Building on Skype’s recent announcements of its evolving Skype for Business activities, Chief Strategy Office Christopher Dean gave a keynote address yesterday at a joint VON/Channel Partners Conference session. Three posts have followed up on the session:

Khali Henderson, in Skype Not Just Telecom’s “Bad Boy”, CSO Says, reports Christopher’s overview of their approach to business markets:

“Skype is no longer just sort of the ‘bad boy,’ disruptive influence in the telecommunications market,” he said. “What we offer is strong opportunities to leverage these trends for operators and their customers.”

The company, he said, is actively seeking partnerships with service providers – wireless and wireline operators and MSOs – as well as OEMs and ISVs and applications developers, to be part of what he calls an “emerging ecosystem.” Skype’s role is to be an overlay of services – audio conferencing, video, desktop sharing, presence, IM, file sharing and more – that drive demand.

Khali reports that Christopher went on to discuss the success of Skype’s partnership with the Hutchison 3 Group and the services offered involving 3’s Skypephone as an example of how Skype has helped a partner successfully build their business.

Alec Saunders reports on the session in Skype counters critics, embraces ecosystem:

…. Skype CSO Chris Dean began his remarks at VON by saying that there is an ongoing sea change in the telecom market, and it’s only accelerating.  The macro trends are around wireless, wireline, emerging applications and service models, the economy and the regulatory environment.  And he warned that there are immense risks to operators that don’t adapt.

Jon Arnold, in VON – Final Day/Skype Keynote – Seeking Channel Partners, reports:

Most of us know this [the business market] is a top priority for Skype, and the most newsworthy item from the keynote was their new focus on channels, which of course ties in nicely with both events here – VON and Channel Partners. The main idea here is that Skype will be launching a service provider VAR program later this year. Christopher provided a URL about the program for reference, but as you’ll see, there’s not much there yet.

So, in the course of a few minutes, the audience heard about how Skype is looking to cross the chasm and partner with service providers. That creates all kinds of interesting scenarios, and Christopher pointed out how this is part of their bigger vision to be more open and partner-friendly in the post-eBay world. On that note, he didn’t have much to say about the Extras program other than they understand how important it is, and are overhauling it now. So, it’s not quite dead yet….

Getting out a message differentiating the Extras program as a partner marketing program, which is coming to an end, from the evolution of any forthcoming Skype developer program has been difficult challenge for Skype. I suspect Christopher was really referring to Skype understanding how important a well-articulated and effective Skype developer partner program is. Reference to the Skype Service Partner Program was made in yesterday’s post: Skype for SIP: Getting Legitimization, Endorsement and Traction.

Bottom line: Christopher’s keynote is one more sign that Skype is getting serious about its approach to the business market, building on the recent launch of Skype for Asterisk and Skype for SIP. A significant challenge will be, once Skype is embedded within business communications infrastructure as a voice calling option, to evolve such that this infrastructure can then take advantage of its presence, chat and video infrastructure.

But perhaps more important: For over six years consumers and many businesses have experienced Skype as a lowl cost or free voice, chat and, more recently, video conversation service – with minimal support from Skype itself. Skype is finally gaining acceptance, certainly now at the communications vendor level, as a viable and reliable alternative to legacy PSTN services. And Skype finally appears to be building the resources and programs required to properly support business communications operations.

This trend recalls the early days, 25 years ago, of the PC itself when adoption of the PC as an enterprise resource only came about because employees were bringing PC’s into their offices on an individual basis and demonstrating the resulting productivity and cost effectiveness to their management. Been there; done that!

Skype VON 2009 Keynote Presentation – Christopher S Dean

View more documents from SkypeConversations.

Thanks to Jon Arnold for providing the pictures, with permission.

Saunderslog.com:  Virgo’s first VON a solid outing

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• Skype for Asterisk Release Marries Skype Calling into Popular Asterisk PBX Platform (voiceontheweb.biz)
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Towards the end of February there were several news reports about DoCoMo suspending their recently launched BlackBerry Bold service due to an overheating issue. In my six months of using a BlackBerry Bold I had never encountered any heating issue. But during my Toronto to San Francisco flight to eComm 2009 on Monday, March 2 that changed. I’ll get to the details but first I need to provide some background.

As reported previously I often use iSkoot or IM+ Plus for Skype (BlackBerry  version) for accessing my Skype contacts via voice or chat while away from my home office. One benefit of the BlackBerry version is that chat sessions can occur in background while using other applications. (This also applies to iSkoot for Android.) As new messages arrive, I receive a notification which provides me with an option to look at the message or continue my current foreground activity.

