a Skype video call. Whereas Skype takes up to a minute for a High Quality Video call to be established, it can take up to 3 or 4 minutes (but usually ~ 2 minutes) for a video call to change over to sending HD. You will know you have achieved HD video when you see that the video image aspect ratio changes from the Standard 4:3 to HD video’s 16:9 ( in effect the image width becomes much greater than its height; it appears "more rectangular").

Other factors influencing HD video include the need for at least a dual core processor on your local PC and the RAM available. Try reducing the number of programs open, especially if you have <4GB RAM on your PC.

Skype also has a "bandwidth management" feature. Skype is constantly monitoring your network connection; should conditions degrade (due to conditions beyond Skype’s control), you may see your call drop back to High Quality Video or even lower (320 x 240 or 160 x 120). But if network conditions improve again, Skype’s bandwidth management will automatically restore better resolution all the way back to restoring HD video (when you have the other requirements for HD video).

See the Call Quality Indicator (Check Settings) to right of the "Call" and "Video Call" buttons for Call Quality information. This will give an indication of the system resources available for making calls (video or audio). See Call Quality Guide for suggestions to resolve any call issue

Bottom line: So the check points are:

• Upgrade to the latest update version of Skype for Windows 5 (5.0.0.156 or later); also perform the one-time update of the supported webcam’s firmware as outlined above.
• Ensure you are  using a dual core processor PC and, if you have < 4GB RAM, minimize the number of open programs.
• To send HD video, ensure you have a broadband Internet service with a minimum 1.2 Mbps upload speed.
• To receive HD video, ensure the recipient has a minimum 1.2 Mbps download speed (not an issue for most broadband services) and is using a Skype client that supports receiving calls from a contact using the H.264 processor (Skype for Windows 4.2 or later, Skype for TV).
• Be patient: It will take from 30 seconds to 4 minutes for the HD-supported webcam to switch to HD video after launching a video call; this is observable by the change of aspect ratio from 4:3 to the more rectangular 16:9 format.
• With Skype for Windows 5, Skype launched an improved bandwidth management feature which can often recover optimum conditions after a deterioration of a network connection (including after a total call disconnect). This feature also recovers HD from High Quality Video after a network connection’s recovery from a degradation of connection conditions.
• Note that the driver for these webcams is embedded in the webcam firmware such that no driver installation is required; just plug in the webcam (and perform the one-time update of the firmware as described above, if necessary).

Hint: I would also comment that one of the most useful improvements with Skype for Windows 5.0 has been the real time Network Connection condition indicator accessed from the revamped call bar in this version of Skype for Windows.

From it you can monitor any changing network connection conditions during a video call; and it will advise you of attempts to improve conditions and/or to reconnect a lost call. This Call Quality Indicator also allows real time monitoring of other hardware associated with supporting a Skype call.

As I gain more experience with HD video calling using these upgrades, I’ll provide further reports.

Full disclosure: In Store Solutions, producer of the FREETALK line of Skype hardware sold via the Skype Store or freetalk.me website, has become a client of Denali InterConneXions, publisher of Voice On The Web, building on the author’s previous business development experience with establishing partnerships that can assist with the promotion of a primary vendor’s offerings. In Store Solutions also is responsible for the shopping cart for sale of the FaceVsion webcam on the Skype Store.

Related articles

• Download: Skype for Windows 5.0.0.156 (skypejournal.com)
• CNN uses Skype group video for call-in segment; violates Skype’s Broadcast TOS (skypejournal.com)
• Skype 5 Forcing Updates (chris.pirillo.com)
• WebM Video Codec in Skype 5.0 Group Video (webmproject.org)
• Facetime for Mac: Adding Millions to the FaceTime User Base (voiceontheweb.biz)

This morning Skype released, for public feedback, Skype for Mac 5 Beta 1 with a range of new features and modifications of the legacy user interface. My first experiences with it over the past couple of days generate some interesting questions (that I’m sure many developers face when developing applications for both Windows and the Mac). Keep in mind that this is a beta and Skype is looking for user feedback; I’ve already reported a couple of minor bugs encountered in my normal use of the application.

First, what’s new? Many features from Skype for Windows 5 and then some:

Bringing it up to Skype for Windows 5 features:

• Multi-party video (beta with the 28 day free trial; no mention of charges)
  • Dan York: Skype 5.0 Beta for Mac OS X: A First Look at Group Video
  • Speaking caller’s name turns green (instead of a blue halo)
• Offline IM: so you can send and receive chat messages while the other party is offline
• Improved experience with network-compromised calls
• Recovery of dropped calls (A most useful feature in Skype for Windows 5)
• Scroll up the bottom of a conversation window to expose the chat window for the conversation
• Join an ongoing conference call
• Add phone numbers to a Contact’s Skype profile (been very handy in Skype for Windows 5)
• Integration with the native Mac Address Book (vs the native Outlook Address Book)

And here’s what’s different:

• A significantly different User Interface (which is supposed to be more Mac-like)
• A Call Control Bar that stays above any documents or other application window that you have open
• Maintain a set of Favorites in the Contact Sidebar for frequent Contacts
• Contact Profile also contains all recent conversations with the Contact
• A Contact Monitor that lets you see a list of Online Contacts (upper left corner of the above image)

Dan York has a second post that covers much of the above: Skype 5.0 Beta for Mac OS X: A First Look with Screenshots.

And here’s what’s missing:

• Call Status Bar from Skype for Mac 5 Beta 1

• Call Status Bar from Skype for Windows 5.0:

• I would really like to see the DialPad, Screen Share and Add to Call, as well as the Call Quality Information icons included in the one primary Call Status Bar as done in Skype for Windows 5.
  • at the moment they tend to be scattered around the conversation screen and not easy to find. For instance the Dial Pad is buried obscurely in the lower left corner of the call window.
• And, talking about the Call Quality Information, the new version of this in Skype for Windows 5 is a very handy tool for determining the status of hardware and network connections with a readily accessible single click:

This is one other “would-like-to-see” in Skype for Mac 5 as it has really helped with determining the cause of any call issues in real time.

The User Interface:

With the introduction of Skype for Windows 4.0 (and enhanced in Windows 5), we had to get accustomed to a new User Interface algorithm. Once I caught onto its separation of Navigation (Contacts, Conversations Directory) and Content (Chat content, call History, File transfer history, etc.) algorithm, it turns out to actually be very efficient for dealing with all my Skype conversation activity. I can easily find previous conversations, Search old chat sessions, check out Facebook New Feed, and find other content. (And if I don’t want to look at the FaceBook News Feed, I don’t have to.) Most significant is its use of Tabs to help maintain focus on the task at hand:

I still need to spend some time using the Skype for Mac 5 beta user interface; there’s something not quite so simplistic about it. There’s an attempt at separation of Navigation and Content but it’s not so obvious. Fundamentally Skype for Windows 5 has figured out how to use Tabs effectively; the lack of Tabs in Skype for Mac 5 beta is what I feel is hindering the ease of user operations. Whereas Skype for Windows 5 “hides” what you do not need, Skype for Mac 5 beta appears to be totally ‘in your face” and cluttered. I would strongly suggest having some discussions with the Skype for Windows 5 product management team along with an investigation of the use of Tabs.

In another post I ‘ll have more to say about Tabs in the Skype interface as they can be used to address another issue that is arising at this time as well (but not discussed here).

What do I like about Skype for Mac 5?

• Video call quality; in the few video conversations I have had, the video quality has been excellent
• Multi-party Calling and the way it is presented; very “Mac-Like” (acknowledgements to Dan York for the image on the right)
• The Floating Call Control Bar
• The Contact Monitor
• Mac Address Book integration
• Handling of Favorites

Finally, Dan York made a video this morning where he demonstrates many of the features of Skype for Mac 5 beta, including a multi-party Skype video call; an eight minute training video to learn about all the new features in action:

Bottom line: it’s a beta, there are a few minor bugs but it needs feedback from the general Skype user community. And I really think a usability review would be in order along the lines suggested in this post. On the other hand, finally Mac users can take advantage of many Skype for Windows 5 features; it’s definitely a step in the right direction.

