Earlier this week I reported an update on the status of the EU Commission approval, indicating that it appeared there would be no conditions placed on Microsoft’s acquisition of Skype. Today the final ruling came out with details behind the EU decision.

In their decision it is interesting to note they split out the consumer and enterprise markets:

In the area of consumer communications, the investigation found that the parties’ activities mainly overlap for video communications, where Microsoft is active through its Windows Live Messenger. However, the Commission considers that there are no competition concerns in this growing market where numerous players, including Google, are present.

For enterprise communications, the investigation confirmed that Skype has a limited market presence for these products and does not compete directly with Microsoft’s enterprise communication product Lync, which is used mostly by large enterprises.

As regards conglomerate effects, the Commission assessed the possibility for Microsoft (i) to degrade Skype’s interoperability with competing services and/or (ii) to tie its own products, in particular its leading Windows operating system, with Skype, thereby limiting other players’ ability to compete.

As regards consumer communications services, the Commission found that Microsoft would not have an incentive to degrade Skype’s current interoperability as it is essential for Microsoft that Skype’s services are available on as many platforms as possible in order to maintain and enhance the Skype brand . As regards the risk of tying or bundling, the Commission noted that the vast majority of consumers who acquire a PC with Skype already installed are registered Skype users and that most of them subsequently download a version different from the pre-installed one. Therefore, the proposed transaction will not change the current situation.

As regards enterprise communications services, the Commission found that Skype is currently not an enterprise product, therefore its interoperability is not decisive for competitors and a bundle or a tie between Skype and Microsoft’s products will not be a must have product for enterprises. Furthermore Lync faces competition from other strong players in enterprise communications, such as Cisco.

The Commission also assessed other ways with which Microsoft could leverage Skype’s large consumer base onto the markets for enterprise communications services but it ruled out negative effects on competition in the time frame relevant for the analysis of the transaction.

In other words the commission concluded:

• Skype would degrade its own brand by failing to continue support for the multiple platforms on which it is currently and potentially available as as service
• Skype has  made such significant market penetration that users who would encounter a pre-installed Skype on a PC would probably already have a Skype account and want simply to upgrade to the latest version.
• Skype is not an enterprise product – confirming that, when it comes to the business market, Skype really has been a small business product at best.
• Any attempt to leverage Skype’s consumer base into the enterprise market would not negatively impact competition.

Microsoft General Counsel  and Vice-President Brad Smith has commented:

We’re pleased that the European Commission has approved Microsoft’s acquisition of Skype. This is an important milestone, as we’ve now received clearance from both the United States and the European Union. We look forward to completing soon the final steps needed to close the acquisition, bringing together the employees of Microsoft and Skype, and creating new opportunities for people to communicate and collaborate around the world.

Bottom line: Microsoft is free to do as it wishes in terms of the integration of Skype into their business. At this point it’s really up to Microsoft, working with its Skype business unit, to determine how to successfully leverage Skype into Microsoft’s enterprise (and consumer) offerings to achieve the increased market adoption that justifies an $8.5B purchase price.

Related articles

• European Union approves Microsoft’s Skype deal (winrumors.com)

In previous posts I have mentioned how the iPad is an ideal form factor for a “Desktop phone” experience, whether using CounterPath’s Bria, as a business phone extension, or Skype for iPad, targeted largely to the consumer and small business market. This is especially true for video calling where the 10” screen combined with the iPad’s portability is an ideal format.

Today at DEMO Fall 2011, a new player, but with lots of veteran IP-communications experience, announced their forthcoming entry into the fray with an offering targeted at the small-to-medium business and enterprise market. Hookflash has been designed from scratch to take full advantage of the iPad’s display format and touch screen features to provide a unique business class video calling experience.

According to Trent Johnsen, Hookflash’s CEO and co-Founder, in a press release today:

“With Hookflash, millions of iPad users will immediately have access to the powerful communication capabilities previously limited to expensive corporate telephone and video conferencing systems.  Leveraging the iPad’s size, touch-based controls and connectivity allowed us to create an integrated experience that will dramatically improve how people work.”

In addition, Hookflash will offer a docking station which hold the iPad but also provide a familiar phone handset for picking up the voice channel of a call. When away from the office, the iPad (say, with a mounting case) remains a convenient form factor for handling video calls.

Hookflash does not simply provide voice, video and chat support with a heavy focus on collaboration, including group video calling, but also leverages social networking tools to provide unique “participant profiles automatically created from information extracted from business and social networks — all seamlessly integrated within an intuitive interface.”

The touch screen user interface allows swipes to be use for activities such as exiting and entering a group video call without killing the conversation. There is also a feature where two video calls can be brought together.

Other features include:

• One-on-one and group video, voice and chat;
• View all active conversations in one place;
• Merge together or divide active group text, voice and video conversations, with a simple swipe of the finger;
• View real-time social and business profiles right inside Hookflash;
• Transfer calls at the click of a button;
• Record and share previously captured conversations–voice, video and chat.

In effect Hookflash proposes to offer a social media-enhanced business video calling experience where participant background, through social networking services and contact information, is available by simply by touching on a participant’s picture. Hookflash’s key value-add appears to be the comprehensive user interface and its ability to quickly show participant information, merge calls, make call transfers, peer into the cloud for background information, and manage other aspects of the call, including recording for later recall.

But what are its chances for market adoption?

• Do business users want the level of information being offered? Can it become distracting to the call’s primary agenda?
• How will it build up a user base? Being targeted to the business and enterprise market requires management endorsement and support.
• What is the level of interoperability? Can multi-party call participants be brought in from, say, the PSTN or other platforms such as PC’s and smartphones?
• How quickly can it become available on other platforms? While certainly the iPad has had huge adoption, how soon will it be supported on other platforms that may be more convenient to some users?
• What are the demands on the network connection? Especially when it comes to considering 3G/LTE data plans and roaming charge issues?

While Hookflash looks to be an alternative to Skype here are some issues they need to address:

• the network effect. How will Hookflash build a user base or will it be restricted to participants within an individual business’s ecosystem?
• platforms: at the moment it requires all participants to have an iPad. While expansion to support iPhone is fairly obvious, what about PC’s, Android devices, TV’s?
• what will the Microsoft acquisition of Skype bring to the table in terms of offerings for the small-to-medium business and enterprise market? Not to mention that Microsoft has already built up a significant business and enterprise customer base.

And finally, where is the revenue model? According to their Home Page “Hookflash for iPad is a free communications app that makes working together easy.” In the long term “free” does not pay the bills.

From reviewing their website, which appears to be incomplete at this point (the video and trial “sign up” is not available for instance), Hookflash overlays social networking for contextual information about participants, end-to-end call management (set up –> call with management –> archiving) and integration with other key services (Outlook Calendar, YouTube, Plancast) onto an open source peer-to-peer voice, video and text chat communications platform. It really remains to see it in action to determine its ease of use, level of market adoption and potential for revenue generation.

Bottom line: based on the limited information available Hookflash layers significant user interface features onto voice, video and text conversations. However, given Skype’s network effect and broad platform support, I can see Hookflash being considered as an acquisition by a post-Microsoft acquisition Skype business unit to provide a richer video calling experience.

Related articles

• Demo: Hookflash aims to make phone calls at work more productive (venturebeat.com)

Yesterday on the Skype Big Blog Skype’s Jennifer Caulkin published an infographic, A day in the life of Skype, with some illuminating usage information:

• 65 million people sign into Skype daily (certainly a confirmation that the order of magnitude of Hudson Barton’s “real user” count is in the ball park)
• 30 million SkypeOut minutes per day represents about 4.3% of all Skype calling minutes, yet Skype has stated that about 8% of its users have Skype Calling Plan subscriptions. Probably the only deduction here is that “paid” calls to the PSTN are, on average, shorter than “free” Skype-to-Skype calls.
• 42% of all Skype minutes are video calling. Certainly justifies Skype’s heavy promotion of video calling as well as its introduction to mobile devices. (And July does not include any video calling using Skype for iPad, launched August 2).

