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.

About two weeks ago Skype launched a new type of beta … one that actually will end at some point in the reasonably near future but that is also a major effort to incorporate user feedback while trialing some new concepts. As mentioned in my previous posts about this beta, this is not a replacement for your current Skype 3.8 or earlier installation in mission critical situations but rather Skype wants to trial this version with a broader audience than simply their very dedicated set of designated outside beta testers worldwide.

On Monday Skype’s Product Manager for Windows, Mike Bartlett put out a post, 10 days later …, commenting on the first ten days of feedback from users. (I’m a little late on following up on this as I’m supposed to be on vacation this week.) To quote Mike:

We’ve had some very positive feedback from a lot of people on the new way of working, and that’s encouraging as it seems we’re starting to solve the problems that we set out to solve. However, it’s very understandable some of you used to using Skype on a regular basis have been a bit frustrated about not being able to work with Skype the way they are used to.

Key points:

1. In beta 2 they will introduce a “Compact” mode where users can access their main Skype activity through a a more traditionally sized window that does not take a large portion of the user’s desktop. From my own experience I like the ability to detach conversations into separate windows, if desired; however, the right side “pane” left over when there is no focus on a Conversation, is wasted desktop space. Perhaps a sliding window pane addition, much like the one that comes with the JWire Hotspot Finder, would be more appropriate. In this case when you focus on a Conversation listed under the Conversations tab but not already open in a detached window or initiate a new conversation with a Contact , the wider conversation pane would slide out and become detachable, if desired. And using this feature should be a user selected option. On the other hand I find the new Conversations tab feature in the left pane to be very useful (a concept apparently adopted from the current Skype for Mac) for readily accessing my conversations with individual contacts..
2. One of the primary issues Skype wants to address is how the video is displayed in a more user friendly, more obvious, yet flexible manner. Basically Mike describes ways to both detach and resize the video in the current beta but also mentions we can expect further enhancements in beta 2. From my own personal experience, Skype video looks best in a minimum 640 x 480 window (available with Skype 3.6 and later) due to its clarity and video quality but with Skype 4.0 beta, as a user, you can determine your own optimum video window size and detach a video session into a separate resizable video window.
3. And for all those frustrated Skype for Mac users out there, expect something later this summer that incorporates feedback from the Skype for Windows beta experience.

One question: does the appearance of the “Add people” button in the detached video window (see Mike’s post) foretell a future beta that incorporates multi-party video?

Yes, there are still many “details” being suggested; I’m sure Mike’s team is looking at them all and especially looking for commonality amongst the many users providing feedback. We have to give credit to Mike and his team for introducing as a trial such a radical UI change to try out with the wider user community. If nothing else, it has demonstrated the passion and enthusiasm of the Skype user community while providing an opportunity for receiving back their input.

As I have said repeatedly, this is a beta; it’s not for any of your mission critical Skype installations as it still lacks some features of the released Skype 3.8. But it’s certainly worthwhile installing it on a secondary PC, trying out the various features available and providing feedback.

Once again, this is a beta — it’s not the final released version — changes, incorporating where feasible and practical the consensus of Skype’s user base, will happen. On the other hand, as one who has administered software beta programs in the past when “beta” meant truly trying new concepts while getting user feedback over a limited time period, Skype is running a true beta program for Skype 4.0, not an “infinite” beta as seems to have become the norm for many web services providers these days. Apparently we can expect a second beta release towards the end of the summer, with the objective of a final release later this fall.

Hat tip to Andy at VoIP Watch, who is also supposed to be on vacation this week, for pointing out Mike’s post.

Over the past two weeks there have been several announcements and activities related to the personal conversation space:

• Skype announced its Skype 4.0 beta program trialing a “full desktop” interface.
• SightSpeed announced an improved SightSpeed client with many engineering improvements to enhance video and audio quality
• SightSpeed for Business announced a 9-party video conferencing capability
• iotum launched its rebranded CalliFlower voice conferencing platform
• Dell announced their new Studio line of prosumer laptops incorporating Dell Video Chat powered by SightSpeed.