P.S.: Did I mention that Dan holds a copyright on requesting upgrades for Skype for Mac?

Two posts from Skype:

• The Big Blog: Introducing the new Skype for Mac, now available in Beta
• Skype Garage Blog: Skype 5.0 Beta for Mac (including Release Notes)

Download it here.

Related articles

• Skype For Mac: The TNW Complete Review [TNW Apple] (thenextweb.com)
• Skype 5 Beta for Mac Now Available (macstories.net)
• Skype Group Video Calls Come To The Mac In Beta (techcrunch.com)
• With Facetime Looming, Skype Outs a Better Mac Client (gigaom.com)
• Skype 5.0 for Mac Beta is now available — includes group video chat (tuaw.com)
• Skype Group Video Calling Comes to Mac (mashable.com)
• Download: Skype for Mac 5 Beta (skypejournal.com)
• Skype 5.0 for Mac beta gets group video chat, redesign (macworld.com)
• Facetime for Mac: Adding Millions to the FaceTime User Base (voiceontheweb.biz)
• Skype 5.0 Beta for Mac Arrives…But Where’s Facebook? (readwriteweb.com)

“Fring is not a communications platform, but only a toy or at best a testbed for shiny objects.”

Comment by Hudson Barton on Andy Abramson’s post: Fring Fumbles on Cross Platform Video Chat

In observing the evolution of Skype and third party access to it over the past few years I have often wondered how far Skype would go in allowing third party services to deploy Skype as one communications mode in a multi-service communications offering. Fring and Truphone are two examples. Usually these offerings figure out a way to put up a temporary Skype client on a “gateway” server and then build their own interface to the Skype client on that gateway.

There are issues of scalability, service quality (especially voice and video quality) and the overall user calling experience that could potentially compromise the user’s experience in taking advantage of the resulting Skype connection. It’s one thing to show that technically one can make the relevant voice and video connections but the challenges rise to a significantly higher level when taking into account the overall user experience.

Personally I look for services that allow me to easily find and select a contact, select the calling destination (Skype, Home, Mobile, Office, for example) and then click on either a soft button or the hardware green button and make the connection within a reasonable time (say, less than 30 seconds). I find the multi-service communications offerings to be a bit overbearing and almost too overwhelming for a non-technical business and consumer user.

Today there’s lots of coverage about Fring and its use of Skype (or now lack thereof); Dan York has provided an excellent summary of the various viewpoints in his post: Skype vs. Fring: Is Fring not telling the whole truth?. Very significant is the speed with which Skype’s Vice-President, Legal responded to get their side of the story out; their legal personnel usually have stayed out of the public discussion on any of Skype’s market-related issues.

But getting back to basics, there are three considerations:

Skype is Fundamentally Communications Software: we have heard this many times from Skype CEO Josh Silverman; he repeated and emphasized this during our CES conversation last January. As a result they own the intellectual property rights to their software. But they have been successful largely because they make much of their intellectual property available free – they can afford to do this since the capital overhead for Skype-to-Skype calling is so low. We as users provide the key piece by using Skype on our PC’s or other Skype-embedded hardware devices. On the other hand they need the intellectual property protection not only to defend potential revenues but just as importantly to defend their brand.

Best examples of this include:

• Skype video calling – here’s the 1964 AT&T World Fair concept now going out thirty-five years later with no charge for one-to-one video calling and being used on ~35% of Skype calls.
• Skype has also made their SILK codec available royalty-free provided the licensee meets performance criteria. As demonstrated with Skype for iPhone over 3G, SILK has the potential to revolutionize voice quality on mobile calling (and I’ll pay one or two dollars per month just to have the superior voice quality after many years of mobile phone calls with somewhat challenging audio quality ). Blabbelon provides an excellent example of incorporating SILK.
• Skype mobile on Verizon: here is a software development and licensing agreement that generates sustainable revenue streams for both parties while delivering a significant benefit, namely free calling to Skype contacts worldwide, to Verizon customers when calling from the U.S.
• With the success of Skype as a commercial TV production platform, Skype has developed special licensing terms for users of this application.

The bottom line is that all these, including making basic Skype-to-Skype calls using the standard Skype clients, involve some form of license agreement that is being adhered to.

Skype is Ultimately About The User Experience: Skype’s brand focuses well beyond the enabling technology to incorporate the entire user experience. It was ease of installation and use that allowed Skype to be adopted so readily such that over 600 million user accounts have been created with around 100 million active users. Skype’s VP for Mobile, Russ Shaw, re-emphasized this during our conversation at CES. We witness this in the recent launches of Skype mobile on Verizon and Skype for iPhone over 3G. While I can only rely on third party reporting about the former (not being in the U.S.) which has largely been positive, for the latter I simply installed the software, looked up a contact, clicked on the Call button and made this excellent quality call to the U.K. using Skype for iPhone over 3G. Woops, did I mention the quality of the call again? Overall both applications set a higher standard for the user experience.

Skype is Opening Up to Developers: Yes, there has been a rough ride for developers over the past four years. PamConsult, Netralia, InnerPass and OnState have persisted with their offerings and have demonstrated the potential for Skype and third party applications. But the recent launch of SkypeKit beta – in a phased program to ensure control over quality and service level issues as the program evolves – opens up significant opportunities for third party developers. Suffice it to say that I know we can expect not only significant software partner offerings but also some innovative hardware offerings based on SkypeKit. Once again, however, there are licensing guidelines to ensure the integrity of Skype’s brand.

But the bottom line is this: sure Skype reserves the right to generate revenues where they see a significant value-add market opportunity but even with their free offerings they want and need to preserve their brand image. It would appear from Skype’s legal executive’s comments that they have been trying to work out a way to interact with Fring without success; Fring has certainly been around for over three years in one form or another, including attending Skype-sponsored events. As Andy Abramson says:

As we all know there are three sides to every story, but given Fring took the shot first, an old rule of thumb in a legal battle is get the word out first. And Fring did. Now Skype, whose legal minds are based on the West Coast, as well as their platform team and video folks for the most part have gotten in and replied.

We now are starting to get a better handle on how Skype will establish the playing field for third party applications, hardware and services. The evolution of the Fring relationship (or lack thereof) will provide a concrete example of how far Skype will go in allowing third party affiliations.

Full disclosure: yes, I tried Fring several times in the past (when it had Skype access). Simply put, I never found a way to use it comfortably and abandoned it. I have used iSkoot successfully in the past; however, they no longer support current BlackBerry platforms. But all this flurry does generate the background for a future post on what I would look for in a mobile smartphone calling experience.

Re Truphone: I mentioned Truphone at the beginning of this post as another example of a third party service that offers Skype as one communication mode. I’ll have more to say on my Truphone experiences – both favorable and unfavorable in a separate post. At least I find it a reliable backup when I have no other choice for calling.

Related articles by Zemanta

• Skype and Fring Go to War Over VOiP Video Calls (mashable.com)
• Who Blocked Who in Skype and Fring Fight? (gigaom.com)
• Fring’s mis-use of Skype software was damaging to our brand and reputation (blogs.skype.com)
• Skype, Fring throw punches over iPhone hang up (reviews.cnet.com)
• Fring removes Skype functionality, then says Skype blocked it (downloadsquad.com)
• Update: Fring removes Skype video call support, what is best in the US now? (zdnet.com)
• Fring for iPhone now blocked from Skype. (thenextweb.com)
• SkypeKit: “Naked” Skype Support Arrives for Hardware-Embedded Skype and PC Applications (voiceontheweb.biz)
• Skype for iPhone 2.0 Released: 3G Skype-to-Skype Calling to Require a Fee (voiceontheweb.biz)
• Skype on Mobile over 3G: A Skype Video Calling First Experience (voiceontheweb.biz)

My initial experience with an FreeTalk product was back in December 2007 when I was provided with the FreeTalk Wireless Stereo Headset – Model 5191. I found I was using it continuously for the next couple of years – I could answer the door when Fedex arrived or let the dog out the back door, yet continue my Skype call (or listening to the audio of a YouTube video). Its ongoing performance is one  reason I took on some partner marketing and blogger relations activity for In Store Solutions as a client.