These numbers certainly set a benchmark for any other IP-based communications offering to match in terms of user adoption. And would they even want to publish similar usage numbers?

The one number that’s not updated is the number of active users during July, last reported as about 170 million in the previous quarter.

What’s your comment or insight on these numbers? Or other information you would like to see?

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)

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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• Skype 2.0 for iPhone: Is it worth subscribing for 3G VoIP calls? (reviews.cnet.com)
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• Skype on 3G mobile impresses (saunderslog.com)
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Ok so I’m the last to write about Google’s announcement this morning on its acquisition of Global IP Solutions, a major provider of IP-based communications infrastructure with not only its voice and video codecs but also voice and video engines that mean simply “supply me with an Internet connection, a microphone and a set of speakers” and we’ll handle the conversation on your PC or smartphone.

Combine this acquisition with Google’s experience with Google Talk and Google Video Chat, its acquisition of Grand Central to become Google Voice, of On2 for its video codec (used by Skype amongst others) and of Gizmo, Google now has a full set of the underlying tools required to bring out some interesting communications offerings. Can Google integrate these tools, and overcome the inherent management and organization integration issues, to deliver a coherent and effective communications offering? What will we see as end user offerings? And how will Google work with the competition?

After all four weeks ago I had a demonstration at GIPS of a video call received on an iPad (notice I only said “to”). And, as I reported at the time, they basically affirmed that we should be seeing video calling supported on mobile smartphones before year end. Perhaps with a GIPS mobile video engine. Will this now simply be an Android offering or will their offerings also involve smartphone video calling support for Apple’s iPhone/iPad and, say, RIM’s BlackBerry?

It’s interesting to note that I’m already observing the Skype – Google competition in my GMail window. Hover your cursor over the appropriate location at a sender’s name and I get one of two “click-to-call” options: to converse with a contact using Google Talk/Video or to converse directly with the same contact in Skype voice, chat or video:

Google has long been a customer of GIPS for its voice technology and more recently for its video technology on Android. As have Nortel, Cisco (Webex), Communigate (one of the world’s largest suppliers of enterprise email services), Yahoo, IBM/Lotus and many others for both its voice and video technology. It will make for an interesting world of co-opetition.

Other bloggers have made some interesting points:

Thomas Howe, Voyces.com in Tick, Tock, Core, Edge implies that, with the pendulum swinging from the core to the edge, IP-communications infrastructure is going to be supported primarily by two players, Skype and Google:

More important, though, is what these battle lines say about the other players. Which is to say, these guys aren’t even on the battlefield. If fellow Cape Codder David Isenberg is right, and we are in the era of the dumb network, then anyone not-Skype and not-Google is not in the running. Although I agree, appreciate and applaud Orange’s work with their core (in particular, the API program), where are they in this battle? Where is AT&T? Now, doesn’t Verizon’s deal with Skype seem much smarter? To me, it does.

Voxeo’s Dan York, in Google buys GIPS for $68 million – to take on Skype? Apple? Microsoft? gives a short course in IP Communications 101 to explain Google’s motives for this acquisition by pointing out where the real battleground lies:

The issue is that while the control channel is increasingly around the open standard of SIP, which anyone can implement, the “codecs” used in sending media from one endpoint to another have long been a proprietary battleground, particularly with regard to wideband (or “HD audio” as some call it). Yes, there have been and are standards, but usually there have been intellectual property or licensing issues. Now, there is work within the IETF to create a standard wideband codec (and as I wrote earlier, Skype is involved with this effort) but that may take some time and the outcome is not known right now.

But there’s one aspect to this acquisition that can tend to get overlooked – cross licensing. When I worked in the NMR spectroscopy industry during its early evolution in the 1970’s, the two major players (Varian and Bruker) would be filing and acquiring patents and then suing each other. But the final outcome was that both players set up cross licensing arrangements such that the entire NMR spectrometer market benefited by always being able to benefit from the best of both companies’ innovation. And it all subsequently contributed to the rise of Magnetic Resonance imaging that plays such an important role in today’s medical imaging space across six or seven vendors. Will we see Google and Skype cross-licensing their technologies so that overall IP-based communications offerings can ultimately provide best-of-breed services to both their customer bases?

Bottom line: What I see emerging is a communications market where each of Google and Skype will continue to bring forth unique communications offerings that may appear somewhat competitive to their respective customers. Recall the final value add is in the customer benefits exposed by the user interface, not the underlying technology. As a result we can expect a world of co-opetition and cross licensing such that customer offerings by either party are not held back by some intellectual property dispute that really relates to technology and infrastructure in which the customer has no interest. In the end its about growing a bigger market for the benefit of all.

Other posts:

• Alec Saunders on Voyces.com: Google Targets Skype
• Alec Saunders on Saunderslog: GIPS acquired by Google. How does Abramson pick them?
• Rich Tehrani on TMCNet: Google Buys GIPS – Here’s Why where he provides a short history of GIPS and then analyzes some interesting reasons behind what may have motivated Google.
• Garrett Smith on Smith on VoIP: Google the service provider

Update: Andy has written Congrats to The Great Team At GIPS – it’s his 18th client who has been acquired and the second acquisition by Google. He has also given me credit for the small role I played in introducing him to GIPS:

And with this acquisition, for me and my agency, Comunicano, the number of companies to “exit” or in this case “get bought” in the last 8 years now has hit 18. Alec Saunders referenced that feat in his very well written post yesterday. GIPS came to my agency and I in the same way the other 17 had. We were asked to work with them. In this case the door opener was trusted friend and colleague, Jim Courtney, who has known Emerick Woods for longer than most dating back to their days at Quarterdeck. Jim always said that Emerick is the consummate professional, and someone who knows how to win. Looks like Jim’s matchmaking ability came through.

Full disclosure: GIPS CEO Emerick Woods was the Vice-President, Internet of Quarterdeck Corporation in the mid-1990’s who became a mentor to the author on several business development projects at Quarterdeck involving partnerships with ISP’s of the time. Over the past 14 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.

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So it’s finally resolved. The Skype spinout from eBay will involve Skype’s founders as investors and board members while contributing a cash investment. Skype finally owns the core intellectual property required for Skype to operate at its current cost levels. eBay gets the cash they were looking for but 5% less of the new Skype. Canadians still get to invest $16.75 each through the government operated Canada Pension Plan. Marc Andreesen gets involved with another major Internet play. Mike Volpi and Index Ventures are out of the picture. Lawyers and consultants are probably heftily rewarded for all the litigation activity leading to the final resolution. Incessant speculation on Skype Journal’s Skype 5.x Public Chat about how to get around JoltID’s Global Index software will finally cease (well, maybe).

While I have put links to several posts leading up to the resolution below it has been most interesting to read various bloggers comments on the resolution and the future direction for Skype:

Phil Wolff at Skype Journal sums up the numbers in his post, Sold! The Bullets and values the JoltID intellectual property at $275 million. (Phil gets credit for the graphic above, by the way.)

Om picks the winners and losers on My Thoughts on the Skype Settlement: Winners & Losers Scorecard. He points out the “great spin quote” from Silver Lake as a leftover from the “PR spin” days prior to the transparency that comes with social networking. Come on, guys. We’ve all seen the depositions and emails. As for the future, Om comments:

No Silver Lining?: One person who I totally feel for is Silverman, the current CEO of Skype. He gets to run a company which will have the looming presence of its founders.

Whatever the press spin might say, the new investor group is like a poisoned well. It will be a polarized group, always looking over their shoulders. Silverman is going to need to keep a lot of people happy, and those board meetings with nearly two-dozen people aren’t going to be fun, either. But as Biggie Small once said:

“It’s like the more money we come across, the more problems we see.”

