Skype - A Heavy Dose Of Crazy News
July 31, 2009
What if you paid billions of dollars for a company, only to find out that you didn’t own the license for the product? That’s just what Skype has learned, and as they warned in a recent SEC filing, it could result in the shutdown of Skype services.
How does one pay a kings ransom for a company and end up in a sticky situation such as this? Stupidity on the part of Ebay and greed and hostility on the part of Skype’s founders Niklas Zennstrom and Janus Friis. Zennstrom and Friis claim that Skype doesn’t own the license to the core technology behind the service which Ebay paid BILLIONS for in 2005. And they are threatening that Skype has breached their agreement and don’t have the right to continue to use the license.
You’ve got to wonder if Ebay even bothered to hire lawyers when they purchased Skype. Would they not have made 100% sure that they owned the customers, software, AND technology in a transaction costing an enormous amount of money? Or were they in such a rush to over-pay for a technology they didn’t understand that all rationality flew out the window?
What makes all of this even more interesting is that Zennstrom and Friis’ moves are threatening Skype’s planned IPO in 2010. Unless Skype can lock down the concerns regarding the license, who will want to jump into an IPO with a company in jeopardy of shutting down?
The whole thing is a sickening mess and it is the 40 million Skype users who will suffer most in this debacle.
Skype has sued Zennstrom and Friis’ company, Joltid, and the battle will soon play out in British courts. However, to hedge their bets in the event of a legal defeat, Skype is also considering the development of replacement software for their service - though unlikely that they would be able to do so in time.
There are fingers to point at all involved in this ridiculous battle, but one does have to wonder what Zennstrom and Friis think they are still entitled to in regard to Skype, since it is widely believed they were overpaid by billions for Skype to begin with. Attempting to extract even more from Ebay, just as they prepare to spin Sype off into its own company is dirty trickery. And some are speculating if this isn’t all a game to undo the IPO and force Ebay into selling Skype back to Zennstrom and Friis at Skypes new, and much lower, valuation.
None of this can be good for Joltid’s reputation. Who would want do business with Zennstrom and Friis these days?
If you can’t reach me by Skype, at least you’ll know why!
Browser Battles Become OS Warfare
July 10, 2009
Just as we were about to post a story on the renewed browser wars, news broke that Google is going after not only Microsoft’s share of the browser market but the Operating System market as well! A few quick changes, some phone calls and research and we are back on track with thoughts on this extraordinary news and Microsoft’s vulnerable position in both the browser and OS markets.
The past year has seen a steady slide for the once indisputable champion of the browser market, Internet Explorer. All the while, competitors FireFox, Safari, and Chrome have made considerable gains in market share, indicating that Microsoft has a few dents in its armor after years of dominance.
I pooled the data from one of my busiest web sites (a travel site with over 25 million annual page views) to see what browsers and operating systems the readers have used to access the site over the past year. What I found really surprised me. I’ve always looked at Mozilla’s FireFox as an innovative alternative to Internet Explorer which probably had limited mass appeal. However, statistics from the past year show that FireFox is now within striking distance of Microsoft with a 32% share of visits to my web site compared with Internet Explorer’s (IE)47%. Apple’s Safari has ticked up 5% over the past year and Google’s new Chrome browser has an encouraging 3% share of the traffic in its short year of life. All other browsers came in at less than 1% market share and won’t be discussed in this article.
FireFox, an open source collaboration, has been fighting the good fight for several years, with the goal of creating a lighter faster browser which allows users to customize and add only the additional features they actually want and need. Apple’s Safari browser by contrast has had a captive base of Mac users and is installed by default on every Apple computer shipped. However, in recent weeks, Apple has made the debut of a slick new version of the browser which is lightning fast, easy to use, and down right beautiful to look at. Safari’s surge in the ratings show that the browser may finally be making the leap beyond just Mac computer users. That stats show a real change in browser use. And this is where things get really interesting.
