Skype Refreshed … And Looking Beyond Being a Telco

Just over a month ago a two-day Skype outage caused great consternation with predictions of gloom and doom for Skype. Early yesterday here in California (around 1600GMT) I noticed almost 9.7 million users online — back to about the same number as peak loads immediately prior to the outage. Somebody out there is continuing to use it; for someone Skype is offering value-add.

Meanwhile Andy Abramson over at VoIP Watch wants Yahoo executives to admit “Yahoo isn’t talking.” And whither AOL’s AIM Phone Line? Om reports on Vonage: How Low Can You Go? And Matt Asay, over at CNet, writes: Swapping Vonage for Skype: One man’s search for VoIP that actually works where he starts out with:

Yes, you read the headline right. I have long been a critic of Skype, suggesting that eBay was foolish to buy the VoIP toy and generally ridiculing it as a serious business tool.

Today I’m eating crow, and it tastes great. Why? Because Vonage has been complete rubbish for me, whereas Skype is increasingly approaching perfection. I dropped my traditional phone service for Vonage. I’m now about to drop my traditionally awful Vonage for Skype.

Read Matt’s full story about how deterioration of service levels is driving away Vonage customers. (Hat tip to Andy for pointing out this story.) This morning Alec Saunders writes Walks like a telco, talks like a telco…. must be a telco where he discusses why many VoIP companies are dying when they simple try to offer lower cost versions of traditional legacy telco services. And he concludes with (my bold emphasis):

To get to free phone calls requires a fundamental change in architecture which Vonage et al have not embraced. It requires pushing the core calling functionality to the edge of the network, which implies turning off the “minute meter”. Voice, in this scenario, is nothing more than an undifferentiated stream of bits, charged at the bandwidth rate of the network operator. The profits must be made from the services surrounding the call – before and after – not during.

The SIP standard anticipates this model by allowing for both peer-to-peer calling models, and calling models which pass through a centralized proxy. While no VoIP “operator” has ever embraced the peer SIP model, Skype has delivered peer calling on their proprietary protocol. Skype understands that the money isn’t in transporting the bits, but rather [is] in all of the ancillary pieces that can be offered around that bit transport — ring tones, voice mail, phone numbers, and protocol licensing to third parties who wish to attach equipment to the Skype peer network. Similarly, by embedding conference calling in Facebook, at iotum we’re trying to create a better experience before and after the call, rather than during simply focusing on the cost of the call (although free is pretty compelling, I would argue…)

That’s the fundamental difference between the success of Skype and the failure of Vonage and SunRocket. Skype doesn’t look like a telco. Vonage, however, walks like a telco and talks like a telco…. without a telco’s deep pockets.

Not only does Skype offer an unequaled range of real time conversations services — chat, presence, video, 10-party conference calls, voice mail, SMS messaging, call transfer and file transfer; but we are also now witnessing the emergence of Skype’s Developer Partner program fully demonstrate the value of having service-oriented, ancillary offerings. Offerings that embed Skype into (business) processes such as call centers, collaboration tools, audio hosting tools, faxing, conversation archiving and CRM tools. To recall my post Skype Partners Answer Jeff’s Call for Innovation in Voice Services:

In the Skype ecosystem we can see the recipe for a foundation for innovative IP-based services.

  • Start with a full real time conversation platform that combines voice, presence and text messaging.
  • Start with a real time conversation platform that is enhanced with video, call transfer, call forwarding, voice messaging and file transfer.
  • Start with an IP-based ecosystem that has a set of API’s to facilitate application development and mashups
  • Start with a platform for which hardware has been developed to take advantage of many features of the platform.
  • Start with a platform that can be accessed via not only Windows, Mac and Linux PC’s but also USB phones, PC-free phone sets, mobile phones, Blackberries (here and here) and the Nokia N800 Internet tablets.

The post goes on to list some of these Partner-generated services. And as Skype’s Partner program holds its various Developer events this month, we are seeing the beginnings of the evolution of Alec’s Voice 2.0 Manifesto. Over the past two years as Skype’s Partner services have evolved we have witnessed a withering of voice services at Yahoo, AOL and others. We have not see others recruit over 200 million account registrations (or disclose how many users are online in real time). Yet the Skype ecosystem is emerging from its cocoon, ready to fly as a major contributor to low cost worldwide real time communications services.

And the telcos don’t have the strategic horsepower to compete with Skype; their most valid strategy for competing with Skype is to partner with Skype for the services and just ship the bits.

Now if we could just figure out what’s going to evolve for Skype from the Google-eBay agreement announced just over a year ago that included this statement: “The companies will also explore interoperability between Skype and Google Talk via open standards to enable text chat and online presence.”

Tags: Skype, Yahoo, AOL AIM Phone Line, Alec Saunders, GigaOm, CNET, Matt Asay, Andy Abramson, VoIP Watch, Voice 2.0 Manifesto, Google, eBay, Skype Developer Partners

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About Jim Courtney

Bringing over thirty years' experience in the sales, marketing and management of cutting edge technology businesses.

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