Credit Ralph De La Vega with seeing the way to the future. In the last quarter the mobile group has put on 2 million new devices. Note the shift from "cell phone" subscribers in this story by Kevin Fritchard over at Connected Planet Online.
The change in language is all about demonstrating that AT&T is NOT a phone company any longer. They are changing their mantra and becoming a connector of information services and entertainment in my book, and that means voice is no longer a main focus. While voice minutes will continue to be a revenue center, minutes are going to be thought of as much as dial tone. It's a commodity service, that sells itself.
Going forward I see AT&T chasing all new forms of communications in more aggressive ways, using all those connected endpoints as attractive potential buyers. Watch as they evolve their N-Screen, mHealth, mFinance and M2M business lines while also having to fight more and more regulatory oversight.
Wireless Moves had a very informative post that skipped by my radar due to travel that helps frame out which mobile operators will be ready for Voice over LTE.
Here in the USA we have T-Mobile, but they are not moving ahead with LTE that quickly, and pushing HSPA+ as their standard of choice so while they show up on the list of which carriers are considering it, the current push, and the tenor of the company today, one which looks like they are slimming down expense into new technology and trying to make money on what they have before selling the property off, makes this revelation more interesting in my book. It implies that T-Mobile has a broader vision, and that what we're seeing today is not the true direction the company is going. HMMM..
So while I think the slowdown has everything to do with figuring out how to make money, not just gain more users and some looming regulatory concerns. Stating the obvious about the key challenge at Skype today is to get the users currently on Skype to start paying Skype for outbound calls and inbound numbers. two services which Skype basically sells separately, or treats as two different transactions as their way to wiggle around the regulators. That two part segmentation approach keeps Skype from saying "we're a phone company" in many countries, but since it also doesn't really pass the duck test, any more than Vonage didn't back in the early days of VoIP marketing. Thus the how do you make money question, or really how do you make more money, and regulatory encroachment are questions the new CEO, Tony Bates has to tackle.
Those regulatory challenges will continue to swing over Skype's head, as they currently sell calling minutes separate from receiving phone numbers approach removes the burden from them having to pay into the Universal Services Fund, something that takes a reported 14.1 percent of telco's revenue here in the USA which has to be one of Skype's larger markets globally. This becomes a financial concern.
The core challenge is the conversion of people to start "paying" vs. making calls to one another for free. The conundrum is thus in getting more people on Skype, who not only make Skype to Skype calls, but Skype to the PSTN or Mobile networks. Given Skype to Skype calls are free, the more people who sign up for Skype, the less people you need to call by a paid call. In essence, the more people they get to make Skype calls the more they eat up their own market.
The second issue is getting those people to "pay" for things, like multi-party video, something Skype is making noise about as a revenue stream. As someone who helped tell the same kind of story for SightSpeed, prior to their exit to Logitech in a down market, selling multi-party video to the public isn't easy. Thus when you take GigaOm's Simon Mackie's perspective on video conferencing, and the recent Forrester report, one has to think that Skype's current approach to selling where the money isn't ready to buy what they have to sell, which is their pursuit of the Enterprise as THE market vs. trying to own the small business sector which is already much more ripe for disruption, is at the crux of the real issue. In this arena Skype marketing has been almost invisible other than through PR which drives a lot of attention through the influencer channels, but which isn't backed up by the advertising and promotion necessary to be taken seriously by the enterprise. In essence Skype doesn't pay into the USF any more than they pay into the advertising channel. Those costs, plus the costs of being a public company begin to eat away at profits.
So, as a company that is challenged by customer acquisition, having the weight of some 700-800 employees around the globe, marketing expense, software updates, engineering (Skype likely employs over 400 engineers by now) all requires a lot of cash, or in startup parlance, contributes to a lot of cash burn each month. Even with revenues approaching a billion dollars a year and with 8.1 percent of the users now paying (I pay for Skype Unlimited) the costs keep going up for Skype as they add more people to keep the business growing and operating.
Next is the focus on where the growth will come from. Rightfully so, Skype has a focus on the enterprise as their cash cow in the future. But the route to the enterprise customer is not one that happens as fast as adding a single user, or even a small business. Those decisions are made in a second. Enterprise decisions are made over years The Enterprise decision take longer than small business decision to buy/switch because of many different reasons, most of which deal with the culture of the company being asked to switch or buy. That means the sales cycle is measured in many months and multiple years, as in fiscal years. Miss the budget cycle, and you miss next year.
The small business market and the SMB sectors move much faster and wanta to compete upmarket, and thus is more primed and ready for Skype as their carrier of choice than the slower to decide Enterprise customer market. That is the yet another hudle Skype needs to overcome, because as the cable operators begin to broaden their reach into the small business market with offers like what I've seen with Cox and Cablevision, the cost of calling keeps getting smaller, while the services they offer using SIP based architectures, the same SIP standards that Skype is using for Skype For Business/Skype Connect, means the value proposition of being more efficient in calling gets whittled away.