Why do I say for two years? Last fall In Store Solutions introduced an upgrade – the TALK-5192 FreeTalk Freedom Wireless Stereo headset with improved overall headset design, including a more robust “head size” adjustment and more comfortable ear pads. There is a more complete description, including a comparison with the FreeTalk Everyman Headset and a discussion of its unique wireless features in my post at the time of its introduction: FreeTalk Freedom Wireless Stereo Headset “2.0? – When You Just Can’t Sit Still During a Skype Call.

But, frankly, it’s not not my opinion you should be relying on; here’s some other blogger feedback:

Jonathan Jensen at sevendotzero:

Call quality is fantastic – being wireless makes no difference to the quality of Skype calls. Plus, the headset is very comfortable to wear. The range is good and allows me to stay connected a couple of rooms away. The sheer convenience has certainly encouraged me to use Skype even more.

….

Overall this is a great device that makes Skype calling even better and means I can fix myself another Nespresso in the middle of a conference call! Although not cheap at £79.99 from the Skype store, I don’t think anyone buying one will be disappointed.

Over at the PhoneBoy Blog, Dameon Welch-Abernathy reports:

Like its wired cousin, the Freetalk Everyman Headset, which I reviewed a while back, the focus is on audio quality. It rocks, even without wires! Skype-to-Skype audio quality is just like being there! It’s light and comfortable to boot.

….

While this headset is clearly geared at Skype (or other desktop VoIP usage), you can also use the headset to listen to music. Just like with Skype, the music sounds great!

Unlike the Freetalk Everyman Headset, which is priced absurdly inexpensively, the Everyman Wireless is more pricey but still respectable at $79.99 from the Skype store (prices vary outside the US). It comes with the dongle, a mini-USB cable, the headset, and the carrying case, as shown in the picture above. People looking for great audio quality without wires should seriously consider picking one of these headsets up.

For more product information and another viewpoint check out Skype Gear blogger Andrew Brennan: Skype Gear Roadtest: FREETALK Freedom Wireless USB Headset. One of the most telling proofs of its popularity is the number of calls I have made testing Skype HD video calling where the other party is wearing this headset.

(Update April 2011) So why did I bring up a post about the TALK-5192 FreeTalk Freedom Wireless Stereo Headset in June 2010?

Because during the month of June, 2010 there was a promotional offer at the Skype Store. You can still buy them at the Skype Store. But each FREETALK product still comes with FreeTalk customer support with a 24 hour response time,  as well as a one year warranty and a 14-day “no questions asked” return policy.

Full disclosure: In Store Solutions, producer of the FREETALK line of Skype hardware, has become a client of Denali InterConneXions, publisher of Voice On The Web, building on the author’s previous business development experience with establishing partnerships that can assist with the promotion of a primary vendor’s offerings. A more complete statement will follow shortly.

Since its release late Saturday, Skype for iPhone 2.0, with its support of calling over 3G carriers and superwideband audio using Skype’s SILK codec, has set the blogosphere awash with two genres of commentary: those who seem to think the end of free Skype calling is approaching as an Armageddon and those who recognize the launch of Skype for iPhone 2.0 as not only setting a new benchmark for mobile voice calling, especially for call quality, but also having a significant impact on the overall smartphone market.

Re the “small fee” (now set to start at the beginning of 2011), I simply say this is one more sign that Skype is a business with investors who are looking for a return. Nobody can argue about its value-add, both in terms of providing international mobile calling convenience but also by delivering a significantly enhanced user experience through establishing a new benchmark for mobile call quality. This outcome definitely justifies a “small fee”, provided it is not obsessive. Alec Saunders, author of the Voice 2.0 Manifesto, positions this issue appropriately in “Skype’s “small fee” is noise, guys”:

Sometimes you have to really shake your head at the quality of the commentary on the internet.  Fact: Skype has finally released a version of Skype for iPhone that supports calling over 3G networks.  Never mind the fly in the ointment that all the commentary is  stuck on – the fact that Skype wants to charge a “small fee” for you to use it on a 3G network.  Frankly, that’s noise.  People will pay for the ability to make a high quality Skype call on 3G, and not pay their carriers long distance termination charges in foreign markets.  So long as the fee is reasonable, nobody is going to object.

Alec goes on to make several points about what the launch of Skype for iPhone 2.0 really means; his post is well worth the read. (Full disclosure: as Canadians who participate in the Canada Pension Plan, Alec and I each have a $17.50 investment in Skype.)

As for the new benchmark for mobile phone call quality, there are several impacts. But first, if you have not heard it already, click here to hear Skype for iPhone 2.0’s “near CD-quality” call first hand between myself and Dean Elwood in the U.K.

Andy Abramson comments on how deeply Skype developers may have gone into the iPhone hardware to achieve this result in “Skype on 3G-Something Borrowed, Something New”; he concludes with:

How good? Well put it this way..why would anyone with an iPhone want to call over old AT&T after their first Skype over 3G call. Oh, and yes, it makes Skype on Verizon sound like, well, a plain old telephone call…..Ma Bell, you’re back sounding like you’re old self. The way the boys in the labs have always dreamed and said you could.

Over at Voyces.com, in “Skype for iPhone over 3G: An Industry Benchmark Game Changer for Skype”, I have commented on the broader impact of Skype for iPhone’s support of SiLK. Simply put, it has the potential to place Skype as a key mobile communications software infrastructure supplier across the entire mobile phone industry. Not simply because of the technology itself but rather as a result of demonstrating high quality voice calls accessible to Skype’s several million users through a single application for the iPhone resulting in several million end user experience – the “Skype network effect”.

With the support of SILK in a smartphone application that runs over both 3G and WiFi, calling costs become almost secondary to an exceptional end user experience with voice quality on mobile devices.

SILK has now become not only a benchmark but also a key communications infrastructure element. End users will pay for a quality experience, especially when it impacts business productivity. Both wireless carriers and smartphone vendors need to rush to ensure they have incorporated Skype’s SILK technology into their offerings. Otherwise the iPhone (iPad and iPod Touch) have one more key feature that sets them apart from the remainder of the smartphone users.

Dean Elwood sums up this “Skype network effect” best when he talks about the Skype “on-net” calling:

The proposition for Skype’s shareholders is the fact that you have to be on the Skype network in order to get the “near CD-quality”. Because you don’t get hi-def when you call a regular landline or mobile, only another Skype-enabled device. So if you want to make free calls to your friends, they all need to get on the Skype net.

and concludes with…….

It’s the mass-market adoption of Skype that makes it work. You need to be on their network, along with other contacts you call regularly, to make it work for you. So in the absence of interconnect, which Skype do not do, your a. n. other mobile VoIP carrier of the future has to start from the ground up.

Bottom line: Dean backs up his observations by telling me that he will be making most of his voice calls using Skype for iPhone when away from his office. It would be most interesting to see not only if this drives more users to using Skype as opposed to the carriers’ voice channels but also the fallout for the transition of communications from a very hardware-oriented infrastructure to a complete software infrastructure operating totally “in the cloud”.

Next: the questions that remain to be answered going forward.

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This morning I received a chat message from TechCraver’s Jason Harris asking if I would take a video call. Little did I realize that this was not going to be a normal HD Skype video call like our last one.

Jason is a fan of the Nokia N900 mobile computer which has always supported Skype voice and chat; he had just downloaded the PR 1.2 version of firmware and learned that it included support for Skype video.

