From the monthly archives: September 2009

On Friday, I had the pleasure of making a short appearance on the show “After Hours” on the Business News Network to talk about Fonolo. (BNN is like a Canadian version of CNBC.) Host Andrew Bell asked some great questions. Condensed version of the video is embedded below (about 4 minutes long). Full version here.

 

NakedSkypeDevelopers-3 Skype announced last week that they were discontinuing their "Extras" program, which is a storefront that allows 3rd party developers to to extend on the Skype platform (i.e. Skype’s App Store). An immediate and very negative reaction from Skypohiles around the world lead the company to clarify that this was just a transition to a new and better developer program.

Developers: "Give it to us naked"

Naturally, the debate now moves to what that new program should look like. A long standing request from developers has been the ability to use Skype’s communication services without actually running the Skype desktop client. This is the so-called "naked Skype" approach. (Alec Saunders credits a post from 2006 as the origin of the term.)

TechCrunch says of the naked option:

Eventually, we suspect, Skype will release a SDK that allows developers to integrate deep into Skype and make calls over the Skype service without opening the Skype client. In other words, people may start to think of Skype (voice, video, chat) as a service rather than a client that must be installed and used to communicate.

Telephony Online said Skype should:

move the API to more of a service-layer rather than client layer access… let a developer embed call controls for accessing Skype into their own applications, with Skype benefiting from network usage, particularly usage that uses Skype In/Out minutes.

The risk: becoming the "dumbest pipe of all".

The problem there is that Skype is not the cheapest option for PSTN access (aka "In/Out minutes"). If I were a developer, and Skype offered this kind of API, I would use Skype’s IM, file-transfer and Skype-to-Skype calling features (for which Skype earns no money) and I would use a cheaper 3rd party provider for PSTN interconnect.

Markus Goebel put it well a recent post: "If Skype opens too much, they can become the dumbest pipe of all. Other companies and services would channel their calls for free over Skype’s gratis P2P network."

(For more on "smart vs dumb pipes" see here.)

Skype is able to charge premium rates for their In/Out minutes precisely because that service is tightly bound to the client experience. The fees for those PSTN minutes (3 billion of them last quarter) account for nearly all of Skype’s revenue (which was $170m last quarter). (Data from Skype Journal.)

If they make their API too open — go too naked — they risk leaving their cash cow out to freeze.

 

3 Skype announced on Friday that they were ending their “extras” program, which allowed 3rd party developers to market add-on components to the popular communications platform. This sparked a lot of negative commentary mainly saying “platforms win when there is a strong developer ecosystem”. I commented on the GigaOm post:

Facebook beat Myspace because of their platform for 3rd party apps. For the same reason, Apple went from zero to THE mobile platform in two years. Now RIM, Microsoft, Palm, Nokia and all the carriers are playing catch-up.

Skype needs a vibrant ecosystem of 3rd party developers to come and use their platform for new services. Services we can’t think of right now. Services that would never have occurred to the original creators of Skype. Who could have imagined 65,000 apps for iPhone?

TechCrunch said flatly: “Skype, you’re going in the wrong direction”.

Now that the dust has settled a bit, it seems our rants were a bit premature…

First, the “Extras” program is not the developer program

Companies that have built add-ons to Skype are using an API that remains alive and supported. Some of the most popular add-ons are the “Pamela” family that offer faxing and recording accessories. Scendix, the author of this software, wrote on their corporate blog: “So how does this affect Scendix/PamConsult products? The simple answer is: not very much….Pamela only uses the Skype Public API and not the Skype Extras system.”

Primarily, the Extras service offered a certification process and a front-end interface to users. In essence, it was Skype’s AppStore. But the actual plumbing to allow 3rd party software to connect with Skype is still in place.