Early in February I attended a BlackBerry App World Developer presentation in Toronto where Tyler Lessard, RIM’s Director of ISV Alliances and Developer Relations, made the point that, in designing third party applications, developers need to “write to the device platform”, not simply to the “application”. For instance, any IM or “voice enhanced” application should include access to the native Blackberry address book as a matter of convenience; iSkoot on the BlackBerry can access the BlackBerry address book for setting up SkypeOut calls. But most importantly, RIM provides API’s such that an application can run in the background and receive data in a “push” fashion rather than requiring it poll the network frequently for data. Tyler pointed out that this approach minimizes an application’s dependence on the radio and, ultimately, battery life.

Finally, as background to this story, I should mention that, due to an allergic reaction to watch back covers, I cannot wear a watch; I use my Bold as a clock for time checks.

So what happened during my flight to SFO that resulted in a mild searing of my left hand? While at the Toronto airport waiting area I made a Skype call to Spain via iSkoot. Immediately after completing the call, it was time to board, so I simply pocketed my Bold and boarded. Once seated I turned off the Bold’s radio, more to conserve battery rather than worrying about interfering with aircraft radio.

But about two hours into the flight I pulled out my Bold to check the time and noticed that it was somewhat warm. Checked the radio settings; both GSM and WiFi were off. Checked again half an hour later when I wanted to listen to music on the Bold and all but mildly seared my hand while holding it. And, what had been a completely charged BlackBerry Bold at the beginning of the day was now showing battery level down at one-quarter. Obviously something was still active and draining the battery.

At that point I realized that I had left iSkoot running when I boarded the plane; maybe its background processing was attempting, unsuccessfully to check for my Skype messages; however, being unsuccessful resulted in frequent re-attempts. I closed iSkoot; within 15 minutes the Bold’s temperature had dropped to a point where I could hold it comfortably; an hour later it was back to ambient temperature.

I have contacted iSkoot with a suggestion that they look at:

• checking whether at least one of the Bold’s radio channels (2G/EDGE,3G or WiFi) is on before attempting to contact the network , and
• ensuring they are using RIM’s  API’s appropriately, especially with respect to their “push” feature, to reduce the heavy battery consumption I have experienced in normal use of iSkoot.

I also had SocialScope running while in flight; however, on my return flight with SocialScope open, I did not notice any heating issues. And, while I made reasonable use of my Bold during eComm 2009, I have not noticed any heating issues. Blogging colleague Jon Arnold did mention that, during phone calls, he did notice his Bold got warmer; however, it was not uncomfortably warmer. To me this was simply an indication as to how much I use text for conversations from my Bold: BlackBerry Messenger, SocialScope, iSkoot (for Skype IM and chat), email (either BlackBerry or GMail), web browsing and how little I use it for normal voice conversations.

Bottom line: if you’re writing applications for the BlackBerry, ensure you are only accessing the Internet when one of the BlackBerry’s radios is on, take advantage of the BlackBerry’s “push” feature, using the appropriate API’s to help extend battery life while using your application and check for other opportunities to “write to the device platform” as opposed to simply attempting to port an application from another platform.

Final question: does this provide a hint as to the cause of the DoCoMo problem? Is it possible that some DoCoMo-exclusive software is encountering a similar problem? To date a Google News search does not provide any mention of restoring availability of the Bold at DoCoMo.

And I’m still awaiting notification of a new build of iSkoot that addresses this issue. In the meantime make sure iSkoot is closed when turning off your BlackBerry radios (GSM/3G/EDGE and WiFi).

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Over the past three days there has been a continuous stream of presentations that provide insight into a wide range of issues, opportunities and perspectives in the IP-based communications space going forward. While there will be more posts covering individual presentations, it’s worth taking time to mention a few highlights:

• Most innovative, outside-the-box, presentation: Ge Wang of SMULE (Sonic Mule) and his presentation including recordings of the Stanford Mobile Phone Orchestra (MoPhO). Become your own iPhone musician by breathing gently into the iPhone’s mic using their Ocarina iPhone application (warning: small fee $0.99).
• Most outstanding announcements: three offerings that open up new user experience opportunities in a Voice 2.0 world (Yes, I already blogged about these but they still stand out as winners for both the service providers and end users.)
  • Voxeo: Tropo.com opens up the Voxeo platform,  previously limited to the small population of voice developers, to hundreds of thousands of web developers.
  • Skype: making the superwideband SILK codec available royalty-free to any relevant hardware or software vendor that wants to bring new user experiences to voice calling.
  • Jaduka: the appointment of Thomas Howe as CEO will accelerate the adoption of voice into existing business processes, eliminating the error-prone mundane while opening up new standards for applications such as healthcare procedures, customer satisfaction and service deployment.
• Other presentations of note:
  • Martin Geddes, Head of Strategy, BT: there is value in addressing issues of efficiency and effectiveness inherent to business processes. Martin proposes that the key business model is to satisfy the needs of parties who want to interact with customers; for instance, improve the productivity of call center employees
  • Shai Berger, Fonolo, whose deep dialing service has now mapped out the IVR trees of over 500 companies and presents new opportunities for customer service operations.
  • Mobivox, expanding their voice-activated mobile services platform with their CRM for Voice business tools.
  • iNum, announcing support for IM and presence, initially with Google Talk
  • Alan Duric continues to see ongoing profitability and success at Norwegian service provider Telio. Why? a continuous stream of innovation and new value-added services.
• Some themes and issues across multiple presentations:
  • Spectrum 2.0: several presentations and a panel covering issues related to (the lack of) spectrum management and “white space”. In major markets over 90% of available spectrum remains unutilized.
  • Regulatory issues: the challenge of creating and executing a user-oriented regulatory framework under “the first technology administration”. Network neutrality: is it more a “buzz phrase” than a real issue? Seeding the policy makers with players who understand regulatory issues from both an innovation and business opportunity orientation as opposed to supporting monopolies or duopolies. Aligning regulation with the application potential of emerging communications technology.
  • API’s: several presentations from vendors who provide free API’s that support third party developers in writing applications that are then hosted by the vendor: IfByPhone, Voxeo, Jaduka, Ribbit, Adhearsion (whose Jay Phillips, right, provided a tutorial incorporating programming to Skype for Asterisk),

One note: there were a lot of innovators and forward thinking people amongst both the speakers and the audience. Most interesting was that there were at least six attendees from carriers who were asking the questions about how carriers can adapt to this emerging communications world: SaskTel (2), T-Mobile US, Rogers, NTT. eComm’s biggest challenge for next year will be to attract a larger audience of carrier personnel. In personal conversations I learned a lot about their issues that may work its way into future commentary.

Overall, eComm 2009 once again provided a primer in a wide range of aspects of the emerging communications space. With Thomas Howe leading Jaduka’s CEBP charge into larger enterprises, Voxeo addressing a huge community of web developers, Skype offering new levels of call quality to the entire communications hardware and software community, Fonolo solving that PITA known as punching your way through company IVR systems and Calliflower offering new user experiences in conference calls, the next few months will prove most interesting. Most challenging to observe will be how these technologies and services assist business and personal issues in times of a most challenging overall economy.

Timothy Hay, Wall Street Journal wrote up Jon Arnold’s panel on “New Ways to Monetize Voice” : VoIP Start-Ups Scramble To Find Niche (subscription may be required)

Alec Saunders: eComm – strong stuff

Global IP Solutions today announced a white paper on Desktop Video Conferencing, providing a background for their video infrastructure technology that has the potential to make video calling and video conferencing available to a much broader user base beyond Skype’s (even though it is quite large) and SightSpeed.

Many of you will recall that Skype’s original voice engine came from Global IP Solutions (formerly Global IP Sound) and contributed to Skype’s initial adoption through both its ease of use and voice quality. In April 2006, Skype acquired Camino Networks whose voice engine provided improved features such as echo cancellation. Camino’s President and CEO was Jonathan Christensen, Skype’s current General Manager for Audio and Video.

Global IP Sound went on to supply their voice engine to other players, such as Oracle and Yahoo but, as a company, they have been struggling; their most recent quarterly report demonstrated the extent of the revenue drop-off after loss of the Skype royalties.

This past April, GIPS announced the appointment of a new CEO, Emerick Woods (see full disclosure below). Since joining GIPS Emerick has led a reorganization of the company that included dropping their professional services offerings due to not only lackluster revenue but also the channel conflicts that operation created for their core audio and video infrastructure technology business. They have also closed a Tokyo office and settled outstanding customer lawsuits, including one with Skype where GIPS’ previous claims were denied in an arbitration resolution. As indicated in this interview with iLocus, they are moving to extend their customer base for their Voice Engine product line. As an initial move in August there was the announcement of Voice Engine for iPhone accompanied by a white paper.