So he called me; I answered on my Skype for Windows 4.2 client and found that it was initiating a Skype video call. Very shortly Jason appeared in full motion video using the N900’s front facing camera with VGA resolution. Occasionally the picture froze but quickly recovered. At my end I was using the new FREETALK Everyman HD webcam.

Here’s what impressed:

• coming from such a small device the video quality was certainly acceptable – from the Call Technical Info I was receiving him at 320 x 240 resolution
• the call was supported by the G729 voice codec, the same voice codec used by the currently available version of Skype for iPhone.
• the N900 was using a H264 video codec sending me 320 x 240 at 14 fps – obviously embedded in the new firmware (if not in earlier firmware);
• My video was also going out over the H264 video processor embedded in the Everyman HD at 160 x 120 resolution at 19 fps. When you look at the image Jason was receiving you can see why it would be at such a low resolution.
• the call was being handled at his end by T-Mobile’s 3G network

Now the Skype for Windows Call Quality Indicator was showing a poor quality network connection; that has to be a result of the 3G wireless end as I had just completed an HD video call to Europe with its demands for a minimum 1.2 Mbps upload speed.

Bottom line: For personal video calling this certainly is a good start. As mentioned in a previous post we should be seeing such calling on the iPhone (and iPad) later this year. It certainly has to open the question as to whether Skype is now developing a Skype video calling feature for Skype for iPhone (especially given the new features available in iPhone OS 4.0, such as multi-tasking). And will the new version of iPhone support H264 video codecs?

And my thanks to Jason for asking me to participate in this quasi-history making 3G mobile Skype call.

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Three weeks ago Skype made available the “Gold” release of Skype 4.2 for Windows. In the interim I have had the opportunity to experience many of its new features, several of which I have found improve the call experience in somewhat subtle but very beneficial ways.

Call Quality Indicator

This is what I have found the most useful new feature; it simply provides quick access to determine the conditions under which a call is being made. Before a call you can check your audio/video setup; click on “Check Settings” to bring up the device bar; click on a device to check that each of the mic, speakers, webcam (only if the Contact has a webcam) and computer speed are appropriately configured for making a call.

During a call you can continue to track call quality in the Call Bar; the network quality indicator on the right will also become active:

Should network connection conditions change the network quality indicator will turn orange or red and the number of bars will reduce. If you get a red exclamation mark you have a serious issue with your setup that most likely needs to be addressed. (The call in this case was to Skype Test Call; thus the gray “video” icon as Skype Test Call does not have a webcam.)

Note also that, at the end of every call, there is an opportunity presented to report on call quality. Responding, especially with less than best quality calls, certainly helps Skype to get a statistical handle on their performance.

But there’s one other unannounced feature associated with the Call Quality Indicator; click on the drop-down arrow to the right of the volume control in the Call Bar and you’ll find a menu that can lead to assistance with call diagnostics.  Select “Call Technical Info” and a separate window will open up with a wide range of diagnostic information including the other party’s SkypeID, codec being used, jitter, packet loss information and, for some calls, the version of Skype being used by the other party. Some of this information has been readily available in previous 3.x versions of Skype; however, in earlier versions of Skype 4.x it always operated in a “flicker” mode which made it difficult to read. Only a portion of the information available is shown here; the “24000” sample rate means the call is taking full advantage of the 12KHz audio bandwidth supported by Skype’s SILK codec.

Skype Access

Skype Access was first introduced on Skype for Mac 2.8; now it’s available in Skype for Windows 4.2. When you enter a WiFi zone supported by Boingo (there are over 100,000 125,000¹ worldwide with the SSID’s shown at this link), a window will pop up indicating that Skype Access is available (simply by having the appropriate client on your laptop). While it’s not exactly the least expensive way to connect to the Internet (including Skype) via a WiFi access point, it does come in handy for those 15 to 30 free minutes during airport stopovers or in “urgent” situations where there is no other alternative.

(Full disclosure: the author has a Boingo account which is available at the same locations as Skype Access as it has proven to be a cost saver at hotels that have the alternative of an expensive daily fee or using Boingo. On the other hand even at these locations, the Skype Access window will pop open.)

From time-to-time Skype has a Skype Access promotion; one is occurring the weekend during which this post was published; the promotion offers free Skype Access from 00:01 GMT Saturday, March 20 to 23:59 GMT Sunday, March 21, 2010 (extended to 23:59 Monday, March 22 in the U.K. to assist travelers stranded by the British Airways labor disruption).

Ready for HD Video

Ready, yes, but we’re not there yet; the HD webcams equipped for this feature will not be available until later this spring. However, I have received some test calls demonstrating that Skype 4.2 for Windows does support HD Video calling using appropriately compliant Skype-certified HD video cameras from FreeTalk and faceVsion. To the right is captured a frame from a test call using a faceVsion camera; below is the call diagnostic information from a recent test call using a prototype FreeTalk webcam – 1280 x 720 is the key parameter indicating HD Video support. (Once again, these webcams will only be available later this spring on the Skype Store). That we are all going to love the experience of these HD Video calls is all I can say at the moment. Note the reference to the H.264 video codec that is embedded in the webcam; the associated video compression is done on the webcam itself to reduce the load on the host PC’s CPU during a call and the associated network bandwidth requirements.

Update: While the FreeTalk webcam call reported above was made Tuesday, March 16, Jason Harris reports on an HD Video call from Andy two days later using the same webcam in Coming Soon: High Quality Skype Video Calls With Everyman HD. (I did not want to embarrass Andy by showing the details of his facial stubble in the one frame that I captured during our call; recall that many actresses were wary of HD video when first introduced as it could show intimate details of facial blemishes. I’m sure the make-up industry has compensated by now.)

Call Transfer: Simply stated, Call Transfer, a popular feature of many Skype 3.x versions, has finally re-appeared in Skype 4.2 for Windows.

Brower Toolbars: Since the release of Skype for Windows 3.0 a Skype Toolbar icon for Firefox was available; concurrently there has also been available a Skype Toolbar for Internet Explorer. Basically it uses a Phone Number Recognition algorithm to locate phone numbers within a web page and Skype-enable them (essentially a Click-to-Call using Skype or SkypeOut). With Skype for Windows 4.2 this feature has finally become stable within Firefox (full disclosure – the author has been an external beta tester for this toolbar). In a subsequent post I’ll discuss how it can also be used to Skype-enable Skype contact names within a web page. Suffice it to say it has become a very handy tool, especially with telephone directory services.

Additional features: The release notes for Skype 4.2 also list several less significant but helpful changes that assist with the user call experience. For instance:

• The video call button remains available even if there is no webcam detected
• Improvements in video quality in low bandwidth conditions
• Improved contact importers, including from GMail, Facebook, Hotmail and Outlook

But it’s still not “perfect”. The Release Notes and Release Notes Document include details of not only improvements and bug fixes but also a list of known issues that the Developer team continues to assess and track down. But there’s one 3.x feature for which I still would like to see support in 4.x – namely Skype Public Chats.

Bottom Line: With three weeks of usage, Skype 4.2 for Windows definitely brings an enhanced user experience, especially with respect to providing diagnostic information to help with call quality issues. Skype Access opens up one more option for road warriors to have Internet access for short sessions at airports or ‘’urgent” situations where no other option is available. And we still have to wait a few weeks for the webcams that will support HD Video support, setting new standards for video calling, but the final outcome will be well worth the wait.

Of course, now that I have a MacBook Pro as my primary laptop, I have joined those asking when the equivalent features (Call Quality Indicator and HD Video calling) will be available in Skype for Mac².

¹Shortly after publishing this post I received my monthly email advising me that Boingo is now supporting 125000 access points worldwide.
² I can continue to use Skype for Windows on my desktop PC or via Windows 7 running as a virtual PC on Parallels for Mac.