And the combination of these announcements, along with my own experience in using these services, hit home once again that it’s all about the user experience. This market needs to remain competitive through innovation but at the same time it’s also measured against performance, process and marketing. Skype and iotum have set some standards to be met, including:

• High Quality Video that has turned my lethargy about video calling into an enthusiastic user whenever feasible. Its 640 x 480 @ 30 frames per second over widely available (cable and DSL) broadband connections, along with top quality webcam optics, sets the standard I am looking for.
• Echo cancellation: while I continue to use a headset for privacy and courtesy reasons, most of my Skype calls are to contacts who are using the basic microphone and speakers provided as the basic configuration of a PC.
• Wideband or HD audio: provides an clarity of sound that constantly amazes. Unfortunately, our legacy phone system makes compromises that we have to live with but when it comes to VoIP-based services I want that HD voice.
• Complementary services: iotum’s interactive participant interface richly enhances the voice conference call experience.
• Upgrades: when I do an upgrade I just want the new version to work. No hangups, no PC freezes. Whereas upgrades could be the cause of much angst ten to fifteen years ago, upgrades offered to the public today – especially if enforced – need to “just work”. And these days I find most offerings meet that standard.
• Auxiliary services such as conversation archiving and file transfer.
• Beta programs are just that: programs to try out new concepts and get user feedback. Pre-Internet I ran software beta programs out of the public eye; today many services and offerings tend to leave their offering in a state of “constant beta” in the public eye such that users don’t realize that beta means provide feedback and check out the various phases as the offering evolves. But please don’t equate beta with the “officially released” product.

And my “like-to-have” list includes:

• Multi-party video conferencing
• Improved conversation management; switch readily between multiple conversations and see a record of all activities with a contact.
• Improved marketing at all the service providers: give us the straight goods, what is the benefit to the user? Forget the technology accomplishments, yes we appreciate – it’s about the user uptake and experience.

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We reported earlier that Mike Bartlett, Skype for Windows Product Manager, would be the guest on Friday’s Squawk Box. With 15 fifteen participants, Mike answered questions ranging from features of the new Skype for Windows 4.0 Beta; plans and objectives for the beta program, the challenges of trying to launch concurrent (Windows, Mac, Linux) versions, interoperation with other services (such as iotum’s Free Conference Call service that hosted the call) and other issues related to the evolution of Skype.

Three key points:

• The Skype for Windows 4.0 beta program is unique in that they are seeking out user responses to the challenges of getting new users started readily while leaving the flexibility and scalability issues power users encounter. For instance, while the Beta 1 client takes up a full desktop — largely to get user reaction — there will probably end up being a way to “hide” the conversation content pane, leaving the left hand conversation management pane but they want feedback from all beta participants on the full desktop. As a result we will see several phases to this beta program with a final release date largely dependent on the beta program feedback (and they’re getting lots).
• New users are randomly being presented to with the beta to get the feedback from actual new users on how they adopt Skype. They want to improve on the adoption rate by new users; abandonment is an issue they are certainly conscious of. (Or does it help to answer the question as to, why, with over 300 million reported account registrations, are the ongoing usage rates in the range of 30 to 35 million “real users“?)
• Providing real time communications infrastructure is most efficiently handled when Skype can write in the native environment for each of the Windows, Mac and Linux platforms. As a result they do not want to compromise the performance through using a cross platform environment but rather want to provide user experiences that users of each environment are accustomed to. Yet this diversity approach to each platform allows the team for one platform to pick up features and experiences from other platforms. For instance the conversation management user interface of Skype for Window 4.0 beta was picked up from experience with the Skype for Mac user interface with its “slide-out” drawers.

There were many more issues discussed; go over to Saunderslog.com’s “Squawk Box June 20 – Skype 4.0″ and listen to the complete interview.

Once again, if you wish to participate in the Skype 4.0 for Windows beta program, read our earlier post for download information but also read the caveats.

Caution: Skype 4.0 for Wiindows Beta 1 is about improving the User Interface but it is not a replacement for your ongoing Skype conversations on your primary PC and should only be used on a secondary PC to provide user feedback.

While over the years, over 300 million have figured out how to download and install Skype, it’s become apparent that, in the end, it’s the user experience that will drive more massive Skype adoption. Finding those initial contacts, getting the speaker/mic working properly, ensuring you have a good Internet connection and determining what hardware is optimal for a good Skype experience is all part of Skype’s ongoing research and development. And perhaps the most important of these is having a user interface that “delights the user”. Certainly new Skype President Josh Silverman has indicated this as a primary goal for Skype.