Cheaper calling isn't a business model any longer, and with companies like Google offering "Free" via GoogleVoice and companies like client Truphone, Viber and Rebtel offering free on-net calling between their own members, one has to realize that companies will give away minutes to get the international long distance market, a market that Skype has been growing each year with, but which has become a big target for everyone else now as their way to attract customers too.
The next hurdle Tony Bates has to solve is the almost hidden from the outside world of the revolving door of executives in key hires since the SilverLake led LBO that took Skype outside of eBay's foolish grasp. Skype has now gone through two Engineering leads in as many years and likely has a new one coming in. One was ex-Sun, the other ex-Yahoo, neither lasted. The hiring they have done in the SilverLake era, David Gurle, head of their Enterprise play is ex Microsoft and Thompson Reuters, Tony Bates, CEO is ex Cisco, further suggesting that Enterprise envy is at the heart of all Skype's business moves coming from the board level, and has become a company that requires a far different wax job on the car, than the kind you get at the drive through. Internally, teams have been rejiggered, and reshuffled, with some people in the UK given the option of moving elsewhere (as in the USA) or moving on. These shifting of bodies and recruitment of new blood thus has the unsettling effect of plans being stalled, or worse, tossed out the window, all under the guise (i.e. spin) of broader "strategic" goals that are being sold up to or by the board of directors, or down to the line personnel.
Taken as a whole of the sum of their parts, Tony Bates' decision as CEO to slow down the IPO is the only decision he could have made. He's walked in just four months or so ago to a company that has at least four operating spheres of influence (USA, UK, Luxembourg, Estonia) some of which suffer from a big case of NIH (not invented here) syndrome, a marketing issue of conversion from free to paid, partner products and programs that don't add many new paying users, an SEC S-1 that has led to lawyers, in addition to the investors and the board having a very deep reach into how the company was being run. He has an under marketed company, that needs to play ball a whole different way to compete against the proven Enterprise sales organizations, with longer standing relationships with the customer segment they're pursuing, and he's got to make the right hires to not be judged like his predecessor.
I would go one step further, and suggest that the IPO should go on a longer term hold, and while the investors may want an exit, or some liquidity for the company, that the IPO and the requisite filings are only making it harder, not easier for the company to be the nimble, growth oriented entity they were enroute to. In my book, staying private, gaining market share, putting in management team stability and delivering new services better than anyone else, all of which were Skype's stock in trade for many years are really what Bates is looking to accomplis. By pushing the IPO back he's now buying time to get the company back to its disruptive roots while navigating the regulatory minefields thrown up by the investor and technology worlds that are around him as an IPO candidate.
In my view if you're using an Android phone, then the deeper integration of GV makes it less of a hurdle, but on RIM Blackberries and the Apple iPhone the apps are not as woven into the phones as much as they enable people to make use of the free service.
I have been a friend of Dean Bubley's for quite a few years, and consider him one of the world's leading Blogalysts (an independent analyst who uses the blog format to share perspective, insight and opinion) This past week he took to task another respected analyst, Gabe Brown article, that surrounds VoLTE and IMS. Dean, who is usually mild-mannered clearly had a nerve struck.
The points Dean makes in his post are nothing new to be reading from him. I've been hearing those points (and reading them in his musings) for years, usually over a nice cold cocktail in one of London's better mixology establishments or over an ethnic meal.
IMS is a pipe-dream that continues to be pushed by some long time bureaucrats/technocrats inside the NEPs and the GSMA. And, VoLTE is really as Dean points out, a very big misnomer, as for now its going to be telephone calls over LTE, as the concept of voice as a service has yet to really be embraced by the mobile operators.
It may have snowed in the Northeast last week, but this coming week, the VoIP world heats up in Miami with IT Expo from TMCNet. Already promising to be one of the biggest IT Expo's ever, the four days of action in Miami begins Tuesday.
I'm about to go on a road trip this week with three of my team members. We'll all flying at almost the same time, but on different routings to take advantage of low fares and our closest airports. Staying in touch with each isn't hard by email, but it lacks the immediacy of SMS. Calling means reaching each on individually, or a call chain, and with weather being what it's been like lately, the risk of flight delays has to be considered, so communications between one another becomes rather important.
Thankfully there are services out there now which make keeping in touch easier and far more convenient.
The new services that tie group texting and group calling are both born and bred in Silicon Valley. One is GroupMe, a graduate of the StartUp Camp program held during IT Expo last fall and client CallVine, which grew out of Vello.
Both in essence do the same thing. They allow you to text to a group of people and to immediately group call all the members on the same list. But while GroupMe starts the call, CallVine's package is very complete, something TMCNet's Publisher Rich Tehrani pointed out, but of course the difference is you pay for CallVine. And in paying, that's where the added value comes in. With CallVine since the work off of the mobile number as the identifier, if you're on a call and the call is dropped, all the dropped party has to do is dial back into a toll free number and they're reconnected to their call. Given it's a mobile service, that's a big plus, especially on the iPhone and the challenges sometimes presented by a network operator.