Full disclosure: In Store Solutions, producer of the FreeTalk HD Video webcams, has become a client of Denali InterConneXions, publisher of Voice On The Web, building on the author’s previous business development experience with establishing partnerships that can assist with the promotion of a primary vendor’s offerings. A more complete statement will follow shortly.

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During my recent interview with Russ Shaw, Skype’s VP and GM for Mobile, he emphasized Skype’s focus on having a true Skype user experience when it comes to supporting Skype on mobile devices.

What is meant by a “true Skype user experience” on a mobile device? Some examples, based largely on my own experience with several applications that support Skype via a mobile device:

• Find a person in an address book; press the “Green” Call button on the device and have the option to call via Skype or SkypeOut with a single click.
• Ensure access to ALL your Skype contacts with no limitation on the number of contacts displayed on the device
• Search for, and add, new contacts
• Support for Skype Contact groups
• Access and manage Skype voicemails
• Ensure that Group Chat threads are maintained on a mobile device; whereas many attempts at supporting Skype on mobile result in losing the “group thread” aspect of a Group Chat.
• Easily sign up for a new Skype account and manage Skype Credits
• Support for call forwarding (to three Skype ID’s and/or numbers)
• Chat history and call history log
• A consistent call quality
• and many more

Now that Skype is becoming mainstream on mobile via Skype for iPhone, Skype mobile^TM over Verizon and the recently released Skype for Symbian where these and many other Skype features are fully supported, Skype has decided to remove download access for two older Skype on mobile offerings: Skype Lite and Skype for Windows Mobile.

So what happened? According to Skype’s FAQ on Skype for Windows Mobile their crime was “…. Skype Lite and Skype for Windows phones were not offering the best possible Skype experience”.

• Skype Lite served as a beta product for building expertise with the architecture and user experience that is now about to be implemented by Skype mobile over Verizon. But Skype Lite, as offered, had no formal carrier support. However, a key business aspect of this architecture is how it can be used to allow Skype to be adopted by carriers such that both Skype and a carrier partner win. And, frankly, I doubt many were using Skype Lite as it really requires:
  • carrier support at the Skype-PSTN gateway inherent to this architecture to provide the robustness and scalability required to ensure consistency of both call completion and call quality.
  • the hardware and intelligence resources of a smartphone to run reliably
• Skype for Windows Mobile – dropping support here is simply a reflection of the market statistics where iPhone, BlackBerry and Android have become the major players in the smartphone market, especially in North America. Its operation over carrier networks were a gamble; it was a battery hog and did not offer a consistently reliable voice calling experience. And the drain on Skype developer resources to continue support simply would take away talent required to support platforms with broader market acceptance. Maybe a review of this decision is in order once the recently announced Windows Mobile 7 becomes available down the road.
• As for Nokia, still the world leader in smartphone devices sold, Skype recently released Skype for Symbian where one gets a complete Skype voice, Instant Messaging (presence and chat), SMS and file transfer experience over both 3G and WiFi using a VoIP client on the device. (Warning, when using Skype for Symbian over 3G, ensure you have a data plan that will not clean out your wallet in one or two calls. )

Going Forward: So what are the options for Skype on mobile:

To further enhance the user experience, three other factors come into play:

• Ideally a Skype application on a mobile device allows multitasking such that IM activities (presence and chat) are being handled in real time in the background while using other applications on the smartphone. Skype for Symbian provides this experience while it has been highlighted as one of the key features of the forthcoming BlackBerry and Android Skype clients for Skype mobile over Verizon.
• Battery Life: while providing higher speed data services both 3G and WiFi have tendency to drain batteries more rapidly. These are issues that are also being addressed in Skype over Verizon client; this is especially easy to execute on BlackBerry with its API’s that facilitate battery management.
• Use of superwideband Skype SILK codec: this really requires a full VoIP client that supports SILK. The first mobile Skype client to support SILK will be the next release of Skype for iPhone.

Bottom line: Skype has set new performance and user experience standards for its supported use on mobile smartphones and handsets. Recall that Skype’s initial adoption on PC’s resulted largely from its straight forward ease of installation and configuration; they are now looking to replicate and enhance that ease-of-use experience in the rapidly expanding mobile smartphone space. And, finally, it appears that we can look forward to additional carrier agreements, modeled on the 3 and Verizon experience.

Update: Skype Journal’s Phil Wolff, Orphaning Skype for Windows Mobile users shows Leadership:

Practicing product management sometimes feels like raising livestock. We have great hopes, spend time nurturing them, and get the most out of them during their productive life. When that productive life is over? Take them to the slaughterhouse and kill them. Make room for the next generation.

Update, March 3, 2010: Say hello to Skype for Symbian – now available via the web or the Nokia Ovi store. Includes video interview with Mark Douglas, Product Manager for Skype Mobile.

Update, March 6, 2010: Jason Harris over at TechCraver has been making multi-party Skype calls from his Nokia N900

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Over the past several months I have written three posts about WiFi’s ever-increasing role as a complement to the wireless carriers:

• WiFi: The Real Threat to the Mobile Carriers
• Is WiFi Becoming the Unregulated Stealth Carrier of the Future?
• Traveling in a Bipolar Mobile Mode

Basically, in my recent travels I have found that WiFi access is becoming more readily available at home, in the office and, as I travel, in hotels, airports and restaurants. Especially when in countries where roaming charges can be excessive, I seek out WiFi access points when on my BlackBerry and iPhone to minimize roaming expense for data.

Now that Apple is allowing VoIP over 3G, this strategy will become even more critical when using the Skype and Truphone applications for the  iPhone where the conversation uses VoIP technology over the data channel. While my home network data plan has sufficient monthly capacity for making these calls from within Canada, I’m not sure I want to be paying $1/MB when roaming in, say, the U.S. for a Skype call.

Brough Turner has built up an immense wealth of knowledge about Internet infrastructure and wireless carriers, not only from the technology perspective but also the business implications, including costs. He has recently published a post, WiFi Offload, not Femtocells, where, while postulating that Femtocell technology is too complex and costly become mainstream, he supports his argument by pointing out the business reasons for relying on WiFi as a primary “carrier” for wireless:

• “most mobile data is destined for the open Internet, not for someplace on the mobile operator’s network” Apparently 96% to 99%. Yet, relative to a direct broadband Internet connection, it’s much more costly per user (and more complex) for a wireless carrier to provide the tower and backhaul infrastructure required to connect a mobile phone to the Internet.
• “the primary sources of mobile data demand are laptops, notebooks and smart phones”. It’s become reality that most mobile devices these days support WiFi in addition to 3G/LTE/4G. And the iPad is a “data only” device. Demand for wireless connections will continue to grow rapidly; carriers need to look at the cost of new towers vs encouraging installation of WiFi access points (for which they have zero cost if the subscriber installs the access point).
• “WiFi access points cost less than femtocells” When end users can set up a WiFi access point for around $100 whereas the carriers’ towers can run $1MM to $2MM per tower and require a backhaul Internet link, it is actually to the carrier’s capital cost advantage to support the build out of WiFi access points, whether private (home, office) or public (hotels, restaurants, airports, etc.).
• “WiFi access points are showing up everywhere”. Yep, see the posts referenced above.

Three instances where WiFi has “bailed me out” recently:

• On both my January trips to CES and IT Expo, I had set up voice roaming with Rogers. Just one complication – over 80% of the calls I received, via roaming partner AT&T, had such poor call quality I had to ask the party to hang up and call them back. But when I called them back it was using Skype for iPhone over WiFi connections to have a more than acceptable call quality. AT&T simply failed, big time.
• At one recent hotel the hotel wanted to charge $14.95 per day per PC or smartphone for a WiFi connection. However, the hotel chain involved also had an arrangement with Boingo. Once I got the Boingo availability reminder I simply upgraded my mobile Boingo plan to a combined plan at $17.95 per month, connected my laptop, BlackBerry and iPhone and bypassed the hotel charges. As a bonus, I was also able to use the plan while waiting for my flights at two airports, amongst other Boingo-supported locations.
• During my trips to Spain last fall I ended up in situations where no public carrier access was available but there was WiFi access – once in an office with no 3G signal and once in a hotel in an ancient building with WiFi but no landline phone. Once again in these situations WiFi was the path to get data and Skype for iPhone or Truphone was used for voice calls.