Jim Courtney summarizes: “Skype Extras is Dead; Long live Skype APIs“, writing:

[this is] the end of a marketing program, but definitely not developer support. As an app store, the Skype Extras program was not exactly a success story; however, the underlying API’s and support for them are not going away. The smart developer partners have evolved their offerings in a way that certainly reduces or eliminates their dependence on the Skype Extras …

Jim’s post is worth reading – he spoke directly with several of the leading developers on the Skype platform for their take.

Is it about the payment system?

A secondary feature of the Extras service was that it offered a micro-payment gateway via Skype credits. For example, with PamFax installed, I pay $0.15 per page to send faxes, using my Skype account to pay. Blogger Andy Abramson postulated that Skype wanted to get rid of this feature to streamline their accounting books:

“…the revenue for extras was really more of a pass through with Skype minutes … in users accounts paying the bills to the Extra’s suppliers….really what is nothing more than a collections and payment disbursement operation.”

However, Jim’s post claims that PamFax is actually the only developer that uses that system. If that’s true, I can’t imagine that there are enough faxes being sent to impact Skype’s numbers in any material way.

Is it about saving cost?

Skype is in the process of being taken over by private investors and a number of people speculated that this move was indicative of the new owners looking to make the business more efficient. eWeek writes:

The move is yet another sign of the changes Skype is undergoing as it seeks to become more nimble.

This doesn’t seem like a satisfying explanation to me. How much money is there to be saved by removing this program? How does this make Skype more nimble?

Hopefully, clearing the way for something bigger

On Friday, a friend of mine, who is close to the Skype development team, told me off the record: “there are other shoes to drop on this topic… don’t count them out yet.” hinting at an improved API. So I was optimistic.

Finally, Skype Exec Jonathan Christensen stepped in yesterday to clear things up in an interview with TechCrunch. He didn’t give any details but stated that Skype is focusing on a next generation platform. I hope this isn’t just be a statement to calm the chatter, as I believe 3rd party developers are the key to maintaining and growing Skype’s dominance. Christopher Dean, Skype’s Chief Strategy Officer, will be speaking at next week’s VON conference and I suspect this will be the top issue on the crowd’s mind.

 

image I attended the Internet Telephony Expo last week in Los Angeles. It was a terrific show as usual: I got to speak on a few panels, met some great people and got up to speed on industry trends.

Operators and Developers

I participated in a panel called "The Ecosystem of Application Developers". Alan Quayle moderated and he opened with a question that sparked some excellent discussion:

If you could have one wish to make working with a operator easier, what would that wish be?

My answer was: "Nothing." After the chuckles subsided, I explained that when it comes to the interface between mobile users and developers, the operators have been replaced by the device makers. I’m talking about Apple’s AppStore, of course, followed very distantly by Android’s and RIM’s offerings. Also on the panel was Francisco Kattan, Sr. Director Developer Ecosystem at Alcatel-Lucent. He has a similar take and describes this as a "developer exodus away from operator communities to the handset and OS communities"(more here). Alan’s summary is here.

Mobile development

I also participated in a panel called "Creating Mobile Voice & Video Applications". The moderator was Doug Green, publisher of Telecom Reseller. We had a lively debate on the two alternate approaches that have emerged for building mobile apps: Using the mobile browser and "wraping" it up like and app, vs. building a proper native app. I was very bullish on the former. Arjun Roychowdhury, from Hughes Systique (which is a 3rd party mobile app developer) was less enthusiastic. This is a topic I’ve been immersed in for last few months because of our work on Fonolo’s new iPhone app. (coming soon).

Where is Voice 2.0?

Finally, I was on a panel called “When Voice Meets Web 2.0”, moderated by industry analyst Jon Arnold. This was more of a general discussion of what’s happening in this space, from both an enterprise and consumer perspective. By the way, Jon was just quoted in Maclean’s talking about Google Voice.

Props

Thanks to Rich Tehrani for organizing an excellent event. And special thanks to Andy Abramson for hosting a terrific wine dinner. Andy has an audio recap of the conference posted here.