In working towards this end Skype has made available an early beta version of Skype 4.0 for Windows with the primary goal of making Skype easier:

• for new users who are just starting up with Skype
• for ongoing users to manage, archive and recall their Skype conversations
• to improve the quality of certain aspects of conversations but especially with how video is displayed during video calls.

Check out the videos provided by Skype that Phil has posted to get a more dynamic overview. A key to understanding release 1 of the Skype 4.0 beta is that its development is at a stage where the Skype product team needs some outside user feedback. As a result they expect the Skype 4.0 beta activity to last through the summer prior to releasing for general use in, say, September, 2008 (a speculative release date, not an official one).

On the other hand at this stage it is an EARLY beta and is missing some features available in the current Skype 3.8 for Windows client. As a result I recommend that you only try it on a secondary PC while keeping Skype 3.8 on your primary PC used for Skype conversations, especially if Skype is mission critical to your conversations. From Product Manager Mike Bartlett’s post today:

We’re sharing this beta with you a little earlier than normal because we know it’s a big change, and sometimes change can take some getting used to. We’re going to spend the whole summer listening to your feedback and making changes so that when we do launch the final version, we’ll make sure it’s perfect. Because we’re releasing it early, a few little things aren’t available in today’s beta: full history and contact groups are two examples.

I can add Call Transfer and PayPal integration as two more 3.8 features missing from this Beta 1. Check out the full Release Notes, identifying the missing features. Via a “Contact Customer Support” Help menu item you can provide your feedback where they’re specifically requesting your “comment, feedback or frustration”.

If you’re into beta testing; if you have a secondary or back-up PC on which you can try this out, give it a try (download here). There is going to be a learning curve to get familiar with the new interface — keep in mind that, with Skype 4.0, it’s more about the user experience than the technology (although technology performance bugs should also be reported). As the beta releases progress we’ll advise you when it’s ready to try out as your primary Skype client. And, as we get more experience with it, we’ll be posting our comments.

Around the blogosphere:

Andy Abramson: VoIP Watch: Skype 4.0 Beta Comes To Life

As a basis for making new revenue, it shows me that Skype is looking beyond just selling cheap minutes. For now think of 4.0 as a canvas, that’s only been outlined. The real version is weeks away and likely will incorporate more feedback from users.

Om Malik: GigaOm: Video Makes Skype 4.0 Grow Bigger, Wider

The real reason for the redesign, however, is Skype Video, which desperately needed a new layout because it requires an ease-of-use that eludes the current client. As I pointed out a few weeks ago, video communication (which accounts for about 28 percent of total Skype calls) has been one of the fastest-growing features on Skype, thanks to the easy availability of built-in cameras, especially in devices used by mobile workers.

Dan York: Disruptive Telephony: Skype 4.0 seriously disrupts the Skype UI – is this a good thing? Dan hits on the core of this beta program:

I’ll also be curious to see how well Skype balances “simplifying” the user experience for new users while maintaining the functionality that “power users” have come to expect. It’s a tough balancing act and it will be interesting to see how Skype does.

New York Times: A Redesign at Skype (registration required)

Sten Tamkivi: siekatsu: Skype 4.0 beta 1 is out! (Full disclosure: Sten is Skype’s General Manager of its Estonia operations which includes the Skype development teams.)

Guest Post: Hudson Barton is a communicatons consultant whose Borderless Communicator blog not only talks about Skype and related IP communications activity but also attempts to track Skype’s “real usage”. According to his analysis, Skype has just cracked the 30 million real or” currenlty active” user number (based on tracking Users Online vs time-of-day). What follows is his post earlier this week summarizing some issues that were raised and discussed on the Skype 3.x discussion Public Chat forum following Dan York’s recent guest post on SIP/Skype interconnectivity.

Skype’s competitors and critics continually point out that Skype’s VOIP architecture is closed and that its API is not adequate for creating a direct connection between the Skype “cloud” and the SIP “cloud”. This of course is true, but there are good reasons for it.