The Bottom Line: Brough says it best in answering his own question “What should an operator do?”:

Mobile operators need to focus on providing bundles of connectivity, not on whether its 3G/4G or Wi-Fi. They should be encouraging Wi-Fi offload by bundling “free” public Wi-Fi access with their mobile data plans.

In the long term, it’s likely most mobile data bytes will go over Wi-Fi.  The 3G/4G network is still necessary to provide a backup path when no Wi-Fi is available. Mobile operators who recognize this can still come out on top, if they focus on facilitating connectivity for their customers regardless of the technology involved.

Note to Rogers: while Andy makes great use of UMA from T-Mobile’s @Home service during his overseas travels, Canadians would appreciate the same level of support for Rogers’ UMA-based services, which are currently limited to access from WiFi hotspots within Canada.

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Launch of the iPad last week and the Apple’s recent change in their developer terms of service involving the removal of restrictions for using VoIP technology over a carrier’s 3G network have had the Skype mobile team busy reviewing the opportunities.

In a Share Skype post, An update on Skype for iPhone and calling over 3G, Peter Parkes interviews Skype for Mobile team member David Ponsford making a few points:

• Skype’s high quality audio SILK technology will be embedded in the next version of Skype for iPhone (for both the latest model iPhone 3G S and iPod Touch)
• “Real soon now” (quoting David in the video) we’ll be able to make Skype for iPhone voice calls over a carrier’s 3G network using Skype for iPhone.
• The next version will also incorporate the call quality indicator, a very useful tool found currently in the Skype for Windows 4.2 beta release.
• Skype for iPad is under consideration; given Apple’s claim that all current third party iPhone apps should run on the iPad, this should not involve too much change other than adapting to the larger screen size.

Here’s the video:

Skype for iPhone has bailed me out for voice calling on my recent trips to the U.S. for CES 2010 and IT Expo. During both events several calls from outside parties to my BlackBerry resulted in very poor call quality when roaming over the AT&T network. As a result I had to ask the calling party to hang up and called them back using Skype for iPhone (fortunately I was in a WiFi access point’s range). And the call quality was more than acceptable in each case. Just reinforces my point last spring about WiFi becoming a stealth carrier.

What will be real interesting is how much data traffic is generated by calls over 3G:

• Will it be the application to cause me to take full advantage of the 6GB data plan (for Canadian access) on my iPhone where my usage currently runs under 100MB per month?
• What will be the impact on roaming data plans and the resultant charges?
• While there is no doubt that Rogers, Bell and Telus will be able to handle the additional data traffic load in Canada, will Skype for iPhone over 3G be the application that brings down AT&T’s network in the U.S? (Especially if they can’t deliver good quality voice calls on their voice channel – see above.)

One final question: Does “real soon now” mean prior to or during the upcoming Vancouver/Whistler 2010 Winter Olympics that start in nine days (Feb. 12)?

Thanks to Skype’s Chief Blogging Officer Peter Parkes and David Ponsford for the update.

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Early today Skype released Skype for iPhone 1.3, available as an update in the Apple App Store.

Two key new features:

Landscape Mode for Skype IM:	Call Quality Indicator

The Call Quality Indicator builds on the experience gained with the call quality indicator in Skype for Windows 4.2 beta – a tool I have found most useful in sorting out call quality issues.

Check out Skype’s Peter Parkes post where he also discusses what the roadblock is for “Calling over 3G” as well as progress with incorporating push notification. C’mon Apple – it’s time to allow Calling over 3G: AT&T says Yes, Rogers does not have an issue. What’s the hold-up (iPhone 4?)? Maybe it’s a hardware performance issue?

The first thing I noticed after downloading the update was that the application appears to operate much more “snappily” in that wait times for chat sessions to appear or even to recognize you are Online appear to be much shorter. But I need more usage experience to confirm this perception further.

With the proliferation of WiFi access points in hotels, conference sites, offices, restaurants, airports and other public places, Skype for iPhone has become a very useful calling option for me with the extensive traveling I have been doing recently. And tomorrow I will put up a post about how I use Skype for iPhone to call my BlackBerry. Eh?

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Following on the heels of the recent launch of Skype for Linux 2.1 Beta, Skype announced to additional updates of note last last week:

Skype for iPhone 1.2

Peter Parkes sums it up in Skype for iPhone 1.2: adds call forwarding, SMS and quality improvements:

• You can set up call forwarding from your iPhone – forward Skype calls to a phone number when you’re not signed in, so you can pick up calls even when the Skype app isn’t running on your device
• Improved performance and better audio quality when making Skype-to-Skype calls
• It’s even easier to send text messages (SMS) – you can now send SMSs from the Call tab

The release notes provide a complete list of not only new features, but also improvements, fixed issues and known issues.

Using Skype or Truphone on the iPhone has always been limited by the fact you have to be in the relevant application in order to receive calls. (There are a few comments to Peter’s post asking for incorporation of “Push” for a reason.)

Adding this call forwarding feature to Skype for iPhone means that you will receive calls even when not in the application. However, there are costs: (1) it will use minutes from your carrier subscription and (2) as happens with call forwarding on Skype for Windows/Mac, you will need either a Skype Calling Plan subscription or Skype Credits to cover both the connection fee and and the Pay-As-You-Go rate for the length of the call.

Question: when launched it was mentioned that the SILK codec was “modularly designed for embedding into silicon”. We have also seen its migration into Skype for Mac 2.8 and Skype for Linux 2.1 beta. Has this version of Skype for iPhone incorporated the SILK codec as part of “improved performance and better audio quality on Skype-to-Skype calls”?

Skype for Windows 4.1 Hotfix 2

A hotfix does not introduce any new features; however, it does address known issues and it seems that Skype for Windows 4.1 had its share of them. However, the Skype for Windows (build 4.1.0.166) hotfix 2 released late last week addresses a long list of issues (document version). And the links also outline known outstanding issues, with work arounds where feasible.

Strongly recommended that you update either via the “Help | Check for Updates” menu item in the Skype client or by redownloading Skype if Skype itself does not offer to upgrade when you next log into your Skype account via Skype for Windows.

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Last week Skype announced Skype for Linux desktop 2.1 Beta, the first new release of Skype for Linux in over two years. As a result it’s a huge “catch-up” release bringing to Skype for Linux many features that have been introduced on Skype for Windows and Skype for Mac over the past two years:

• Incorporation of Skype’s SILK codec which not only improves call quality for Skype-to-Skype calls but minimizes bandwidth usage
• High Quality Video support: VGA-standard video calling at 30 frames-per-second over a broadband Internet connection (minimum upload speed 384 Kbps)
• SMS send support (requires Skype credits)
• Chat: incorporates typing notification, message editing and other features into chat so we no longer get those “this person does not have a Skype client compatible with chat” type of messages.
• Contact groups
• Other “catch-up” details and improvements as listed on the Skype for Linux 2.1 Beta announcement post (link above) and in the release notes (link below).

Note that this is still a Beta release; it still has several “known issues”. Check out the release notes for details including details of how to make video work on Logitech Quickcam Manager and features that may result in crashes, such as accepting screen sharing from a Mac or Windows client.

The one recently introduced Skype for Mac/Windows feature that appears to be missing: initiation of a screen sharing session. The release notes indicate you may be able to receive a screen sharing session but you may also encounter a crash.