Google shocked the world when it announced the Chrome browser last September. And while the news was exciting, I couldn’t imagine why we would need another browser option? Microsoft was everyone’s default, FireFox had cornered the web nerd market, and Apple had their own fervent fans. What did Google have to gain? Still, they must have had a reason - perhaps beyond creating a simple new browser choice for users.
Many, including Telecom Monthly, speculated that this was an elegant way for Google to eventually consolidate it’s many web based products (Gmail, Docs, Maps, Search, News, etc) into one convenient platform. We got close. But Google had even bigger plans in mind. By this time next year, Google intends to morph Chrome into a full fledged operating system capable of running on netbook computers. From there, Google will no doubt set its sights on even bigger computer targets.
But is it worth it? Does Google stand to actually gain enough new users to make the huge amount of time and money that building a new OS will consume worth while? If we look at how quickly Microsoft’s hold on the browser market has melted, Google may very well be on to something. Following Vista’s miserable launch, a poor economy, and Microsoft’s reputation for expensive software, an inexpensive and light weight new browser from the trusted name of Google might very well have a shot.
The computer market has changed rapidly in the past couple of years. Microsoft built its Windows legacy on a big powerful OS designed to run ever bigger and faster computers running ever bigger and more bloated software. And Windows did that job pretty well for a long time. But something fundamental has changed. There is a decreasing emphasis on installing big processor intensive programs on a local computer. Rather, applications and storage have begun to move onto the web (and into the cloud), which has significantly reduced the computing power that many users need. Applications like web based email, Google Docs, online maps, web browsing, and millions of newer web based business applications don’t reside on the users computers at all but rather on the web and are accessed via a browser.
While Windows has gotten bigger over the years, computers have quite suddenly gotten smaller. Netbooks, handhelds, smart phones, and new net-enabled consumer products just aren’t happy running a big bloated operating system like Windows. And that is the exact market that Google will target with the first release of its new Chrome Browser next year.
And that would be big news by itself, but given that Google also has an Android operating system targeted at small devices, Google Docs squared off against MS Office, the Google Chrome browser with laser sights on Internet Explorer, and now the Google Chrome OS which will go after Microsoft’s bread and butter Windows products, it is clear that Google has gone to war with Microsoft.
The chart above shows that at the same time Microsoft was losing browser share on our sister site, they were also losing OS share, with Apple picking up the difference. Apple has proven that by filling a niche, you can compete against Microsoft. A Google product designed to fill in the holes where Microsoft is weakest, could fill a niche or two as well. Few would have considered Google’s web based “Docs” to be much of a threat to Microsoft Office. And yet, here we are in the middle of a recession with companies everywhere at least giving the free Google Docs a test run. Anything to save money in a pinch. And the same will likely be true for netbook manufacturers. Netbooks are value priced electronics and a big chunk of their hard costs are tied up in Microsoft Windows. At the right price, Google Chrome OS could quickly become the OS of choice and necessity.
Google has a solid reputation for building lightweight and free web based applications. That’s compelling these days, and people are taking note. Apple has pounded the notion in advertising that Windows is imperfect, difficult to use, and insecure. The Apple attacks have helped to make Microsoft vulnerable, and both Apple and Google will benefit from that.
If Microsoft’s Windows 7 release isn’t a huge success this Winter, and Apple and Google continue taking pot shots and making strides in the OS and browser war, Microsoft will have a lot of dramatic hole patching to do in 2010. Microsoft is no longer an unstoppable Goliath, Apple and Google are titans in their own right. It appears that the browser battle has suddenly become open OS warfare.
We are practically drooling over our keyboards in anticipation of the drama already!
-iTodd
Telecom Monthly - July: A T & Tease
July 7, 2009
- Telecom Monthly July Newsletter
Welcome to what is shaping up to be a wacky Summer. iPhone and Pre are positioning themselves as the ultimate smart phone and Android would just like to be mentioned at all. But who has the most at stake: Apple? Sprint? Palm? AT&T? It leaked out that Steve Jobs had a liver transplant while on medical leave from Apple and everyone is holding their breath to see what will happen next. But holding one’s breath won’t save the likes of Nortel which is about to be sold off into pieces. Red ink is on everyones mind this month and hopes are riding high for a Fall economic recovery in the Telecom sector. Give us a few minutes and we’ll fill you in on the news you missed while trying to save your job and still get your kids to soccer practice on time.