In my interview with Emerick at that time, he pointed out that, while GIPS offers, through its various Voice Engine products, a total solution linking the Internet inbound/outbound connection to the user’s microphone/speakers, customers can also customize the voice engine, particularly when it comes to codecs. Customers can use either the GIPS codecs available with the voice engine or any other standard codec. Another feature he emphasized was their independence from operating system restraints and their support for various mobile platforms.

One additional focus has been on working with their current customer base to build stronger customer relationships that can extend their various Global IP Solutions implementations. And, going forward, GIPS will be investing in innovation with video as a key focus.

Today GIPS released a Desktop Video Conferencing (DVC) white paper, authored by analyst Jon Arnold, outlining “the value proposition behind desktop video conferencing, especially in conjunction with other solutions, such as telepresence. Supporting this is an analysis of the trends that create the momentum we believe will make desktop video conferencing as ubiquitous as PCs themselves, and even mobile phones in the years to come.”

Jon talks about the spectrum of video conferencing solutions from telepresence systems employing large “real life” HD video displays, such as offered by Cisco and Polycom, to boardroom systems that provide the basics of teleconferencing via standard display monitors, to desktop conferencing where the user does not have to leave his/her desk to participate in a video conversation.

In short, compared to other video conferencing solutions, the value proposition for DVC is based on three variables: quality, cost and flexibility. Today’s DVC solutions can deliver a high-quality experience, at an affordable price point, and across a wide variety of environments. Aside from complementing the other types of video conferencing solutions, DVC can be deployed in a host of scenarios that are simply not practical any other way.

Jon goes on to provide tables comparing the three scenarios and then goes into details on potential market size for DVC as well as enabling trends that will help provide an appropriate infrastructure for DVC. On a SquawkBox conference call this morning (recording will be linked once posted) we discussed one aspect: support for HD video. Its minimum 720p resolution will require higher bandwidth upload speeds (> 1.5 Mbps) that I have been told will be coming to Rogers Internet next year with an implementation of the DOCSIS 3 infrastructure and probably to other cable Internet services; recall that the widespread availability of broadband Internet was one factor in the rapid adoption of Skype back at its launch in 2003.

He then goes on to discuss the complexities of the providing and adopting the underlying technologies starting with video quality. Synchronization of audio and video, a consistent user experience, the variability of DVC end point configurations and support for a wide range of camera devices are other factors.

And, now for the commercial: GIPS is offering four products, Voice Engine and Video Engine for the PC client side and Voice Conference Engine and Video Conference Engine for the server side, that will allow ready embedding of desktop video conferencing into their customers’ services. Basically GIPS is providing platforms that allow developers, enterprises, service providers and end users to have a high quality DVC experience. Jon concludes:

With GIPS, they have a complete engine that handles all the complexities of IP communications, and with that, a clear path for allowing DVC to reach its full potential, not just at the desktop, but in the mobile world as well.

GIPS has put up two demonstration videos for comparison: one “Traditional Video Conference” and the other “Video Conference Using Global IP Solutions”.

The only current customers using these services are Oracle and Baidu, the Chinese portal; however, discussions are being carried out with several prospective customers, probably including many in their current customer Most interesting is their potential for mobile video; the only North American carrier supporting video to date has been Rogers; however, its most obvious problem is finding other users who can take video calls. Introduction of the Nokia N95 8GB was supposed to expand the video calling-enabled user community; however, iPhone and BlackBerry Bold have stolen the 3G phone market.

Skype’s High Quality Video, SightSpeed’s acquisition yesterday by Logitech, Qik on Blackberry and Nokia N-Series combined with news of GIPS platform offerings are all precursors to a much broader adoption of user-friendly video in both business and personal conversations in the future. (Yes, we all know users have been looking for Skype video conferencing; when?)

Skype Journal: On2 Powers Skype High Quality Video

Full disclosure: GIPS CEO Emerick Woods was the Vice-President, Internet of Quarterdeck Corporation in the mid-1990′s with whom I worked on several business development projects involving partnerships with ISP’s of the time. Over the past 12 years, Emerick, in his capacity as CEO of several startups, which have gone on to be sold, has hired the author at various times for his business development services. The author, however, has no business relationship with Global IP Sound. One more clarification: Emerick has the same initials as a well known Tiger and loves golf just as much.