Bottom line: Finally a much awaited Skype for Linux that has most of the features of the current versions of Skype for Mac and Skype for Windows. if you’re a Skype for Linux user and have tried the 2.1 beta, please comment below on your experience. (Of course, Skype also appreciates having all bug details reported to Jira.)

The initial feedback post, FREETALK® Everyman: The Bloggers Speak Out, is getting a bit long for a single Internet post. But feedback continues to arrive, not only in blog posts but also via Twitterville where we find, searching on “FREETALK Everyman” and “Skype Everyman”:

And Michael Graves (@mjgraves), in his post Skype’s FREETALK® Everyman Headset, walks through some of his past experiences with headsets, especially in his recording studio work. He had some initial scepticism when he received his evaluation FREETALK Everyman headset; he first came to appreciate its flat-fold feature as a frequent traveller in his day job. And once he arrived at his destination:

Kicking back in my hotel room that evening I donned the headset to listen to a couple of podcasts. My initial reaction to wearing it was… it was fairly comfortable. Perhaps a bit bulky compared to my usual gear, but not bad at all. The microphone, mounted to a flexible metal tube, swung easily out of the way for the purpose of pure listening. The headset sounded like it had decent, large diaphragm drivers. That is, it sounded very full, not obviously lacking in frequency response.

and concludes with:

No doubt you can tell that my opinion of the FREETALK® Everyman headset has softened over time. I was predisposed to dislike it for being merely cheap. However, there’s more to it than that. It does what they set out to do. It sounds good and it’s convenient. It’s not my favorite headset by a long stretch, but at just $22.88 it’s the most affordable good-sounding headset that I’m aware of. It raises the bar in the low-end of the marketplace, and maybe that’s a good thing for everyone.

Alec Saunders has finally found time to put up a post, SquawkBox August 13 – FREETALK Everyman, that features the SquawkBox conference call where he interviewed me about the FREETALK Everyman headset and we took questions from over twenty participants that resulted in a very lively discussion.

Luca Filigheddu, one of Italy’s VoIP veterans and an active reviewer of all things Skype, mobile smartphones and Twitter, in Here Is The Best (and Cheapest) Skype Headset Ever, concludes with:

In conclusion, a very good deal for anyone shopping for a new headset. I tried lots of great headsets in the past 10 years but I can assure you this is the one with the best balance between price and quality.

As for my own personal experience: Last week I was on a trip where I needed to move between a business office and my accommodation twice daily. Talk about how to learn to appreciate the flat-fold feature.

Full disclosure: In Store Solutions has become a client of Denali InterConneXions, publisher of Voice On The Web, building on the author’s previous business development experience with establishing partnerships that can assist with the promotion of a primary vendor’s offerings. A more complete statement will follow shortly.

In my post, “FREETALK^® Everyman for Skype: Not “Just Another Headset”!, outlining the background leading to the production of this headset, I mentioned that the most important feature of any headset is the user experience. But reporting on the user experience has to rely on feedback from a cross section of independent evaluators who can try it out under different conditions on both Windows and Mac PC’s.

My major criteria for inclusion in this post is that there have been an actual reported user experience; posts that simply repeat the specifications do not qualify.

The first full review came from Tom Keating at TMCnet who reports on its “fold flat” feature, apparent durability and of course his Skype calling experience; Tom concludes with:

I made some test Skype calls and the audio quality was excellent. I also connected my iPhone using the 3.5mm jack and was able to play music using the iPod application on the iPhone. Slightly better bass response than my iPhone ear buds due to the larger speakers. All in all, a pretty good Skype headset.

Neil Thompson at Spoken Like a Geek provides a brief history of his experience with previous Skype phone handsets and then gets into his feedback:

The call quality was excellent both for me and the other party who commented on how much better it was than usual. The headset makes use of what Skype calls super wideband audio which is included in v4 and improves call quality even at low bandwidth. Having your ears covered means that there is no distraction from external noise which obviously also makes things better.

Neil likes the fold flat feature; he then went out and bought a pencil case for storing it in his laptop bag; he concludes with: “So, to summarise, the Freetalk headset is a recommended device, particularly for those on the move who want good quality combined with portability.”

TechCraver.com’s Jason Harris, in The Everyman Headset for Skype: Killer Audio, Sweet Price, outlines “a few things that set it apart from the rest of the pack” and tried three different calling tests:

In all three cases, I was absolutely blown away by the Everyman.  If the manufacturer of this headset was looking to make a reasonably priced headset that sounds perfect and was comfortable to wear, they absolutely nailed it.  After about 2 hours of wearing the Everyman, I was impressed with it’s comfort and how it felt on my head.

Jason goes on to describe his experience listening to his iPod and points out  that “it’s great for those who talk into your computer for creating training videos or video-conferencing”.

Ken Camp at Stardust Global Ventures,  in “The headset for Everyman, woman and child – FREETALK Everyman USB Headset”, starts out with “I’ve been using Skype since the beginning.I can’t count the number of different headsets I’ve used. This one is the only one that’s made me step back and say wow.”

He then goes on to discuss the comfort level, the benefits of supporting Skype’s SILK codec and why road warriors should like the “fold flat” feature. Ken concludes with:

Gadgets are sometimes a dime a dozen. Headsets aren’t often something to get excited about. The FREETALK Everyman headset is absolutely different. It’s worth every penny of the $22.88 price in the online Skype store. Go check it out and order yours here. It’s an investment you’ll get more than full value from.

In a comment on Voice On The Web “Skype In Your Business” Public Chat, Hudson Barton, whose Borderless Communicator tracks Skype statistics, stated:

I can confirm that this is a nice piece of hardware.  One thing that I have not seen pointed out elsewhere is the fact that the “Everyman” headset is light and comfortable.   I had given up on my former headset for this reason because I want to have it on whenever I’m at my computer, and that can be for hours at a time. (You can quote me on that if you wish.)

Dameon (PhoneBoy) Welch-Abernathy, in Every Man, Woman or Child on Skype Needs an Everyman Headset, provides a brief background on the evolution of audio support on PC’s and outlines why FREETALK Everyman is different. He concludes with:

When you consider the price: under $23 shipped to your door, purchasing this headset is absolutely a no-brainer. It will be one of the best investments you can make to improve your calling experience with Skype.

Joel Evans, producer of the Geek.com podcasts, appears to have been frustrated with microphones and the quality of his recordings. So he gave the FREETALK Everyman a trial:

For my tests I used the FREETALK Everyman Headset in Skype, Quicktime and iChat. In all tests it performed perfectly and even my chat partners commented on how clear I sounded. The design of the headset allows for adjusting the boom and even the position of the microphone, so it did take a bit of fine tuning, which I did while recording tests in Quicktime. Once it was adjusted, though, it sounded great and I’ve been using it for voice chats, and even used it to record the Podcast that will be going live tomorrow.

Bottom line: the reviews speak for themselves. I’ll add more reviews to this post as they become available.

Full disclosure: In Store Solutions has become a client of Denali InterConneXions, publisher of Voice On The Web, building on the author’s previous business development experience with establishing partnerships that can assist with the promotion of a primary vendor’s offerings. A more complete statement will follow shortly.

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So why would Skype announce support for, and In Store Solutions develop and launch, the FREETALK^® Everyman headset in a seemingly crowded market? Let’s step back a bit and look at some issues related to headsets:

• Skype’s research has found that a Skype user’s “end point” configuration is one of the main contributors to churn. A major component of the end user configuration is the PC’s audio chip; they have found evidence pointing to a lack of consistent audio quality across the various PC audio chip sets.
• The recent introduction of Skype’s “superwideband” SILK audio codec, supporting a 12KHz audio bandwidth, has set new bars for incorporating HD Voice performance into a headset – both the speakers and the mic.
• Headsets have always been an issue for road warriors trying to fit them into their briefcase or PC carrying case. Speakers that are at right angles to the main headband suddenly demand a space with about 3 to 5 inches of width. Breakage and loss are often the result. (Full disclosure: I have never found a headset that was suitable for easy insertion into my multiple PC carrying cases over the years.)
• Complementary to the PC has been the widespread adoption of (smartphone) media players such as iPod, iPhone and BlackBerry; standard earbuds are not capable of adequate overall audio quality, especially for bass tones.
• Cost: try to find a good quality headset for under $30 or $40. A “no brainer” impulse purchase is certainly assisted by keeping the cost low.
• Finally, in this age of online e-commerce, why do the devices that are shipped as a result of an online purchase need plastic clamshell packaging that goes straight to landfill (and generates emergency room visits when cutting the packaging open)? The sale has been completed; there’s no need for the packaging to be a “sell piece”.