Let’s get the sensational news out of the way first. Michael Jackson dies and takes the Internet with him . . . at least for a few moments. Social networking and news sites like Twitter, Facebook, CNN, Google News, and Wikipedia all went down for varying lengths of time as people around the world searched for bits of news and rumor on the web regarding the early whispers of Michael’s death. AT&T reports record text messaging volume during Michael mania, and his songs shoot back to the top of the charts on iTunes and Amazon. Perhaps it took the death of a legend to prove that the days of traditional media are over. By the time the newspapers or even the evening broadcast news could report the tragic details, most Americans had already found the answers they were looking for in texts, tweets, and the words of their friends on Facebook. At least one company was able to turn the tragedy into a show of power. Sirius XM satellite radio announced a new Michael Jackson tribute station just 16 minutes after the singer’s death, proving that the newly merged company is both technically flexible and willing to make major decisions on the fly. Amazon and iTunes were similarly able to tailor their music stores to the throngs of customers looking for all things Jackson. There is no time to be sentimental when there are customers knocking down your doors.
MJ wasn’t the only sensational news of June. Some have been hawking paranoia and panic that millions would be left without a live television feed once the digital deadline passed on June 12th. But, to our knowledge, the world did not come to an end. We’ve got to wonder if traditional television is even relevant in the new agent of communications and entertainment. Most Americans now get their television content via Cable or Satellite, with many younger users rarely using a television as much more than a monitor for their video game machines. Nielson reports that all but 2.2% of television users had successfully completed the conversion. At least 2.2% of the population is faced with the decision (or already has) of whether or not television plays an important role in their lives or if they can find their entertainment elsewhere or online. Personally, we find ourselves streaming more content from Netflix and Hulu these days and reading news online as it happens rather than waiting for the broadcast news. Have your habits changed?
Sensational news tends to come in threes. And our final tabloid-esque item involves the ailing Steve Jobs of Apple. It seems that while Mr. Jobs was out on his six month medical leave, he took a little side trip down to Tennessee to swap out his liver for a newer model. Of course this has many on the Internet speculating on a possible return of his cancer. The investment community has renewed concern about Apple’s ability to survive without Steve Jobs at the helm. And Telecom Monthly wants to know if it is time for Apple to get a CEO transplant. At the very least, investors and Apple fans want to know if the company has a succession plan in place, but Apple is loath to give details on issues such as this, once again leading inquiring minds back to the Internet to speculate on the worst. The Internet can always be counted on to make a bad situation worse.
Speaking of bad Internet policy, AT&T has proven to be terrible at spinning a web of happiness. They seem to be poking their customers in the eye at every opportunity. This past month, they managed to upset loyal iPhone customers by making it more expensive for existing customers to upgrade to the new iPhone 3Gs, then it became clear that they also wouldn’t be ready to support MMS and tethering on the new device. Fans and bloggers pounced, spreading the news about the increasingly evil AT&T on Twitter and social networking sites. Suddenly, AT&T reversed position making it possible for most early iPhone adopters to get the new model. But the door remains open on when AT&T will finally make the long awaited MMS and laptop tethering available to iPhone users. AT&T’s credibility hangs in the balance and many customers are already posting online that they intend to switch carriers the moment the iPhone is no longer locked to AT&Tease.
Not all AT&T news was bad last month. AT&T and Apple blew 3Gs sales projections out of the water with an opening weekend sale of over one million iPhones. By comparison, Palm’s Pre apparently sold just 50,000 units in its opening weekend. More positive iPhone news came with the announcement that phones which have been upgraded to OS 3.0 will be able to automatically authenticate to any AT&T hotspot location, making it a breeze to surf the Internet wirelessly at thousands of Starbucks and other locations nationwide. And for those who live in poorly covered AT&T areas comes the exciting news that femtocells will be available by the end of the year. Femtos are little router-like devices which act as tiny cell towers, making it possible for you to place AT&T wireless calls in otherwise unavailable locations (such as indoors or in basements or garages). We are big fans of Femtos as they make wireless access universal and remove the barrier to using wireless devices as a primary form of communication in previously poorly covered areas. Of course, we’d be even happier if AT&T would simply expand their cellular network and patch the many holes!