Tags: Global IP Solutions, GIPS, Emerick Woods, Jon Arnold, Skype High Quality Video, Polycom, Cisco, Nokia, BlackBerry, Qik.com, Logitech, video conferencing, video calling, video, Jonathan Christensen, Desktop Video Conferencing, Voice Engine, Video Engine

TMCNet Editor Michael Dinan has reported on Jonathan Christensen’s keynote two weeks ago at TMCNet’s IT Expo in Los Angeles. While many of us in the Skype world have heard pieces of this story previously, Jonathan was addressing an audience of enterprise and business telephony professionals who are dealing with VoIP implementation issues.. Jonathan’s basic thesis was that VoIP has become a commodity feature but the innovation starts by going beyond low cost voice conversations:

Now, Christensen said, are emerging three pillars of a generation “beyond VoIP.”

The first pillar, he said, includes different facets, including the fact that – unlike analog telephone conversations – services such as Skype are marked by an “explicit handshake model,” or agreed relationship, where both or all parties have agreed to communicate (a nice idea although this presidential election year will feature no robocalls, courtesy of Congress). Secondly, he said, there’s a new band of audio, including wideband audio, improving communications, in part, by allowing participants to distinguish among different speakers. Finally, higher resolution video makes video conferencing such as that offered by Skype, more real.

Three pillars that set the bar for fully equipped IP-based conversation services from the performance aspect.

Yesterday analyst Jon Arnold, who also attended the conference, wrote in his weekly Service Provider Views column: Is VoIP Dead?

Skype has an important message to deliver, not just for the consumer market, but for the business world too. It’s really a matter of how far ahead you’re prepared to look. While most service providers are just catching up to the realities and potential of VoIP, pioneers like Skype are way past that, and for them, VoIP is so old, it’s dead for them.

He goes on to point out:

The vision Jonathan paints, of course, is based in the world of IP, not TDM. VoIP can readily replicate the PSTN feature set today, but not much more. With end-to-end IP, not only can VoIP deliver an added layer of new services, and integrate seamlessly with Web services, but it can also deliver superior voice quality to what we’re experiencing today. Under these conditions, VoIP is actually a better product than TDM, and that’s where things get interesting. VoIP is still widely perceived as an inferior service, which explains why it is primarily sold on the basis of price rather than quality. Think of the possibilities for service providers when VoIP could actually be marketed as a premium service, and one that does not have to be sold as a way to lower your long-distance costs.

Well, by the time the incumbent telcos come around, Skype will be long past them. Skype has built up a sprawling international customer base that has embraced a communications platform that goes well beyond VoIP. PC-based VoIP and IM have been the backbone of their success, but Jonathan sees a richer experience emerging, and one that is much more than everyday VoIP. In the keynote, he talked about three pillars that will support this new mode of communications – presence, wideband audio and high resolution video.

And, after discussing the three pillars mentioned above, concludes:

Taking all of this into account, one of Christensen’s key messages was that innovation is happening today at the network edge, not the core. Furthermore, it is not coming from the telcos, but from the disrupters from outside the voice world, such as Skype, Google and the whole Open Source movement. Telecom, as we know it, is now software, and rapidly moving into the cloud and the world of Web 2.0. In this environment, voice becomes another data application, and telcos will no longer be able to build their business around it. This means walled gardens cannot last – and this includes Skype, by the way – and the end user will ultimately define what the optimal experience is, as well as where they choose to get it from.

This is the world Skype is building its future around, and to the extent that VoIP is offered as a standalone service, it will not have much of a future here. Service providers are certainly welcome to try doing so, but in my books, the voice of tomorrow will look a lot more like what Skype is talking about today. What does it look like to you?

It’s not about VoIP; it’s about the potential of multi-modal IP-based conversations. Read Michael’s and Jon’s complete posts for more insight.

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Recall our “Note to Innovators: Market Thyself” post over the weekend triggered by Andy’s VoIP Watch post on Why Some Innovate and Die, discussing the importance of marketing considerations in building a business. Alec Saunders has responded with several low cost suggestions for doing market research that don’t involve hiring a Forrester or Gartner:

Bottom line, there are many ways you can do effective market research without having to spend a bundle of money. Effective research will help you find the need and be customer focused.

Read the entire post for Alec’s comments on customer focus, distribution models and the role of retail.

Garrett (Smith on VoIP) contributes insight, from his perspective as a largely web-based distributor of VoIP and related hardware, built around three themes:

• Marketers Create Products, Engineers Build Them
• Use Your Money to Build a Great Product; Then Sell It Online
• For Retail VoIP the Numbers Don’t Add-Up

The last one comes from his experience with Vonage retail kiosks: As an example:

“…. The vast majority of consumers you will encounter in a mall kiosk setting (or even at radio shack) just are not able to comprehend the technology. Not that it is that hard to comprehend, but from my own “market research” during the kiosk trial you wouldn’t believe how many people think AOL “is the Internet.”