Since late 2007 In Store Solutions’ wireless stereo headset has been a top seller on the Skype store. It has been my PC headset of choice ever since I received one in December 2007.

When Skype recognized the need for a headset that provided both consistent audio quality across all PC models (desktop and laptop) while also fully supporting the audio bandwidth demands of their SILK codec, they approached In Store Solutions about producing a new basic headset that addressed Skype’s audio quality concerns. But with In Store Solutions’ previous retail distribution and audio hardware experience they designed a product that also addressed the other issues outlined above.

The result of this partnership was the recently launched FREETALK Everyman Headset. It’s a USB headset incorporating an audio chip in the USB dongle. But on the headset side the USB dongle has a 3.5 mm speaker jack into which is plugged the removable speaker wire coming from the headset.

The physical headset itself comprises a unidirectional microphone to reduce background noise along with neodymium speakers supporting 20 Hz to 20 KHz stereo audio. Weighing in at 124g/4.3 oz, the headband and microphone are adjustable. (Hint: headset microphones work best when the microphone is positioned near a corner of your mouth.)

Compatible with both Windows 2000® / XP® / Vista™ and Mac OS 10.22 or later, the only other requirement is a USB port on the PC.

FREETALK^® Everyman incorporates:

• HD Voice support within the audio chip via its support for the SILK codec used in Skype for Windows 4.1 and Skype for Mac 2.8 (or later) and an overall 20Hz to 20KHz audio bandwidth.
• Plug & Play such that Skype immediately recognizes and acknowledges the headset as the default audio device for Skype (no need to go to Skype audio settings; no driver installation required)
• A flat fold-down design that compresses the entire headset to a thickness less than 3 cm or 1.25 inches; it readily fits into your PC carrying case.
• A removable speaker plug such that, when not using the headset with your PC, you can plug the speaker plug into any media player with a 3.5 mm audio jack, such as the iPod, iPhone (3G and 3G S) and BlackBerry.
• Eco-friendly “brown box” recycled cardboard packaging that not only eliminates sending plastic clamshells to landfill but also helps to reduce shipping costs.

And, to encourage “no-brainer” adoption, it’s available at the Skype Store at US$22.88/£19.88/€19.88 – including delivery (and VAT in Europe).

But the most important feature of any headset is the user experience. Several bloggers and columnists are currently reviewing the FREETALK Everyman; links to their posts will be incorporated into a forthcoming post summarizing the feedback as they become available. But two initial posts for more information and feedback:

• Skype’s Andrew Brennan: Skype Gear Road Test: The FREETALK Everyman Headset
• TMC’s Tom Keating: FREETALK Everyman Skype Headset Review where he concludes:

I made some test Skype calls and the audio quality was excellent. I also connected my iPhone using the 3.5mm jack and was able to play music using the iPod application on the iPhone. Slightly better bass response than my iPhone ear buds due to the larger speakers. All in all, a pretty good Skype headset.

Earlier today, Alec Saunders interviewed me on SquawkBox; with about twenty participants including both ISS’s Product Manager and Skype’s Hardware Product Manager contributing to the discussion. I’ll be adding a post covering this interview and incorporating a player for the recording shortly. (Update Aug. 25: you can now access the conference call recording on Saunderslog at SquawkBox August 13 – FREETALK Everyman.)

Hints (based on some initial user feedback): when you receive your FREETALK Everyman headset, ensure you plug the speaker plug into the speaker jack on the USB dongle for listening to your Skype calls or any multimedia playback from the PC. And to keep the cost down the volume control is carried out via the volume control slider in the Skype clients.

Bottom Line: Addressing the audio quality issue is only one aspect of the Skype user’s end point configuration that can affect the overall Skype call quality. The PC processor, active software programs, operating system (Windows or Mac) and user’s Internet connection can also contribute to the finalSkype call experience. However, the FREETALK Everyman headset optimizes the audio configuration of the PC and its associated audio hardware such that it consistently meet the standards required to support Skype’s SILK codec and its contribution to the overall calling experience.

Earlier posts related to Skype’s approach to call quality issues:

• At his talk to VON Canada in April 2006, Skype Goal: “Better than a phone”, Stefan Oberg outlined many user issues that Skype still needed to address at that time. During that talk Stefan mentioned Skype’s frustration with the fact “terrible user experience” when the user could not readily locate the audio jacks on the rear of (older) PC’s.
• In April 2007 Skype 3.2 was launched incorporating echo cancellation – which allowed users to use their basic PC mic and speaker for Skype calls without having to deal with echo feedback from the speakers back into the microphone.

Full disclosure: In Store Solutions has become a client of Denali InterConneXions, publisher of Voice On The Web, building on the author’s previous business development experience with establishing partnerships that can assist with the promotion of a primary vendor’s offerings. A more complete statement will follow shortly.

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Over the past eighteen months I have often reported on iotum’s Calliflower voice conferencing service as it has evolved and matured. For the first time in a few months I had occasion to use it once again yesterday evening. Connecting  11 participants in the Montreal-Ottawa-Toronto triangle, New York and Virginia, I can report on an excellent quality, two hour and ten minute call with no interruptions where everyone was clearly understood. (Even the dogs co-operated by not barking in the background although someone’s cell phone did ring at one point.) And it’s archived for access by all members of the group, including those who could not participate in the call.

However, not only has the overall consistency of call quality improved but calls hosted by a Premium Service subscriber ($50/month for two organizers, unlimited calling and participants) can now be accessed “locally” from over 100 cities in 30 countries:

Calliflower flat-rate conferencing services are now available in Argentina, Australia, Austria, Bahrain, Belgium, Brazil, Bulgaria, Canada, Chile, the Czech Republic, Denmark, Finland, France, Hungary, Ireland, Israel, Italy, Japan, Mexico, the Netherlands, Norway, Pakistan, Poland, Romania, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

If there was one improvement that could be made it would be to make it more obvious on the invitation emails that a participant should RSVP whether they will/may/will not attend. As demonstrated with recent enhancements to Tungle, the meeting scheduling service, invitation emails must clearly explain all the steps to be taken to respond to the invitation appropriately. In my case yesterday, I was sending invitation emails to “newbies” unfamiliar with the service; some did not know how to respond. As a result I had to send separate emails to non-responding participants to ensure they knew how to access the service.  The issue has been reported to iotum personnel who now have this issue as a “ToDo” item on their action list.

And how much of a value is this service? Ten years ago, using Bell Canada conferencing service, the 11-party call I mentioned in the introduction would have cost $787.00 with additional minutes at a cost of $0.55 per minute per participant just for the voice service. How business models change! But with Calliflower you can also see who is on the call, manage participation through muting and hand raising, share documents, augment the conversation through a chat window and record/archive the call.

Bottom line: with a rewording of their email invitations, Calliflower certainly delivers on its offering of unlimited calling from over 100 cities worldwide along with tools that enhance the conversation. During last night’s call, Calliflower went into the background and was transparent to the discussion; we accomplished our meeting agenda and objectives uninterrupted by the technology.

Overlooked: Calliflower conference calls can also be scheduled, accessed and moderated via their iPhone application.

Click here for more details about the Calliflower service

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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.

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