Both Kara Swisher at All Things Digital, in All Is Forgiven: “It’s a Clean Slate,” Says Andreessen About Lawsuit-Mad Skype Co-Founders, and Dan Primack at PEHub, in 5 Skype Questions for Marc Andreessen, interviewed Marc Andreeson of Andreeson Horowitz. The common statement about his relationship with Niklas and Janus:

We have not been in business with them before, so we don’t have any baggage at all. Our view is that they’re two super-creative founders. We’ve known lots of legendary founders, and they are all different and have things that make them unique. We include ourselves in that from past experiences. We view ourselves as a pro-founder firm, so we like the idea of founders being involved. It’s a net positive.

Martin Varsavsky. CEO of FON, a company partially financed by many of the same players in the Skype sale, restricts his comments to his thoughts on the future of Skype – where is Skype vulnerable?, where are its strengths? – in Why it may make sense to buy Skype back. His overriding statement:

Skype is simple. Michael Arrington and all of Silicon Valley may find Google Voice amazing but is the average global citizen ready to use it? Massively use it? You download Skype, you find your friends on Skype, you talk. And, if you don’t find them, you Skype out. And when you talk you can also do video. I LOVE video calls on Skype. I used to use them for people I really cared about, relatives, close friends. Now I even do business calls on video with Skype. It just gives you more of a sense of what is going through the other person´s mind. And Skype is the leader on video quality. So simplicity plus video may be a good way to beat flat plans from telcos and avoid being Tivoed. If the video services can migrate to mobile phones Skype is on to something.

Andy Abramson, in The Skype Suit Is Settled-Now Business Can Get On, comments:

I’m just glad the suit is settled between eBay and Skype. Now a lot of things that have been held back can finally move forward. In many ways the settlement is a good thing. The return of the original founders means disruption will continue, and new ideas will flourish. It also means Skype as a business or brand will now have a chance to prove its worth.

Alec Saunders, in eBay’s big mistake; Why the JoltID license was inevitable, concludes:

The lesson in all this? Deals involving technology licenses and acquisitions are common in business. When acquiring a technology asset, buyers must acquire the necessary control needed in order to protect the business.  Either buy, or license in perpetuity, what you need to prosper. Unless your intent is to immediately begin work on a substitute technology, a license for core technology that needs renewal is a sure way to find yourself caught by the short-hairs in a future negotiation.

The bottom line is that Skype is now in a position to focus on building future communications software and services without the distraction of depositions, legal wrangling and media curiosity. Provided he can navigate through a 23-member board with diverse interests and experiences, Josh Silverman can build the real communications software business of providing infrastructure for conversations while having a wealth of technology and business connections available in an advisory role.

Previous Posts:

Om’s trail:

• Skype, Founders Settlement in the Works (Nov. 1)
• Further Details Emerge As Skype & Its Founders Close to Settlement (Nov. 3)
• Skype Founders Fight Their Way Into the New Skype (Nov. 5)
• My Thoughts on the Skype Settlement: Winners & Losers Scorecard (Nov. 6)

Kara Swisher (All Things Digital):

• Volpi and Index Ventures Out of Skype Deal, the Lawsuit-Happy Founder Twins In (Nov. 3 with lots of links to related stories)
• I Love the Smell of Settlement in the Morning: Skype Founders Set to Get 10 Percent, Option to Buy Three Percent More and Two Board Seats (Nov. 3)
• All Is Forgiven: “It’s a Clean Slate,” Says Andreessen About Lawsuit-Mad Skype Co-Founders (Nov. 6)

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• Skype soap opera ends as founders set to regain stake ahead of $2B sale (dailyfinance.com)
• Lessons From the War Over Skype (bits.blogs.nytimes.com)
• Skype Cofounders Will Be Part Of Buyout Group; Index Ventures Is Out (paidcontent.org)
• Skype Founders Re-Found in Settlement (marketingpilgrim.com)
• Skype founders win back share (guardian.co.uk)
• Andreessen On Skype: “This Is One Of The Most Important Companies On the Internet.” (techcrunch.com)
• eBay’s Skype sale gets go-ahead with settlement (news.cnet.com)
• Confirmed: Skype Founders Settle With eBay And Others, Get 14% Stake In Skype, Not 10% (techcrunch.com)
• Skype Settlement: Zennström And Friis Have Won It Again (paidcontent.org)
• 17 Million Canadians Will Have an Interest in Skype’s Success (voiceontheweb.biz)

In a recent post, I provided some examples where Skype is being used by small businesses to build relationships with a worldwide supplier and customer base. In the same post I provided a couple of examples where current economic conditions are helping to stealth Skype into enterprises in the medium to large business category. Skype itself claims that about 30% of its use is by businesses. At a blogging for business workshop a week ago and a local WordCamp this past weekend I again encountered several entrepreneurs for whom Skype was a key tool for conversations.

It seems that Skype wants to build up a repository of case studies involving business use of Skype. Last week Skype asked businesses to share their experiences with Skype as a business tool.

We’re looking for businesses like yours to share their experiences with us at Skype. We’re looking for creativity and originality – companies which use Skype in innovative ways around the world to save time, save money or stay ahead, and preferably a combination of the three.

The contest will be judged with three prizes to be  awarded involving Skype credits using Skype’s Business Control Panel along with Skype certified hardware products. More details are available at Peter Parkes post announcing the competition.

While the application form encourages the use of photos and video to support entries, it would also be useful to learn about how Skype not only reduces costs but also how Skype’s services impact business processes, customer/supplier relationships and team building across a geographically disbursed operation. And it’s not simply about voice conversations but are you using Skype chat for virtual water cooler conversations and Skype video to enhance conversations? Or do your activities involve one or more of Skype’s partner’s products for conferencing sessions, call center operations or document management?

Do you have a story to share?

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• Multiple Business Control Panels Per Company: A Thing I Really Want from Skype for Business (skypejournal.com)

Yesterday’s announcement of Grand Central’s rebirth as Google Voice drew a lot of attention from both the mainstream media and blogger world. In following the IP-based communications world over the past three years, I have come to believe that the only potential real time conversation service provider challenger to Skype could come from Google. It has huge user registration numbers at a world class scale; however, its primary business is built around how many ways can one drill down within Search and then offer contextually relevant advertising. On the other hand, they appear to be looking to complement search-embedded activities, such as Search within GMail, with real time conversation capabilities.

For instance the recently launched GMail Voice and Video chat allows users to migrate to real time conversations directly off an email message. Great in the context of building a dialogue out of an email’s subject and content. I’ve tried it and it works but have not had reason to use it in my everyday activity; on the other hand, if I  find reason to use it, it’s there and easy to launch. A great example of voice-enabling a conversation in the context of an ongoing dialogue.

Show me a platform that is not supported by Google’s GTalk chat offering. Almost every PC and mobile device I receive for evaluation is supported by GTalk. Yet, I only have about ten contacts on GTalk and may get a message once every week or two. There’s a reason Alec Saunders came out recently to say “Ditching all IM Systems except Skype!”. On the other hand, GTalk is there; it’s handy if someone contacts me via GTalk.

While Google Voice lists its entire feature set here, Kim Peterson’s post, “Free long-distance? Oh yeah, Google;s going there”, on the Topstocks blog at Microsoft’s Money Central, highlights the the top ones:

In a nutshell, here’s what you’ll be able to do with the free program:

1. Get a single phone number that routes calls to your cell, work and home phones simultaneously.

2. Call numbers in the U.S. for free. And call internationally for ridiculously low rates — I’m talking 2 cents a minute to China.

3. Get your voicemail transcribed into e-mail or text messages.

4. Make free conference calls.

5. Get your voicemail on the Web.

Mainstream media, however, could only focus on how Google Voice would provide competition to eBay’s Skype. New York Times’ Miguel Helft starts out with:

“Google stepped up its attack on the telecommunications industry on Thursday with a free service called Google Voice that, if successful, could chip away at the revenue of companies big and small, like eBay, which owns Skype, telephone companies and a string of technology start-up firms.”

Ryan Singel at Wired’s Epicenter:

When Google announced its integrated phone service called Google Voice Thursday, it said something very loud.