1. The security and reliability of the Skype cloud would be seriously compromised if SIP hackers were given the tools to create direct VOIP connections between Skype and the outside world.
2. A SIP gateway to Skype might work if it were handled like SkypeIn/Out. However, I don’t think there’s a large enough population of SIP users out there to justify the cost of SIPIn/Out. Skype is growing at a rate of 500k-1000k “real users” per month, which is probably 10x faster than the rest of the VOIP world combined. A third party could build these gateways with the presently available API, but nobody is trying it to my knowledge… presumably because there is no demand for it. In any case, the developer (even if it were Skype) would have to justify the cost of such a gateway.
3. An IM (text-only) gateway is very possible and would not compromise Skype’s security or strategic position. Look for future interconnections with major players like AIM, gTalk, Yahoo, and MSN.
4. The Skype cloud is far more complex and has far more features than the clouds of any of its competitors. It is not rational to expect any of them to create a feature-for-feature mirror of Skype even if this were something that would be good for Skype (which it is NOT). A partial list of these features: video, SMS, encryption, and file transfer.
5. Relationships between Skype and social networks like MySpace are already possible if there is a partnership agreement. It does not require a change to the Skype API. Note that MySpace is a social network… not a VOIP carrier.
6. Skype may double its revenues this year and it’s already profitable. No other VOIP carrier is profitable (unless you want to count a few of the hosted VOIP services from the Telecoms and cable companies). A gateway to Skype will help Skype’s competitors far more than it will help Skype, so from a strategic perspective it makes no sense to help the competitors survive. Without Skype’s help, they (SunRocket and Vonage for example) are failing at a rapid rate. Meanwhile, “successful” competitors like Packet8 are monetizing themselves by selling off intellectual property. Obviously they “see the writing on the wall.”

Tags: Skype, SIP Gateway, Hudson Barton, Borderless Communicator, Packet8, Dan York

Having reflected on Skype’s accomplishments in 2007 and some of the more interesting devices and technologies that have crossed my way, now for my projections for 2008. (In the interest of enhanced objectivity — not that I can be totally objective — I have yet to read Phil’s 37 Sketchy 2008 Skype Predictions or Andy’s The Road in 2008 (links below after you have read this <gr>).

1. eBay will appoint a new Skype CEO in the first quarter. Andy has his insights into the search.

2. The new CEO will focus on “Delight the User”

• Introduce customer support plans (limited free and premium paid)
• Provide <24 hour response time on customer support requests
• Hire a Chief Marketing Officer who understands the role of, and process for, marketing a technology platform to both consumers and small businesses.
• Provide guidelines on optimizing end user configurations for highest quality voice and video.
• Set challenging goals for increasing SkypeIn and SkypeOut minutes used.
• Change Skype business and management structure to support the development and marketing of platforms as opposed to services
• Build a “Skype Inside” marketing program for Skype hardware
• Build a blogger relations program
• Improve dialogues with Developer Partners

3. Skype will introduce multi-party video conferencing (may initially only be three party)

4. Skype will focus on licensing two platforms:

• Skype real time conversation infrastructure (to additional social networking platforms beyond MySpace)
• Skype Developer API Toolkit: to include web services support

5. Skype users will rush out to replace their PC’s with Dual Core processors and their webcams with Logitech Carl-Zeiss optics webcams to take full advantage of Skype High Quality Video.

6. Skype will revitalize the Skype hardware program, improving hardware partner relationships, building a more effective hardware distribution channel (especially in North America) and building consumer awareness of Skype as a premium real time conversation offering.

• Skype will figure out how to open a Skype store for the 3.5 million Canadians.who have registered on Skype.

7. Skype will have to support emergency services for customers with SkypeIn numbers in countries requiring this.

• SkypeIn numbers for Canada will become available within three months of providing emergency services access for UK SkypeIn numbers.

8. The Skype Partner program’s business solutions providers will start to gain significant traction amongst the small and professional services business community.

9. Skype will execute on some form of significantly enhanced business relationship with Google.

10. Skypephone will become available in the U.S. via T-Mobile (and the Skypephone will be modified to support the required additional 850 MHz GSM band.)

11. Skype will upgrade its presence engine to deal with the fact that we may have multiple concurrent logins, especially on at least one PC and one mobile device.