Garrett goes on to talk about the difficulties of hiring experienced staff at the retail level and the role of subscriber commissions and ARPU in generating sales. Interesting perspective….

In case you missed its referrals on other (VoIP) blogs, check out VoIP News’ “25 Tips to Improve Your Skype Experience”. Some tips are simply pointing out features of Skype (Call Forwarding) while others are innovative applications for Skype (A DIY Home Security System). The “Silliness” section includes mention of a Voice Analysis Love Detector and a NotMyNumber Directory.

And you can read about the DemoCamp 12 event I attended Monday evening in posts from Alec Saunders, Matthew Ingram and Jon Arnold (who has video’s of Alec’s presentation). Two key rules for participation: 10 Minutes and No PowerPoints! Now if they WiFi link had been more robust…And if you’re looking for a photo site that is for non-geeks, check out BubbleShare (whose Albert Lai presented an update on his Bubbleshare’s recent sale to Kaboose). It is a prime example of the need for simplicity in consumer products. I speak from experience; several non-geek friends have been using BubbleShare to share family pictures via the ‘Net.

I just reinstalled SightSpeed on my “rebuilt” laptop and am always impressed with the video quality. It is reminiscent of the days about 25 years ago when the first color monitors became available for the mini-computer-based instrumentation I was selling at the time. My budget-limited customers (mostly university based researchers) thought they could get away with budgeting for a black and white monitor until they actually saw the color monitor … it took all of two minutes to change their mind once they realized the features color added. Somehow the additional funds for color magically appeared quite quickly. (I won’t mention the price they paid for simple monitors at that time!) When you see a SightSpeed video its quality just hits you instantly as being the benchmark for video communications. And this week PC Magazine thought so also.

While it is a challenge to market in a space containing the GYMAS-five, Peter Csathy seems to be ringing up the wins by working with partners who can take advantage of SightSpeed’s video messaging functionality. Two of note: a deal with MTV who is using SightSpeed on their Total Request Live offering to bring viewers into the show; SightSpeed is also making its debut in politics as a campaigning tool. Would be interesting to see if my university colleagues Michael Ignatieff and Bob Rae start to use SightSpeed in their tight run for the leadership of Canada’s Liberal party this fall where they need to approach 4500 delegates spread across 4,000 miles.

In fairness I need to point out that PC Magazine makes a point of how Skype video is more associated with ad hoc “phone” communications as opposed to SightSpeed’s video messaging approach. Great to have two players in the game where one sets the benchmark for one particular feature that can be leveraged for targeted messaging while the other provides a total real time communications platform.

Other commentary on SightSpeed: Jon Arnold, Ken Camp and check out SightSpeed CEO’s video message on their implementation of peer-to-peer communications.

Turning to another aspect of video, SlingMedia announced a family of three new products this week:

• SlingBox Tuner for those who still receive their TV “over-the-air:
• SlingBox A/V for those with cable/satellite service and PVR’s
• SlingBox Pro for those who want to use HD signals or access multiple devices (say, cable box and DVD player)

A key feature of the new products is the enhanced resolution – from the previous 640×240 to 640×480 for local network connections; it remains at a very acceptable 320x 240 for remote connections. Any hope for Skype integration in the future to add a personal audio channel with the viewer of the “home” TV setup?

AOL has a long history of innovation. Initially launched as a proprietary pre-Internet personal communications platform building up to several million users via dialup connections, AOL has evolved its integration into the Internet to the point where it recently broke down its “closed garden” business model and opened up the majority of its content and services to anyone visiting their site. It has certainly gone down a bumpy road with its history of balancing the conflicting needs of innovation against the needs of an operation bureaucracy looking for a profitable business model. At one point it was the poster child for the Bubble 1.0 bust as the business world tried to work out business models to provide a profitable combination of both infrastructure services and (syndicated) content. Breaking down the walled garden is but one example of the direction it is going under new leadership.