Google is saying it wants to be the world’s communication hub, and hundreds of companies — ranging from mobile phone operators to Skype to Microsoft better be listening.

Further down the same article, Ben Lilienthal, now general manager of audio services for Citrix Online – and a Skype partner for full service audio conferencing, “isn’t convinced that businesses will move to the service very soon”, Ben went on to say:

“For a consumer, it is a pretty compelling service,” Lilienthal said. “But I think if you are a business user, it’s not necessarily a road you would want to go down. There are a bunch of things business users worry about that consumers don’t. If it doesn’t work, can I get a live person on the phone? Is it reliable? What kind of quality of service can I get?”

Many reporters and bloggers had a chance to upgrade their Grand Central service to Google Voice yesterday. However, being a Canadian I never acquired a Grand Central number for the same reason as fellow Canadian and Fonolo CEO Shai Berger:

….. this problem is not unique. Many similar services don’t extend into Canada. It’s still hard to get a Canadian Skype-In number for example. Ooma has the same problem and when I spoke to some senior people at Ooma last year they cited complicated regulatory issues (including a word I hadn’t heard before: “homologation“. Always like learning a new word). I don’t expect Grand Central/Google Voice to address this any time soon and I don’t hold it against them — the extra hassle is probably not worth it in the early stage of the game.

But Shai also gives a more generic reason for not being a user of Grand Central:

That 2nd item is a bigger issue because it effects everyone, not just Canadians. Our mental model for interacting with phones is that “if you called me from number X” I can hit redial to call you back. (Or I can store that number in my address book for later.) To fix this we either have to change user behavior (tough) or spoof the caller-ID (technically doable but quasi-legal). The only Voice 2.0 company I know of that has solved this problem is Truphone, which does transmit your Truphone number as to the destination. [Author’s note: SkypeOut also provides callerID using either your Skype Online number or your “Skype registered” mobile phone number.]

But there’s also a user interface issue when you look at how a call is placed. Further down in Kim’s post (and similarly described in the NYT post referenced above):

Here’s how it works: You call into your voice mail on Google Voice, and from there you get transferred to a dial tone. You can call any number at that point [author’s italics]. You also have a central Web site that will show your voice mails and manage your account.

So I have to call one number in order to call the number I want (and, at that point, there’s probably no linkage to my device’s native address book), eh?

And, finally, Om Malik points out a few issues, including how users will pay for international calls:

Just as a warning, the upgrade to Google Voice won’t allow you to take your Grand Central address book with you, since the new system uses Google Contacts. In addition, the service doesn’t work with those of you who have Google Apps accounts; you’ll need Gmail accounts. Lastly, they make you use Google Checkout to pay for international minutes. No thanks — I am happy paying with PayPal and/or credit cards. [author’s italics]

Let’s go back to Skype (and iSkoot):

1. I want to locate a phone number (or SkypeID) in my native mobile handset address book, hit the green “Call” button on my mobile phone and launch a voice call. Real simple UI here. On a mobile device, such as BlackBerry or Nokia N-series, I can do this with iSkoot for making both Skype-to-Skype or SkypeOut calls.
2. I have 14 years invested in my current office and mobile phone numbers. I’m not ready to make any changes. iSkoot, on my BlackBerry, and Truphone on both BlackBerry and iPhone work with each device’s existing phone number.
3. SkypeOut (and iSkoot, when making SkypeOut calls from a BlackBerry or Nokia N-Series S60 phone) provides my mobile phone number as a callerID. A party who needs to return my call can simply click on the number and reach me. (and, if in my native address book, readily see who has called).
4. With Skype I can make payments via PayPal or directly on my credit card.

While I will try Google Voice once they expand to supporting Canadian numbers, its modus operandi certainly does not come up to Skype’s standards for a truly user friendly calling experience. On the other hand its call screening, call management and voicemail handling features certainly provide some new challenges for Skype to watch out for.

Bottom line: today we all look for competition in the wireless carrier and mobile smartphone markets. But there are key differentiating features. It’s healthy to see two players such as Skype and Google, both with world scale user bases, in the real time conversation space. But there are differences, in the individual end users will adopt whatever provides the most convenience for his/her individual needs.

Full disclosure: the author has Bell Canada lines for his home office, including fax, requirements while using Rogers Home Phone for family voice calling. He also uses Skype for most of his business conversation requirements, especially long distance and international calling. Just as different smartphones meet different user needs, we’re probably going to find that many of us need multiple services for all our real time conversation needs.

Finally let’s look at one more slide from Skype President Josh Silverman’s analyst presentation earlier this week:

Google has a little bit of work to do to round out an equivalent ecosystem.

Check out Kim’s post for links to several other bloggers’ comments as well.

Andrew Hansen: Skype makes a small ripple, but no Splash with new VM features.

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• GrandCentral To (Finally) Launch As Google Voice. It’s Very, Very Good. (techcrunch.com)
• GrandCentral Returns as Google Voice (readwriteweb.com)
• GrandCentral Becomes Google Voice (appscout.com)
• Google Launching GrandCentral As Google Voice (searchenginewatch.com)
• Run YourOrganization.com with Free Google Apps (blogs.harvardbusiness.org)

… your partner fails to provide an obvious path to download and install your software.

In early July last year I wrote about the launch of Dell Video Chat, based on a newly announced agreement between Dell and SightSpeed to use SightSpeed’s video services. The bottom line was that Dell Video Chat would become available on an expanding range of Dell PC’s.What follows is a story about what turns users away from Windows PC’s and why Apple is doing so well with its iMac’s and MacBooks these days.But it also has to be an embarrassment to Dell.

As background I should say that recently I have watched as two non-tech persons have started up their MacBooks for the first time. Turn it on, asks for your name and contact information, upgrades the software, takes your photograph with the built-in webcam, finds the WiFi, connects to the Internet (and finds other PC’s on your LAN). In about 20 to 30 minutes you’re up and running. No hassles, no new software to install; it just happens!. And subsequently these people do not come back to me for technical support, especially on security, operating system upgrade and new software installation issues.

This weekend I am helping an acquaintance getting transitioned to a new Dell Vostro 220 desktop PC. Due to one critical business application that only supports a Windows installation this person could not change to a Mac. In the course of starting it up I found there was a webcam embedded onto the monitor and installed the appropriate webcam software. (No, Dell did not pre-install it even though a monitor with embedded webcam was included in the initial order.) Ran a client called Dell Webcam Central. You could take photos or record video while seated in front of the monitor.

Then I noticed in the upper right hand corner an option to “Switch to video chat”. Recalling that I had written about Dell Video Chat last summer I clicked on the link. And got a dialogue box stating: “You have not installed the video chat application ‘Dell Video Chat’. Do you want to download now?” Clicked on the “Yes” button.

This took me to a Dell web page that asked for my Dell Service Tag. Entered it and ended up on  the standard page of driver downloads for the Vostro PC. Looked through the various categories (after identifying my OS as Windows XP) and could not find Dell Video Chat software anywhere. No application downloads. Nothing about it listed in a sidebar on the same page. Nada, Did a search. No luck.

So, at this point, not being sure if I had installed Dell’s webcam software properly I installed Skype on this PC and found it recognized my webcam, including its associated microphone, with no problem. Dell had failed to provide any means (let alone a user-friendly means) to download and install the Dell Video Chat software.

Sort of defeats the purpose of having this SightSpeed-Dell agreement and the associated easy access to the relevant software somehow. It actually turned out to be easier for me to download and install Skype (and have ready access to voice and/or chat conversations with the huge Skype user base).

A couple of points made in posts since my initial one about the arrangement between Dell and SightSpeed have happened since last summer:

• Skype hired Scott Durchslag as COO. In a post about CxO’s and their persoanl business networks I pointed out that both Scott and Ron Garriques, now Dell’s President of Global Consumer Group, had worked together at Motorola.
• Logitech announced it would acquire SightSpeed in late October.