Ironically, the core idea of group conference calling was started back in 2006 by Alec Saunders and his company, iotum, which is now called Calliflower. Saunders, and then co-founder Howard Thaw, had developed a service platform based on relevance of knowing which number to call you on, and if you would be available. They added in a service overlay called "Pronto" and made it the conference calling service that would call you, winning a DEMO God award along the way. Now these services and others like Beluga and Fast Society are ready for breaking out, with the likely forum being conferences and events like the SuperBowl in Dallas this year, followed by SxSW a few weeks later in Austin.
For Saunders, who was the original Product Marketing lead at Microsoft for both Internet Explorer and Windows Mobile, being first is nothing new. Since that time he's evolved Calliflower into being one of the most complete desktop and mobile collaboration platforms around, offering even Skype integration via the iPhone, iPod Touch, iPad and desktop.
These innovations in group communications highlight a growing trend for the mobile worker. The ability to do things on the fly, quickly, easily and conveniently, where ever you may be. What's more, the concept of distance, timezones and an office keeps being farther and farther knocked down as new solutions to problems come into play.
For my traveling party this week, CallVine and GroupMe will likely come in very handy, as we coordinate our post landings meet up in the airport, and gathering each morning for coffee. No more relying on hotel switchboards to call between rooms, and as a matter of fact, more use of SMS vs. BlackBerry Messenger, as the iPhone is rapidly becoming my device of choice when traveling, now that I have a legitimately unlocked iPhone 4 that I purchased in the UK. Plus, only two of us have Berry's while three of us have iPhones, and all four have SMS--Got it?
That in and of itself speaks volumes, and with more and more use, I'm finally beginning to question my need for the RIM Blackberry in my arsenal of phones, largely because of RIM's hard to penetrate concept of a developer program, or in providing tools to developers that would make things easy for them to deploy new ideas when they really were new. Now if RIM would open up the BBM platform to allow others to communicate with it seamlessly, there may be extended life, but their proprietary approach to it, likely leads to their own extinction over time with it.
All this leads to the idea of radical simplicity and radical clarity in communications being upon us. Services, applications, smartphones and tablets/iPads are bringing those ideas to the forefront, and the developers and minds behind companies like Calliflower, CallVine and GroupMe are clearly seeing the future of collaboration and group activities in the era of "i".
Longtime friend, and CounterPath founder, Erik Lagerway now runs the voice division of ZipLocal up in Vancouver. He has just announced the release of an open platform voice calling solution called ZipRing for the Apple iPhone.
Personally I'm happy to see Erik get this one out the door, but my guess is that what he has next in mind will be even better :-) Last fall I did some consulting to Erik around ZipRing as I've always viewed him as one of the top product development minds in our space. Basically, Lagerway has consistently built products and applications that just simply work. He, like PhoneGnome's David Beckemeyer simply understand the basic so well that when it comes to deployment, the product or app does what it's supposed.
Okay, enough with the bathroom humor. Here are a few more things that you're paying for and may not be supplied:
1. The elevator isn't working-->Walk down the steps. The baggage handlers are outside at baggage claim and with more people carrying on, and more families with kids doing the same have you ever seen the lines of a family of five trying to get strollers, babies and more down a flight of steps.
2. The up escalator isn't working but the down is. They do work both ways but that means someone managing them.
4.The trash cans are full of trash, but no one is emptying them for hours.
5. There's no one else parked at the curb, your pick up is waiting and as you're walking up the traffic marshall chases them away as they are pointing at you. Or worse, you get chased and the other person who has been there longer is allowed to wait without any official markings.
6. Some of the dining (um that's a stretch) are never open for the first flight out or last flights in. Worse, take a red eye and starve. The excuse is that concession operators can't afford to stay open. I say, lower the rent so they can stay open and SERVE the public, not be empty and NOT SERVING.
7. The so called "free Wi-Fi" isn't working or is so slow it's not really there for most of us who need speed.
Year's ago growing up watching Adam-12 on TV I recall the saying, "To Protect and Serve." Well public facilities have been yelling about reduced tax subsidies, but in this case, the travel public is paying every time we fly, and yet, being facilitated seems to be going out the window.
What triggered this? Another "surprise" at San Diego International Airport today. But it wasn't with TSA which has since the "incident" a few months back, gotten uber friendly. I even had a very kind TSA agent offer to help move my bags to stimulate traffic flow through the belts.
No, it was the fact that because yesterday was a holiday things like restrooms weren't as clean as they should be first thing in the morning, and the hand sanitizer was empty. Things like that are too easily fixed, but management wants to earn higher salaries, while the working stiff who works for minimum wage can't earn holiday pay because of profitability. Yet, we the travel public pay the "fee" with every ticket and yet, we end up feeling un-facilitated.