12. Skype will gain significant placement on mobile devices.

• How extensively this goes depends on the (low cost) availability of “public” WiFi and./or 3G network access.
• note that I did not necessarily say there will be a mobile device Skype VoIP client.
• Should more (GSM) carriers invoke UMA/GAN we will see Skype continue the current “mobile” trend of IM over the data network with voice connectivity over the carrier’s inherent voice network.

13. Skype will conclude deals for local termination services in many more countries to improve SkypeIn and SkypeOut call quality.

14. Someone at Skype will review all the SkypeIn provider contracts to ensure we can keep our SkypeIn numbers permanently. (And Londoners will learn that their area code is simply “020″, not “020n”.)

15.eBay will begin reporting Skype usage numbers that are meaningful, such as number of users who actually made at least one Skype call in the previous quarter.

Will be interesting to see how much of these predictions actually play out but one can always hope for the best.

Happy New Year and Happy Skyping in 2008!

And for other predictions:

• Phil Wolff’s 37 Sketchy 2008 Skype Predictions
• Andy Abramson: The Road in 2008
• Ken Camp articulates his perspectives on Mobility, VoIP, Video, SOAP/SaaS and Social Media/Social Networking in his Unified Communications Watch List 2008. Well worth a read, especially for his comments on the decline of Windows Mobile — a trend I have also noticed.

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The highlight of today’s sessions at Voice over the Net Canada was a presentation by Stefan Oberg, General Manager, Skype for Desktop and Skype Hardware. Stefan’s theme built on Alec Saunders’ Voice 2.0 Manifesto by talking about how Skype is working to be “better than a phone”.

After reviewing the history of text messaging from the telegraph to telex to fax to email, Stefan then contended that the current phone is to voice as the “telex” stage was to text messaging, leaving many opportunities open to build new services and features. He went on to repeat how currently phone services are in a pricing game requiring complex marketing messages to differentiate.

He went on to state that Skype’s vision is “to be the voice communications channel of choice wherever one is: on the PC, on the Web, on mobile devices and in third party applications” … “whenever I need to talk”. But when does one need to talk?

• Start with people who know each other
• Expand to people with common interests
• More formally when I want to buy something
• When I want to travel but need a translator to make travel arrangements

Stefan then went on to define “how we (Skype) can be better?”

• High quality, hi-fi stereo audio
• World phone book – is there an opportunity to pool PSTN numbers?
• Presence – especially for communicating across time zones
• Privacy – users can build their own “Do Not Call” list
• Speed dialing
• Mood messages – self-publishing
• Archiving – storing voice mails, chat sessions and call records
• Text – combining voice and text
• o Multi-party chat: instant, brief, efficient, persistent
  • Becoming an alternative to email
  • Privacy: no spam
  • Unlimited attachments
• Conference calling: currently 5 or 10 users but developing a server-based technology for larger calls
• Video
• File Transfer

Stefan then pointed out that we are only at the beginning of seeing the features that can be built both into Skype and into third party applications.

Back to the phone: why is the phone so ubiquitous? Five 9’s reliability (even in power outages) and a simple user interface. Stefan mentioned a few guidelines for adding features:

• Don’t bloat the client – keep it simple
• But aim to be the Swiss Army knife of voice communications
• Look for hardware integration in addition to software features.

He then went on to point out as a simple example how Skype gets complicated as soon as a desktop user installs Skype, realizes they need a headset but need to plug/unplug the headset on the back of a(n older) desktop PC. Such a complication (or to use Stefan’s words – “such a terrible user experience”) limits the mass market appeal of Skype; it is a goal of Skype to overcome such hurdles to mass adoption.

Stefan’s concluding slide was his opening slide: “Better than a phone”. We look forward to experiencing new features from both Skype and their third party developer/partner community.

As an aside, Stefan mentioned during his introduction (Carl Ford has a unique way of introducing speakers at VON conference sessions) that there are four divisions to Skype: his (Skype for Desktop and Skype Hardware), Skype Mobile, Skype Telecom (working with termination partners) and Skype eCommerce.

In response to a question about their approach to the business market, Stefan emphasized that Skype is staying focused on its mass market potential as they do not have the resources to address the business market. However, he gave a couple of examples of partners who are addressing the business market: (i) Web Dialogs with their Unyte web conferencing application and (ii) integration with SalesForce.com.

As described in the Voice 2.0 Manifesto, the business opportunities for Skype and their partners lie in the Applications.