Aside from Dell’s obvious quality assurance problem described above, the sceptic in me might ask:

• Did Logitech’s acquisition of SightSpeed somehow sour the Dell relationship with SightSpeed?
• If it’s all but impossible for a somewhat technically savvy person to find and install Dell Video Chat, is there any Dell Video Chat user registered out there with whom a user could have a conversation?
• Has SightSpeed been tracking any metrics on Dell Video Chat adoption?
• Is there an opportunity here for Skype to leverage a Skype executive’s previous relationship with a current Dell executive to initiate discussions about having Dell provide Skype with all its PC’s?
• Will “Skype Everywhere” include Dell PC users when they want to hold voice, chat and video conversations simply by default? “No biz dev required.”

Just wondering …..Where’s the value in a Dell partnership? It’s all about execution!

In spite of being a 14-year purchaser of Dell PC’s, it’s one more nail in the Dell/Microsoft coffin as I contemplate a transition to a MacBook for my next laptop purchase.

And, in case anyone was wondering about what Steve Jobs brought to the table at Apple: a discipline within Apple’s corporate culture that focuses on a friction-free and overwhelmingly successful user experience. In spite of Steve’s current absence that corporate culture is not going away anytime soon.

Phil’s Observations:

• Two More Reasons why SightSpeed is good for Logitech
• Why Did Skype lose the Dell account to Logitech

SightSpeed’s CEO Peter Csathy:

• Speculation About SightSpeed’s Partnership Success — “How Did They Do It?”

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Over the past few years we have seen the evolution of several conversation communities, some simply employing instant messaging; others employing both instant messaging and voice. Skype is the primary example with its support of IM, voice and video as well as auxiliary features such as file sharing (and, as announced tonight, basic screen sharing) but we are also seeing these services diffuse into Google, via GTalk’s voice and chat capability, MSN Live via Live Messenger, and, in spite of its trying to define who they are, Yahoo. Truphone is a mobile voice calling service that I have used for a couple of years from a Nokia N95-1; it became critical in a situation I encountered in Germany two years ago. I have liked both the quality of the voice calls as well as the user interface, especially its use of the device’s native address book for initiating a call. While they have had some hiccups with their recent product launches, Truphone has become the leader in providing low cost calling from the iPhone while breaking the carrier barrier via Apple’s App Store. I will soon be reporting on Truphone Anywhere for BlackBerry. Now, under recently appointed CEO Geraldine Wilson, Truphone is making a move to grow their user base rapidly by leveraging the user bases of other services.

This evening at the MacWorld Showstoppers event Truphone announced an enhanced Truphone for iPhone providing connectivity to these four conversation communities. Supporting both instant messaging and voice conversations, voice calls to, say, Skype contacts are free provided they go over a WiFi connection. Calls to these communities can also be made over a carrier’s 3G network, usually at the cost of a local call. In addition Truphone is providing access to Twitter as one additional messaging service accessible via Truphone’s iPhone application.

In my interview this evening with new Truphone CEO Geraldine Wilson, she pointed out:

• Using Skype as an example, Truphone’s enhancements set up an appropriate Skype client on a Truphone gateway and complete the call to the Skype contact, taking advantage of Skype’s peer-to-peer architecture such that there are no resulting termination charges.
• By introducing instant messaging, Truphone is recognizing the key role IM is taking on in IP-based conversations where a conversation may start over a chat session and migrate to a voice session if deemed appropriate.
• Truphone sees the introduction of these enhancements as a key to building the Truphone user community; Truphone generates revenue through offering low cost calling to/from the landline and mobile PSTN network.
• Truphone is looking at adding BlackBerry and Android to their supported platforms for this service over the next few months. Key here are devices that support an application store in order to make user access to these services simple and trivial.
• To avoid high roaming charges it is recommended that Truphone for iPhone be used either over a WiFi connection anywhere worldwide but only over a user’s home country 3G carrier.
• These new features go live on next Monday, January 12.

Some outstanding questions:

• Given that the Truphone application needs to be active for conversations, how will this work when other applications are open? Currently if I have Truphone as the open application on my iPhone, I can receive free Truphone calls and my presence will be indicated to other Truphone for iPhone users if I am in their “Favorites” tab. However, if I am in another iPhone application, I cannot receive “free” Truphone calls over WiFi; nor is my presence indicated to others. I look forward to seeing how the enhanced Truphone handles Instant Messaging when Truphone is not the “open” application on the iPhone. This is where BlackBerry’s full multi-tasking capability is a major advantage over the iPhone.
• Calling Skype contacts involves providing your SkypeID and password. What security is in place to maintain the confidentiality of this information. What other security aspects are compromised as a result of placing the calls via a connection to a gateway that supports the caller’s Skype client.
• What is Skype’s reaction to having Truphone siphon off what could otherwise potentially be SkypeOut revenues while leveraging the Skype user base and using the “free” aspect of Skype? We know Skype is working to launch mobile phone applications, probably this week at CES. With iSkoot and the Skypephone on 3′s networks, as we learned at last year’s eComm 2008 iSkoot presentation, a portion of carrier revenues are shared between Skype and iSkoot.

A major step forward in making low cost calls worldwide, Truphone’s moves once again emphasize that WiFi is becoming an ever growing alternative connection option to making wireless calls. At the same time it will be interesting to see how the business model plays out in a world where the cost of voice calling continues to move towards zero.

GigaOm: Truphone Brings Skype to iPhone and iPod Touch

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Today Ireland’s favorite communications entrepreneur, Pat Phelan, put up a post: “How Popular is Skype, really?” Shows the potential for both Skype and its (prospective) partners, should the new executive team be able to execute on a restructured Skype and a viable partner program. And it shows the relative magnitude of the challenge that Truphone, Jajah and Rebtel are up against as they try to grow their business.

Truphone‘s announcements last week overcame a significant carrier resistance barrier to using VoIP-enabled services to reduce international calling costs. The key secret here was that it required the combination of Truphone’s iPhone and iPod Touch applications along with the Apple Application program that leverages Apple’s established carrier relationships to break this barrier.On Friday I was finally able to complete provisioning of Truphone on my iPhone. It happened at this time for three reasons:

• The association of my original Truphone number and account with a Nokia N95 handset and the “416″ number I eventually transferred to my iPhone whose acquisition as an upgrade on my carrier account minimize my iPhone costs over the term of the three year contract.
• The original iPhone application only supported outbound calling; I would have lost the Truphone inbound calling feature I had on the N95.
• For this reason I left Truphone on my N95 (using a deactivated SIM and my home office WiFi access point) pending the arrival of a Truphone for iPhone application and service that supported both inbound and outbound calling.

Recall also that the original Truphone for iPhone only allowed calls over WiFi access points with no ability to pass them through the underlying 3G wireless carrier. Truphone’s two announcements last week addressed three issues:

• Truphone for iPhone now supports both inbound and outbound calling
• Truphone added the Truphone Anywhere service such that Truphone for iPhone calls could be made over the underlying 3G carrier as well as over WiFi.
• Truphone for iPod Touch (2nd generation) invoked the Truphone Anywhere service allowing calls to be made from iPod Touch to any PSTN number.

Over the course of the past week it has become possible to make low cost international calls from any iPhone or iPod Touch mobile device worldwide. Truphone has demonstrated how the underlying service provider can can eliminate the need to have a multitude of individual “carrier-service provider agreements” with the 79 carriers currently offering the iPhone worldwide. Yet carriers still benefit through increased local minutes used to provide the connection to/from Truphone calls. To quote from Ted Wallingford’s “Heartburn Chuckle: The telecom industry can blame itself”:

The Carriers

The carriers are firms like AT&T, Windstream, Verizon, BT, and so on. Their obsession with the billing unit (the almighty minute) has made them helpless to see the possibilities of a software-rich, application-based global ecosystem. Consequently, the most successful apps to arrive on the carriers’ networks, the ones most embraced by the public, overwhelmingly have one purpose: to steal billable minutes from the carriers. The innovation disappeared and the scrappy new players in the market, the ones with the power to transform the public’s thinking about telecom, instead got stuck doing the same old thing the big telecoms do to put bread on the table: bill minutes. [Author's italics]

For instance, Canadians can now use Truphone for iPhone as their international calling service over Rogers without the need to subscribe to one of Rogers international calling plans but perhaps with an increase in their monthly “local” voice plan minutes. In this case, there is no cost for the actual application and you establish international call credits through a Truphone account. When Rogers’ iPhone customers travel to Europe, calling back to North America can be handled at a much lower cost through hotel, cafe and airport WiFi services, such as Boingo or iPass. (True roaming calls from outside the “home country” over a 3G carrier will still be expensive; Andy’s post linked here suggests RebelSIM provides a solution.)