Comcast has teamed up with Clearwire and Sprint to provide 4 mbps WiMAX in Clearwire areas and Sprint 3G access where WiMAX is unavailable. That’s next generation wireless speed and marks the beginnings of the wireless speed revolution. By this time next year most carriers will have deployed or will be about to build out their 4G/WiMAX/LTE networks which promise blazing fast Internet for all sorts of mobile devices from phones and handhelds, to computers and appliances. Mark our words, connectivity is about to change in dramatic ways and the wired Internet may soon be in its decline.
New FCC Chairman Julius Genachowski has finally been confirmed, just in time to weigh in on exclusive carrier contracts such as AT&T has with the iPhone and Sprint with the Palm Pre. While it is unknown which side of that issue Genachowski may come down on, it is known that he favors net neutrality and consumer choice.
FCC just cleared the way for Embarq and CenturyTel to merge, creating a new local service powerhouse. And talk has been heating up that Sprint and Level 3 Communications may be discussing a joint venture which would allow them to spin off their Long Distance networks. But we find it unlikely that the FCC will continue to allow the contraction of the entire Telecom industry. The days of the reemerging Telecom monopoly may soon be over in a Genachowski FCC.
Insiders predict greater regulation and consumer protections from the FCC. But that may not be an easy task. The poor economy has made the inevitable draw of large objects to attract even harder to stop. Take Nortel for example, it would once have been impossible to think of this mega technology firm as bankrupt jalopy in the pick-a-part bin at the local junk yard. And yet, it is about to be sold off in pieces to the likes of Nokia Siemens. And while purchasing entities may seem like saviors now, the lumbering behemoths staggering out of the recession era will also become the big game in the sights of consumer groups and the FCC.
The Minnesota courts have declared the Internet to be a “Utility,” and in the process opened the eyes of many to the obvious truth that communications needs have changed. Landlines are in a clear state of decline and more consumers now place their critical communications via the Internet or on mobile devices. The FCC and state PUCs will increasingly need to address the fact that the communications habits and needs of Americans have been dramatically altered in recent years. Can it be long before the FCC recognizes both wireless and Internet as critical utilities in much the same way that electricity and phone service were regarded in the last century?
While competition may be shrinking on the carrier side, technology is still a hot market. Open source telecommunications options from Asterisks and FreeSwitch have boomed during the recession, even as Nortel, Avaya, and many other stalwarts of the bygone Telecom golden era have faltered.
All powerful institutions seem to be vulnerable these days. Microsoft knows all to well how established franchises such as Internet Explorer are suddenly at risk from crafty newcomers such as FireFox, Google Chrome, and Apple’s Safari who have all made gains in the past year which have eroded Microsoft’s lead. Where competition is allowed to flourish, it seems to be doing so these days, in spite of, or as a result of, tough economic times. The big trend we spot in all this change is “Free” or “low cost” as an alternative to expensive entrenched solutions. Funny how an empty wallet can effect such broad change!
Those low cost threats may come from previously unexpected places for the Telecom Industry. Google Voice is sending out beta invitations for a service which will likely challenge carrier phone service with free SMS, voicemail transcription, free domestic calls and low cost international calls. But the industry may be its own worst enemy, raising rates on SMS and data just as Google and others seek to drop the floor out of pricing. Consumers are feeling pinched and options, such as Google Voice, are much more likely to take hold in the current economy than they might have in the past.
While you’re out enjoying the Summer sun, we’ll keep our eye on the growing shift which is occurring at a rapid pace in the Telecom world these days. Plop yourself in a lounge chair. Pour a cool drink (or twelve). And check in with us when you get a chance at TelecomMonthly.com.
Cheers,
iTodd
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