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A Warning To Skype? Nah, Not in My Book

Skype was sent a warning by Peter Csathy, on his blog this week, explaining why Skype, which is currently using the ON2 codec should be worried after Google acquired them. Google is also using parts of Vidyo and video technology from client GIPS, and sometime back purchased a company with video expertise out of Scandinavia.

Actually, ON2 made the move at the right time to sell, just as Csathy did when he pulled a rabbit out of his hat and successfully exited SightSpeed to Logitech last November. But I have to disagree about Skype needing to worry about ON2 and Google.

In my view Skype with their technical team has the internal know-how and expertise to build their technology based on standards, not proprietary technologies. So while ON2 uses h.264 their own technology and optimizes it very well, this is much like the purchase of TellMe by Microsoft. You buy it for what and who it has. Google has yet to demonstrate they play the "patent" game, and their video chat is just that, chat while what Skype is likely working on goes after Cisco and other telepresence suites, democratizing them the way their voice platform has leveled the cost of talking.


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In my view, it's not only Skype which should be focused in the follow-up of this deal.

I like the article of Dan Frommer in the Silicon Alley Insider how this move by Google could revolutionize whole online video industry:

I agree with Dan Frommer in that Google intends to control the online video space and the ads money therein. And that it can do with On2 tech whether it will choose open or closed approach.

Therefore, in my view, it's rather Microsoft, Adobe and even Cisco who should be more affected by this deal than Skype.


Afraid? Skype? Skype is hardly the one to be most afraid? Nor are any of the other customers/clients of On2 Technologies. The ones who ought to be most afraid?

Those responsible for the massive naked short selling, Fails to Deliver, and the Persistent Fails to Deliver shares that placed ONT on the REG SHO list from July '07 to Jan '08 and in the process driving the share price from over $3.50 to barely above a dollar before the stock was de-listed from REG SHO. But they did not stop there. No, they continued to naked short sell and create Fails to Deliver every day for an additional year, unabated, unabashedly, with utter impunity, unstopped by the SEC, the regulatory body created, empowered and assigned with the responsibility to prevent such abuse yet abrogated that responsibility, and did so with the blessing of the previous Administration (and quite possibly on orders from that same administration). It is these parties, specifically as well as those they were working for who are the most afraid of this situation. The two law suits are going to present in court, in front of a judge, evidence of this manipulation and the judge will have no choice but to demand the SEC reveal all the gory details, including the parties responsible for this manipulation and exactly who they were working for.

Skype has motivation to be afraid? On2's customers and clients have motivation to be afraid? Hardly. Not when seen beside those who are about to be on the receiving end of the wrath of a large number of On2 shareholders.



Andy, I actually agree with you and my post about Skype/Google/On2 ultimately is about the fact that no one (other than Google itself) knows what Google's real intentions are. And, this should make lots of folks very nervous indeed -- read my reply post that I wrote today in response to your post --

Peter Csathy


Couple of minor nits with your post:

1. The company you are referring to as "Videyo" is actually spelled as "Vidyo". See

2. ON2 does not use H.264 and has their own proprietary codec called VP8 (they open-sourced their VP3 codec as Ogg Theora). See

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