It was the second part of this announcement that is most significant. Previously VoIP-enabled services, such as 3′s Skypephone, required working with individual carriers to establish the appropriate business and operating agreements. However, in one move, Truphone was able to leverage Apple’s relationships with 79 carriers worldwide to bring about commitment free international calling. Apple, through its Application Program has become a disintermediator, facilitating a business model disruption, once again.

As for the iPhone for iPod Touch application; this is why the most successful carriers need to offer both wireless and broadband Internet services. Calls via WiFi access points, including one’s broadband Internet service, go over the broadband connection and reduce carriers’ needs to build out the capital-intensive wireless network infrastructure, including backhaul.

In a future post, once I’ve had some more Truphone for iPhone experience, I’ll do a comparison of services available over Skype and over Truphone. But one obvious difference: Truphone is about voice conversations only; Skype is about voice and text conversations.

Related Post: Race to Provide Low Cost International Calling Heats Up

Tags: Truphone, iPhone, carriers, voip, Skypephone, iSkoot, international calling, service providers, WiFi

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Yesterday I wrote a post for GigaOm, Skype: Coming to a Cell Phone Near You, discussing how the announcement of two new beta versions of Skype on mobile devices gave a hint of Skype’s future mobile strategy.

At the same time Truphone announced a new version of their iPhone application. Whereas the version released at the time of the Apple App Store launch back in July only supported outbound calling over WiFi access points, the new release not only supports inbound calling to your iPhone number but also makes outbound calls via the 3G carrier networks that offer the iPhone.

Innovation driven competition in delivering low cost international calling services appears to be heating up during these challenging economic times – at least for calls originating in your “home” calling country or area code(s). Here’s a brief summary of what is evolving:

We’ve seen the evolution of two architectures for making VoIP-enabled calling from mobile devices; it’s all a matter of where the calling party’s Skype (or VoIP client) session is opened up – directly on the device or on a dedicated hosted server. This leads to two other considerations:

• Carrying the voice portion of the call from the mobile device into the network cloud: either via the carrier’s robust and proven (GSM) voice channel or over via a WiFi access point
• The need to support Skype’s instant messaging (chat and presence); this always occurs as a data activity

VoIP Client on the Mobile Device; VoIP over WiFi

Skype for Windows Mobile places the VoIP client directly onto the device. As a result the device must handle the “VoIP processing” to generate the packets that are transmitted over the supporting data network (either a carrier’s 3G network or via a WiFi access point.) As mentioned previously, it places heavy demands on the device’s resources, especially the processor (running at much lower speeds than on a PC) and the battery.

Truphone’s original voice offering also runs on the device (usually a Nokia Smartphone). While both Skype for Windows Mobile and Truphone can run over either WiFi access points or a 3G network, it is strongly advised to use these only over WiFi access points to have a reliable, robust, high quality voice service. For instance, the Skype for Windows Mobile download page says:

• Log into Skype from any WiFi zone to make free calls and send instant messages to anyone else on Skype, anywhere in the world, any day of the week.
• WiFi connection or 3G/2G data connection (we cannot guarantee voice quality over 3G/2G. You may also be liable to additional data charges so please check with your operator before using)

Truphone’s original iPhone outbound calling offering was also only available using the iPhone’s WiFi capability; however, details of their architecture were never revealed.

Accessing VoIP via a Wireless Carrier

Over the past year we have seen the rise of several services that use the alternate architecture where a call is placed via a local access point to a hosted server that then opens up a Skype client. The server-based Skype client then completes the call as a Skype-to-Skype call.

While originally pioneered by iSkoot, a service using this architecture, such as Skype Lite beta, makes a call to a SIP Gateway server via a local point of presence while data about the call is concurrently sent via the underlying data network to a hosted Mobile Gateway. This dedicated gateway then sets up a Skype-to-Skype call between the SIP Gateway — now connected to your cell phone — and the destination Skype contact. Skype chat messages can also be exchanged concurrently over the data network. We are now seeing various offerings using this architecture:

• The highly successful Skypephone offered by 3 in nine countries.
• iSkoot providing service for a wide range of phones including BlackBerry, Nokia and T-Mobile’s G-1.
• Truphone Anywhere: when Truphone found they could not offer a highly reliable service over 3G networks (largely due to device resource considerations), they launched Truphone Anywhere that allows Truphone calls to be made over a 2G (GSM/EDGE) or 3G (UMTS/HSPA) voice/data network as well as over WiFi access points.
• Skype for Mobile beta – Skype’s first attempt to go beyond Skype for Windows Mobile onto other platforms such as Nokia N-Series and E-Series devices. This never got out of the beta phase; while you could use Skype chat anywhere, the voice service was only to be available in a limited number of  countries (that did not overlap with countries where Skypephone was available).
• Skype Lite beta: building on the Skype for Mobile beta experience to a service that supports not only smartphones but also over 90 cell phones that support a Java client and include basic web browsing and data capability. According to the Skype Lite page it appears that Skype is working with carriers in ten countries to support this service.
• Truphone for iPhone 1.12 release: makes Truphone calls either over WiFi or any cellular network using an iPhone, building on their Truphone Anywhere experience.

Key features of these server-hosted VoIP client services:

• They are most cost effective when calling from your home country or local calling area. You could incur long distance or, when outside your home country, roaming charges that would run up quite quickly.
• An unlimited or high cap data plan minimizes costs associated with using these services.
• Only Skype provides a full Instant Messaging capability covering both chat and presence. Some Truphone offerings have shown support for SMS messaging.
• Calls to Skype contacts are free.
• Calls to mobile numbers outside U.S. and Canada will still invoke the charges incurred in “caller pays” mobile services.

Why only the cost of a local call? Your cell phone makes a call to a local number which puts the call through to the service’s SIP Gateway. At this point you connect into a Skype-to-Skype call for which there are no termination charges involved as a result of Skype’s unique (and secure) peer-to-peer architecture.  The same applies to Truphone where Truphone-to-Truphone calls are free.

This Skype Lite beta announcement portends that we could be seeing Skype-to-Skype calling, along the lines of 3′s popular Skypephone service in nine countries, become available to mobile customers having a much broader range of cell phones and in up to ten additional countries.

One other service that can be accessed from any phone is Mobivox. However, there you have to build up and manage your address book online such that VoxGirl can help you make your calls; it does not access your mobile phone address book. It’s purely a voice service with no messaging component (other than using SMS to facilitate setting up calls under certain circumstances).

While we’re getting a first step in driving down mobile costs for international calling, the next step needs to be finding a user-friendly way to drive out roaming costs. MaxRoam and Truphone’s SIM4Travel are starting to offer some hope on this front; however, at the moment their costs for USA-Canada calls are much more than my Rogers roaming charge. The winners will feature not only lower costs but a very friendly user interface, interacting with the device address book, that also provides the most complete ranges of services in terms of coverage and complementary conversation modes, such as IM.

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• Truphone for iPod Touch: Accessing Skype Contacts and Social Media

Earlier this week the GMail weblog announced GMail voice and video chat; basically they are designed to add voice and video modes to an email thread; from the GMail blog post:

… today we’re launching voice and video chat — right inside Gmail. We’ve tried to make this an easy-to-use, seamless experience, with high-quality audio and video — all for free. All you have to do is download and install the voice and video plugin and we take care of the rest. And in the spirit of open communications, we designed this feature using Internet standards such as XMPP, RTP, and H.264, which means that third-party applications and networks can choose to interoperate with Gmail voice and video chat.

