if connected

Skype Tests Software for Mass-Market Mobile Phones. It’s interesting but not anything like as earth shattering as their press release headline suggests.
The applet offers text chat, buddy list, and incoming and outgoing calling. But the telephony part uses Skypeout credits for a user to receive incoming calls so is little different to simply using the call forwarding option in the desktop Skype application.
Chat and presence requires the use of a data connection — unlimited mobile internet tariff highly recommended — so the applet both costs cash for calls, and needs a mobile data package! This isn’t the innovative VoIP world that Skype users have been expecting with Skype’s long-planned mobile initiative.
The other downside is the handset support. The application is a java applet that works on a selection of mainstream and smartphones, but there are some odd omissions, presumably due to the problems of mobile application development: Nokia’s N95 and N80 are supported, but the similar N82, N77, N96 and N81 are not, for now. Hopefully, Skype will expand the range of handsets before taking this out of beta.
For now, independent start-up Fring, is closer in spirit than this to a true Skype mobile application, and works on many handsets.
There’s a few other official Skype mobile options: for Nokia Internet tablet users; for Windows mobile users; or for those in the market for a new phone (3′s Skypephone) but none of these are ideal mobile applications for various reasons.

A beta of Fring has just been launched for Apple’s iPhone. The downside is that it’s only available for jailbreaked iPhones (ie those that have been hacked to allow unauthorised third party software to be installed).
Quick observations, prior to trying it out:

• Skype calls on iPhone are now possible.
• As VoIP applications are not going to be allowed on the official iPhone application store, Fring has nothing to lose in releasing its application for jailbreaked phones now.
• The limitations on official iPhone applications look like they will give a prolonged lease of life to the unofficial jailbreak community. Essentially, tight restrictions on the official development SDK are leading to a black market situation with the jailbreak folks. I’m slightly surprised here: I’ve not been wildly impressed with any of the unofficial applications so far and prior to February had been expecting Apple’s iPhone SDK to be jailbreak’s death knell.
• Fring is not the first commercial application to be released for use with the jailbreak installer (see Devicescape), but with the official option looming, Fring won’t open flood gates to commercial apps on jailbreaked iPhones unless developers are unable to do what they want with the official SDK.
• Consumers will be drawn to Fring for IM text chat as much, if not more, than for its VoIP abilities.
• Fring for iPhone is still a beta. The jury is out on whether it will match or surpass the Series 60 version’s quality, or whether iPhone Fring will be close or below the more cumbersome Windows Mobile port. All mobile applications are not created equal, even if they are from the same company and try to do the same thing: the various mobile phone OS’s are better or worse at different things.
• It’s iPhone only. The Touch lacks a microphone and speakers.
• Fring’s VoIP will only work smoothly on WiFi. Edge latency is too poor for VoIP. On other mobile phone platforms, Fring switches to a push-to-talk type experience for VoIP on GPRS or Edge connections. Here, it looks like Fring have chosen to limit VoIP to WiFi only. When a 3g iPhone arrives, Fring should be able to work over the cellular connection too.

Everyone, please take note, I’m not against developing mobile applications or widgets. I like Fring.
But my view continues to be that given the cost of development of mobile software, and the highly balkanised handset market and mobile audience, creating a mobile application is only worth the trouble if the result delivers a product that couldn’t be done with a cheap mobile website. Fring’s VoIP and IM application meets those criteria.
More on mobile VoIP in this report:
Competing with Free Communications
and more on IM here:
Instant Messaging Growth, Quantifying the Link Between Skype, IM, and Social Networks

Microsoft has bid to buy Yahoo!

This is being widely reported as an anti-Google move. But in communications — email, instant messaging/presence, social networks etc. — a Yahoo! – Microsoft combination would be tremendously dominant. Microsoft has the leading IM platform in Europe. The second place varies by country: AOL or Skype or Yahoo! but never Google’s.

Similarly with free email. Microsoft’s Hotmail (now branded variously with Windows Live flavours) and Yahoo!’s excellent email service have an enormous user base and Google is smaller competitor.

In VOIP, the key players are likewise not Google, but the DSL ISPs (including incumbent telecoms operators) Skype, and Microsoft. Googletalk is far behind in take-up.