Last week there were several posts (Aswath, GigaOm) about the closure of AOL’s TotalTalk, where AOL effectively recognized there is little to gain by playing in the pure legacy telephone replacement game and has decided to abandon it. Earlier this week there were several posts (Jon Arnold, Andy Abramson, Mark Evans) discussing Vonage’s latest quarterly results; the common theme is that Vonage is spending such enormous sums on customer recruitment that there is little hope of profitability in the foreseeable future. Cablecos and legacy telcos offering DSL services have a leg up as they already have a customer base to whom they can market. But Andy at VoIP Watch sums it up best when talking about the demise of AOL Total Talk in his Requiem for the Future of VoIP:

Rather than look at it as a failure, my take on this is AOL really has seen the future sooner than others. Much like the BT announcement earlier this week about their softclient, and like their other online portal player competitors including Yahoo, Google and MSN, AOL’s Voice Team has seen the future of telephony and is moving in that direction with AIM PhoneLine, and the burgeoning ecosystem that already has started to bubble earlier this month at the VoIP Developer’s Conference, and will likely have a big boost at VON in Boston next month.

But unlike Yahoo and MSN who have so many internal battles to fight, AOL as part of Time Warner has leadership that is smart enough to not fight a marketer (Time Warner Cable) who wants to sell a phone 1.0 replacement, and instead is focusing on Phone 2.0 and where it can be.

Today AOL issued a press release outlining their execution on the Voice 2.0 Manifesto through building an ecosystem around their AIM Triton IM client and its AIM PhoneLine service called the Open AIM PhoneLine initiative. AOL will introduce three API’s this fall that will give developers and hardware partners the ability to:

• Personalize the AIM Phoneline service by adding ringback tones and unique ring tones for frequent callers.
• Enable a wide variety of USB devices such as speakerphones and phone adapters that will allow standard cordless phones to initiate and receive calls with the AIM Phoneline service.
• Build new call management functionality into the AIM Phoneline service such as context and relevance-based call handling that could treat each call on the basis of rules that use Caller ID, online presence, calendar activities and more.

AIM PhoneLine provides free inbound numbers and, for a $9.95 per month charge, provides calling out both within North America and internationally on their Unlimited Plan. This is all tied into AIM’s Triton client to provide presence and chat functionality. Using the Open AIM PhoneLine API’s, AOL will be providing demonstrations next week of:

• MyNuMo, an online content community demonstrating ringtones that allow personalization by caller, and
• MVox Technologies, demonstrating their versatile speakerphone technology linked into AIM PhoneLine
• Iotum’s Voice 2.0 call management service using the iotum Relevance Engine

By combining the AOL PhoneLine API’s with iotum’s Relevance Engine, inbound AOL PhoneLine calls can be directed to voice mail or AIM’s Triton client or, if the user has the Unlimited Plan, to the user’s wireless phone. Potential applications include using the service as a second line to home-based businesses to triage incoming calls such that the existing customer base gets priority attention.

This is a break through for iotum in that

1. it becomes their first platform that makes their Relevance Engine available to a broad consumer audience, namely, AIM’s 43 million registered users.
2. they can focus on their core expertise and incorporate it into AOL’s platform that manages the infrastructure issues such as providing phone numbers, call termination and switching.
3. For iotum, it is the first agreement where users can simply extend their current setup to incorporate and experience their Relevance Engine. There is no need to purchase additional equipment, subscribe to an additional service and/or write interfacing software (such as with their PhoneGnome or Asterisk implementations).
4. AOL will promote its partners’ applications and devices at an on online store that users can access by simply clicking the “Shop” link off of the AIM Phoneline dashboard.

In an interview with Alec Saunders, iotum’s CEO and author of the Voice 2.0 Manifesto, he made the following points:

• AOL wants to create a community of innovation by opening up appropriate API’s to developers. For instance, opening up API”s to PhoneLine’s switching infrastructure allows iotum to handle call transfers. This is a feature that Skype has said will only be available in Q1 of 2007.
• Development of call transfer functionality requires not simply creation of an appropriate API but iterative co-operation between the platform vendor (AOL in this case) and the technology team at the partner (iotum) to develop an API specification such that the logistics of call transfer functionality operate in a user friendly manner while meeting the general business process rules for handling call transfer.. In this case iotum worked over the past few months with an AOL developer team in Halifax, Nova Scotia to come up with the relevant API. How this happened will be the subject of a separate post.
• The demonstrations at Fall VON next week are the launch of a startup phase with the final service becoming available by year end.
• While details of a launch marketing plan still need to be worked out, users will be able to subscribe to the service via AOL’s store front; the business model involves revenue sharing with AOL as the conduit responsible for recruiting customers..
• The AOL PhoneLine team has been “a superb partner to work with; they have been responsive; they provide promotional opportunities and they’ve delivered”.