This afternoon I had an opportunity to try it out with Hudson Barton; publisher of the Borderless Communicator weblog and tracker of “Real Skype Users”. We had a 20 minute conversation using my Logitech QuickCam Pro for Notebooks on a Wiindows laptop and the webcam on Hudson’s MacBook. There are two viewing sizes available: a 225 x 140 window inside the GMail tab of a Firefox (or other browser) session and an optional pop-up window that goes to 430 x 270. We were only able to determine that it provides a “letterbox” 1.6 width-to-height ratio (as opposed to the 1.33 ratio of “standard” video), but not the frame size or frame rate actually being transmitted over the Internet. As for CPU usage, the “googletalkplugi.exe” was using between 10% and 17% of my CPU. With no accessible statistics along the line of Skype’s option to display call statistics, it was not possible to drill down further. Both audio and video quality were clear and crisp – quite acceptable for a basic one-to-one conversation. Echo cancellation was apparent; Hudson was using the native speakers and mic of his MacBook with no perceivable echo..

It’s definitely not up to the feature set of Skype but here’s where it fits in:

• GMail certainly has a large user base, same order of magnitude as Skype.
• It’s easy to forward your standard POP/IMAP email account to GMail; I use this feature both for the resulting search capability and the available access to GMail on multiple devices, including smartphones.
• It provides real time conversation mode options for GMail threads being read on a PC. While reading an email and running the cursor over the sender’s name, an option pops up to respond to the email message by email, Chat or Voice/Video based on the sender information as shown in the graphic above.

I would classify GMail Voice and Video Chat as a very mild competitor to Skype, suitable for basic “free” voice and video as a conversation enhancer. There’s no way to establish or check audio and video settings; there’s no access to the PSTN. While the video is quite good, it certainly does not meet Skype’s High Quality Video standards. It’s a perfect example of embedding voice and video into an application as a feature but it’s not a standalone real time conversation software application. When I consider the rejuvenation of Global IP Solutions and look at its customer base, I can foresee many other forthcoming instances of embedded voice and video as a feature within an application.

Note: as for the installation issues that Aliza encountered, I simply went to the URL suggested in the GMail weblog post and installed the plug-in (with the browser open). But then you have to restart your browser (in my case Firefox); initially the “video availability indicators” (as represented in the graphic above) were not present but I had to head out at that point. When I came back to my PC four hours later, they had appeared. Chat pixel dust from the (Google) cloud in the interim is my only explanation. At the time of writing this post, its availability should have spread to many GMail accounts by the usual Google osmosis process.

Full disclosure; the author has had previous first hand experience with what was thought to be an application but turned out to be a feature. Quarterdeck’s mid-90′s effort at building a web browser as an application was thwarted when Microsoft decided to make its web browser (aka MS Internet Explorer) a feature within the Windows operating system.

According to Tech Crunch and GigaOm posts late last night Logitech is about to spend $30 million to acquire SightSpeed, the video messaging and video conferencing service that recently was selected ot provide the infrastructure for Dell’s Video Chat. Congratulations to Peter Csathy and his team.

Seems like the video calling and video conferencing market is about to heat up. There will be another post later this morning involving an announcement that can bring video conferencing to a much broader user audience than Skype’s (though it’s not exactly insignificant) and SightSpeed’s.

Questions that arise from this acquisition:

• How is Logitech able to continue to partner with services such as Skype when they are now entering the desktop video services market? Logitech’s co-operation was vital to Skype’s ability to provide High Quality Video.
• Or is it a produce marketing acquisition? Is Logitech acquiring SightSpeed simply to have additional collateral software to provide with their webcam offerings? Will we start to see Logitech’s Carl-Zeiss optics in embedded webcams on Dell PC’s?

The economy may be in recession; it’s driving less travel and more audio and video conferencing. They’re seeing a rise in customers and use of audio conferencing at both HiDef Conferencing and Calliflower. It will be an interesting winter for expanding user experiences involving desktop video.

Tags: Logitech, SightSpeed, Skype, Peter Csathy, Tech Crunc, GigaOm, HiDef Conferencing, Calliflower

Just in case you’ve been on vacation on a remote island not reading Skype Journal the past few days, Phil and Michael Robertson have been having this debate about Skype and interop with SIP-based services (more here and here). It even spread to last Friday’s SquawkBox call.

This morning Dan York, who sits on IETF forums on VoIP security, weighed in with his perspective in a post: Skype and SIP Interop – the two sides of the issue raised by Michael Robertson where he lists all the various posts on this subject and comments:

About Wireless Openness:

So with that view, you can expect I applaud Skype’s efforts to open up the wireless networks and allow consumers to have a choice of what apps they want to run. I want the *wireless* carriers to be big, fat, dump pipes… give me an IP address on the *mobile* Internet and let me do what I want with it. Sure, the carriers can offer their own services, and maybe if I like them I’ll pay for them…. but I want the option to use other products and services – without degradation or prioritization…

To put it another way, I pay the wireless telcos for *dialtone* now. Once connected, I can call anyone and use any *voice service* over the PSTN. I could use someone else’s voicemail if I want (like GrandCentral), although the carrier’s offering may be more convenient (and is usually free). But I can call anyone on the PSTN and use any voice service I want. The carriers just provide me dialtone.

I want “IP dialtone”. I want a Big, Fat, Dumb Pipe.

So… go, Skype, go

About Skype Openness

We need to build the interconnect.

Yeah, there are a TON of issues out there that we still need to address to build that interconnect. There’s a whole host of security issues… there are billing issues… there are trust issues… there are network plumbing issues. Yes, there are all those issues. But if we are to succeed in ultimately bringing about the rich communication experience we want, we need to make this happen.

And for that, Skype’s walls need to come down…. at least a bit.

What we need is that Interconnect from Skype’s cloud out to the emerging IP infrastructure. Think about it… Skype right now has a two-way interconnect between Skype’s cloud and the cloud we know as the PSTN. It’s called “SkypeOut” and “SkypeIn” (or whatever marketing names they are being called now). If you dial my SkypeIn number, you can reach me on Skype wherever I am. From my Skype client, I can call anyone on the PSTN. The two-way interconnect is already there.

So why not offer the same on the IP side?

My feeling is that we are at a stage in the evolution of IP-based communications where the interconnectivity agreements between service providers still need to be worked through. While technically one can make the connection, it seems that every SIP gateway also requires a business agreement and transaction – similar to the agreements amongst PSTN carriers that are so transparent to our ability to make calls anywhere on the PSTN. I’m not a technical expert; I just want to be able to call as many of my contacts as possible – at as low a cost as possible – but I also want the privacy, security and authentication of Skype when connecting to other services.

In a Skype Journal post earlier today, Skype President Josh Silverman is quoted as mentioning that Skype is looking for a GM for Platform whose initial responsibility will be to lay out Skype’s future platform architecture. But Josh also assured us that user perspectives will be considered while designing this architecture. It would seem that, once the appointment is announced and Skype has a forum for user input, the debate engendered by these posts would be a good starting point for consideration of one aspect of Skype’s platform ambitions.

Over the past few months I have been a frequent participant on Alec Saunders’ daily SquawkBox conference call where several of those involved in following today’s communications and web developments will discuss topics of the day. Subjects for yesterday’s call were the impact of the Internet on this years U.S. President campaign and Skype’s fifth anniversary today. Participants included Dan York of Voxeo, James Body of Truphone, William Volk of MyNumo (one of the more successful iPhone Apps developers) and Jonathan Jensen amongst others. The Saunderslog post is here.