Related reports:
Instant Messaging Growth, Quantifying the Link Between Skype, IM, and Social Networks.
Social Networking Across Europe, Using Localization and Personalization to Drive Growth
Competing with Free Communications,
Delivering Revenues from Rising Consumer Adoption of Digital Communications

Skype is continuing to become a more ubiquitous communications service. Now, it arrives on the PSP. Skype is being offered for free to new PSP owners and to older ones that choose to upgrade their firmware. This distribution method will push Skype in front of a large number of users that have bought PSP’s for other reasons (and despite the positive press noise around Nintendo’s DS, the PSP continues to sell steadily and has a large installed base in Europe).
Free availability of Skype makes the PSP version ideal for occasional usage where a consumer would be put off by any up-front charge for the Skype software.
Ubiquitous Skype delivers location free — “in the cloud” — communications. What do I mean? When a user logs on to Skype, they always have instant access to their up to date contact list without having to re-enter any details or set up some awkward sync process; they use their normal outgoing and incoming Skype telephone numbers; or listen to their voicemails; etc.
However, the PSP version’s drawbacks will limit its usage to certain scenarios, mainly when other versions of Skype are not immediately available to the user in that location:

• No speakerphone. The user has to remember to carry a headset with them.
• The PSP headset is bulky. A user has to own/buy both the remote control cable and the special Skype headset. The combined cable length is several times longer than needed.
• Incoming calls issue. Skype on PSP cannot run in the background while the user is playing games, so its utility for incoming calls is pretty limited as the user has to leave Skype running and be connected to a WiFi hotspot and not be playing a game. I’m unsure whether this version supports Skype voicemail (some non-PC versions of Skype do but some don’t).
• No keyboard. A tremendous amount of Skype usage is text instant messaging before, after, or instead of making a voice call. The PSP has no physical keyboard and no touch screen to enable handwritten text messages.

Regardless of the above. Skype on PSP will prove useful to PSP owners that don’t own a mobile phone that can run Skype (either directly or via Fring), or that don’t routinely carry a laptop, or that don’t routinely leave a PC switched on all the time at home, or that don’t own a Nokia N810 Internet tablet (more Skype features supported, speakerphone, keyboard).
Related reports for more insights:
Instant Messaging Growth, Quantifying the Link Between Skype, IM, and Social Networks.
Competing with Free Communications,
Delivering Revenues from Rising Consumer Adoption of Digital Communications

From eBay’s financial release:

“Skype delivered a third consecutive quarter of segment profitability, excluding the goodwill impairment charge of $1.39 billion. Geographically, all three major regions, Europe, North America and Asia exhibited robust revenue growth.

Skype net revenues totaled a record $98 million in Q3-07, representing a year-over-year growth rate of 96%. Skype had 246 million registered user accounts at the end of Q3-07, representing a year-over-year increase of 81%.”

Skype is making money, just not as much as eBay anticipated when they bought Skype.
I was at a large European telco yesterday presenting to members of their exec team. They were acutely aware of the eBay writedown, but not Skype’s bottom line: three quarters of profitability. They should be and are now.

Swapping Vonage for Skype: One man’s search for VoIP that actually works
How one person went from:

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.

To:

So today, I finally got a SkypeIn number. (I’ve had SkypeOut service for more than a year.) I set up my voice mail on Skype. I bought a phone (Philips VOIP841) to complement my use of a Plantronics headset (used more for comfort than anything else).

But there are a few real gems within the piece as to why he has embraced Skype that Internet businesses should understand:

Before I leave this post, it’s worth pointing out how similar the Skype model is to many open-source business models. Skype is free and, at least initially, tends to get used for tasks that are not mission-critical. Adoption starts with ease of trial and zero cost.

The challenge is clearly revenue. Something Skype has achieved to some extent but not sufficiently to meet eBay’s expectations.
and:

The sound quality is exceptional, and the reliability of the service (with one big exception) has been impeccable. When it’s not, there’s my mobile phone.

[my emphasis]
With multiple communication methods available to individuals, compared with the pre-mobile and pre-Internet era, everything changes.
More to follow in an upcoming Jupiter report.

At the time of the acquisition (Voices not Eyeballs: Ebay Buys Skype) I wrote that Skype’s purchase price was astonishing. This was, by the way, one of the reasons I drew the comparison between that 1990s metric of eyeballs and Skype’s voices.

Now that Skype is being written down, I imagine the naysayers will again attack Skype.

They ignore several realities:
1. Skype has a business model, and one that is independent of advertising.
2. Skype generates revenues. [Clients- please ask us for details on which consumers are paying for Skype's services.]
3. Skype’s cost base is designed to be uniquely low, due to its (largely) decentralised voice network that uses p2p technology.
4. Skype reports it has doubled its registered user base in the US in the last year.
5. Despite the write down, Skype’s paper value on eBay’s books remains enormous.

Bottom line:- While eBay overpaid, and the hoped for synergies with auctions and Paypal have not delivered upon the lofty expectations implicit in eBay’s purchase price, Skype may yet prove to be a profitable business in the long run.

Again, to draw that 1990s analogy, there are a number of successful Internet businesses alive and strong today, that struggled for a time in 2000-2002.