At Fall VON next week I will be looking for examples of execution on the Voice 2.0 Manifesto as it provides the route to sustainable and growing profitability for Telco 2.0. The demonstration of iotum running on AOL Phone Line is certainly one stop I will be making and reporting on.

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With the turbulent migration to VoIP occurring in 2006, it will be interesting to track usage and subscriber data to support the impact of VoIP and Voice 2.0 business models. A couple of items that appeared this week:

Skype vs Vonage in the UK: Heather Hopkins of Hitwise, an online Internet usage monitoring service, has reported on Skype, Bebo and Vonage — Why Skype Visits are Through the Roof. Her chart that results from tracking visits to websites for each demonstrates how UK visits to Skype have climbed from ~1% of UK site visits in early February to 6.9% mid-May while Vonage has stagnated in the 0.8% range. And this happened in a market with no free SkypeOut! Score one for market penetration by a Voice 2.0 business model.

Earlier this week I reported on the $15 million funding of Bebo, a social network with 24 million members predominantly in the European market and Andrew Hansen’s observation as to how Skype support was probably a factor in their financing success. Heather goes on in her post to report on how Bebo is responsible for over 50% of the upstream sources for visits to Skype. And this number has increased with a Bebo-Skype partnership tied into the launch of Skypecasts. A Voice 2.0 application driving adoption and market penetration in the social networking space.

Acknowledgement to Mathew Ingram for the post that brought my attention to Heather’s post through the Comments.

Telus – a legacy Canadian telco in transition: Jon Arnold has posted some numbers provided at the Telus President’s Symposium held last Thursday in Toronto. Telus is the primary (and legacy) telco in Alberta and British Columbia and has a very successful national mobile network in Telus Mobility. They have a reputation for rapidly introducing new technology — they were the first to have an EV-DO offering in major Canadian metropolitan markets; also they went through a strike last summer that was essentially about transitioning labor costs to a level consistent with a Voice 2.0 business model. Telus has continued to be profitable; their stock price has risen over fivefold since mid-2003.

This is the picture of a telco successfully transitioning to a Voice 2.0 model reflecting the value is in applications (as opposed to access and directory) where:

• Talk is the baseline through provision of connectivity and directory services, yet
• The meter is going off — as evidenced by their reduced long distance activity and the reduced reliability on voice for revenues.
• Applications (as evidenced by their increasing reliance on Data and Wireless) are becoming the value creators.

At the end of the second day of trading Vonage (VG) closed at $13.00 with over 11.3 million shares traded today; down 24.6% from the IPO price. There is some interesting and inisghtul commentary coming out:

Andy Abramson, VoIP Watch: My Thoughts on The Vonage IPO

So really, this reaction to the stock price is not a reflection of how VoIP will do, for VoIP, especially with new and different services coming on line every day that can only be delivered by IP will do very well in the hands of companies with real leadership and vision, not just a sales model that costs more to acquire the customer than will ever pay back.

No, this reaction is a show of no-confidence by Wall Street in the company, their leadership and their approach to business. Nothing more. Nothing less.

Jon Arnold was interviewed by ROBTV (a Canadian business channel); this link will work until May 31. Jon points out that, whereas the legacy telco and cable competitors at least have a customer base to whom they can market a VoIP service, Vonage needs to recruit a customer base … thus, the high marketing costs. Well worth a listen for an overview of Vonage and its positioning.

Tom Evslin brings his insight as a former CEO of company that went through an IPO in the Bubble 1.0 era to two posts: Vonage IPO – When the Crowd Is Always Wrong and Vonage IPO – How The Bankers May Make a Bundle More Despite the Bust. Most interesting are his comments about “flipping”.

Andy Kessler follows up his guest post a week ago on GigaOm: Vonage Sucker Punch. “Here’s how not to do a deal. Citigroup raised the number of shares in the deal, but not the price. Bad move – it signaled some weakness….” Read on.

Mathew Ingram: Use VoIP to Call Your Broker and Sell. But he recommends using Skype to call your broker — “it’s cheaper”.

In summary:

• It’s the VoIP business model, not the underlying VoIP business technology, that needs attention. Once more an implicit validation of the business model described by Alec Saunders’ Voice 2.0 Manifesto.
• Trading at this point appears to be unrelated to any business fundamentals but rather to the psychology and needs of the financial market players.
• There will be a continuing squeeze on Vonage’s margins as their competitors come in with lower price offerings. Didn’t Skype say “free within North America” to year end?