The Skype discussion commences about half-way through the call. The one universal agreement was that Skype has succeeded because of the user experience. You can build all the communications technology you want but unless people can get all the way through the setup and readily make a call, people will not use it routinely. And the discussion highlights the importance of getting the Skype 4.0 user interface right but starting with some experimentation that challenges all of us to think through how to set up and manage a multi-modal conversation experience.. Some comments from the SquawkBox discussion:

• James Body: participating in a discussion at a smoke-filled bar in London with Nicklas just after Skype launched: “this proprietary thing will never work because it does not use SIP”. James then goes on to point out that if Skype had not had the success it has achieved, Truphone may never have been funded to the level they have obtained.
• Alec Saunders: basically it was the first VoIP-based service that “just worked”.
• I then discussed my memories of watching the Quarterdeck team develop WebTalk back in 1995 – and how our CEO of the day drove the engineers to make it work on 50MHz (not 50 GHz – a slip of the tongue) Pentium PC’s and over 14.4 kbps modems. But the overall infrastructure was just not there to let it become viable as a consumer in the 1996 time frame.Yes, having widely deployed broadband was one major contributor to the timing element that helped achieve Skype’s immediate success. (I did have WebTalk running over a 56kbps modem on a 100MHz Pentium but it was challenging to carry on a conversation. Yet a few small businesses did adopt it.)
• William Volk talked about the importance of usability. “Just because it – VoIP – works is not enough. Users are fickle. You will lose a significant number of users at each step where the process of installing and completing a call may fail. The user experience is everything.”
• Dan York the security expert amongst us, got into a discussion of how Skype worked when offerings such as NetMeeting and CU CMe just did not get significant traction. Firewall traversal across NAT – a major failing of SIP, the first true high quality wideband codec, and Skype’s inherent security are all features that impressed Dan.

But listen to the recording via the link/player on the Saunderslog post to get the full story, especially helpful for Skype employees involved in the Skype 4.0 beta.

And Happy Fifth Anniversary to Skype from all of us on the call! There are many challenges ahead as Skype liquifies communications – we look forward to the next generation of Skype under its new executive team. And thanks to the iotum team and SquawkBox producer Alec Saunders for making such a conversation feasible.

While there has been lots of dismay about the discontinuation of Skypecasts (Skype’s blog posts: here and here), it had appeared for the past several months that the service just did not have the robustness to provide the reliability and quality of service that users would expect. Being a free service, it was obviously placing resource demands with zero revenue potential on Skype developer and support personnel that hopefully can be diverted to bringing feature equality to Skype’s basic service, whether on Windows, Mac or Linux.

There are alternatives; in fact, this decision provides a unique opportunity for two third party conference calling services:

1. Skype Multi-Party Calling:

For up to 25 participants on a call, Skype has recently expanded its multi-party calling capacity. The caveat here is that the host must use a multi-core Windows PC and a reliable broadband internet connection (preferably cable). Participants can be on any version of Skype or be accessed via SkypeOut. In this case the host must set up the call and call out to all the participants. More details here. A unique feature of Skype’s multi-party calling is its ability to show which participant is actually speaking at any given time. But keep in mind Skype really offers multi-party calling, not a full conferencing service.

2. iotum CalliFlower

iotum’s CalliFlower has the benefit of no charge other than whatever it costs to make the connection to one of their access points. I often participate in their daily SquawkBox call via my SkypeOut account; the recent availability of SkypeOut CallerID, displaying my mobile phone number when I make a SkypeOut call, has allowed me to participate in these calls within my SkypeOut subscription without even using the provided password for each call. In fact, there are four options for accessing these calls:

As an example of building communities, iotum has worked with Alan Hunkin to provide a weekly interview session, CalliFlower Communiques, with notable personalities such as William Shatner. Immediate future guests include Ken Blanchard, author of “Being a One Minute Entrepreneur” and actor Alan Alda discussions his recent memoir “Things I Overheard While Talking to Myself.” Recordings of previous sessions are available at the page linked above.

3. HiDef Conferencing

Vapps’ HiDef Conferencing (formerly HiSpeedConferencing) provides high definition (HD) voice quality calls for participants accessing via Skype. Their business grade service involves fixed rate monthly hosting subscriptions involving unlimited Skype access, dial-in to specific numbers in several countries and toll-free numbers. Obviously this involves some ongoing expense to the host but their infrastructure supports providing the best possible voice quality, depending on access mode. The host uses their web controls to set up calls, manage call participants as well as record and archive calls.

Looking at the options it appears the best conference experience comes when:

• hosts are able to setup and fully manage the calls, including an open access invitation;
• users can participate through a web-based experience not only via voice but also via chat.

The good news is that Skype provides either free or low cost unlimited access to any of these services. What will be most interesting is to see if iotum and/or Vapps rise to the opportunity here and and is able to provide encouragement to the many communities that were supported by Skypecasts.

Tags: Skype, Skypecast, iotum, CalliFlower, Hi Def Conferencing, CalliFlower Communique, Vapps, multi-party calling, Alan Hunkin

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Dan York, Director of Emerging Communication Technology at Voxeo, but also on the Board of the Voice over IP Security Alliance (VOIPSA) has written two excellent pieces in another of his blogs, Voice of VoIPSA, discussing the blocking of VoIP calls by Aircell. The first explains how they can block Skype calls, even though they are encrypted while the second goes on to explain why Andy Abramson could make a VoIP call using Phweet.

1. How Aircell is (probably) blocking VoIP phone calls on planes (hint… VoIP Whack-A-Mole)

There it is… all in UDP… and coming in at about 100 packets per second. And if I look at the actual Wireshark traces, I can see that these 100 packets per second are all very tiny sizes. Many of them are between 37 and 50 bytes.

And this is an encrypted Skype call!

No need to decrypt it. Just see that it’s a steady stream of 100 very small packets per second (50 packets per second each way) all over UDP.

Kill the stream. Block it. Conversation dead. No more VoIP on the plane.

It’s basically the network security version of Whack-A-Mole. See a VoIP stream start up… block it. See another one… block it. See yet another… block it. Whenever anything pops up that meets the profile, stomp on it.

This explains, too, why people could talk for a few seconds and then had their conversations terminated. The pattern has to appear in the network monitoring software. The software has to be sure it’s a VoIP stream and not something else… and then the software can block it.

Now I don’t know for a fact that this is how Aircell is blocking VoIP, but it would be easy enough to do it this way.

2. The reason why (probably) you can use Phweet on a plane when Skype is blocked

And there you go… one very possible reason why Phweet may work and Skype, Sightspeed and others were blocked is simply this:

The Tringme Flash-based softphone is sending audio over TCP and Aircell is not recognizing and blocking VoIP calls over TCP.

Or at least Aircell wasn’t blocking TCP. (They probably are by now or will be soon.)

Now to be fair, if Aircell isn’t blocking TCP, this was probably a decent assumption to make. I mean, the typical mindset to date has been… who in their right mind would send audio streams over TCP?

In all the VoIP systems I’ve worked with, I can’t think offhand of any other systems that send audio over TCP. As part of its range of tricks to get through firewalls, I understand that Skype can use TCP if it is unable to send over UDP, but I’ve never captured it doing so. The IP-PBXs I’m familiar with, both commercial and open source, all send RTP over UDP.

Read the entire posts for the details of Dan’s assumptions and explanations. One of Dan’s writing strengths is his ability to make technology understandable to the lay person.

As for not wanting to have voice calls available in flight I would soften my stand if human nature would change. Over the weekend I was reading a book on the history of one of our rural independent telephone companies where they were providing anecdotes about early usage of the operator-serviced telephones:

Mrs. Alice Cooley’s brother, Billy Huang, Tiverton, used the phone for the first time to call his chum a few houses down the street. Alice and some others were out in the garden and they heard Billy shouting loudly on the phone. He thought he had to shout to be heard. Some people never did get over the idea that they had to shout on the phone.

From “Bruce Municipal Telephone System – A Long Line of History 1910 – 1994″ by Anne Duke Judd.

Enough said. Thanks, Dan for taking time to put up these explanations.

Tags: Dan York, Aircell, Skype, GoGo, Andy Abramson, TringMe, Phweet

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