The Disruptive Nature of Skype

February 19, 2004

in Skype Journal

No it is not free telephone calls that are Skype’s disruptive punch but free conference calls that obsolete current networks. Disruptive innovation takes a path that others can’t follow. Skype is vulnerable in only a few areas and that has nothing to do with telephony. It is only to do with consumers (and perhaps governments and regulatory authorities) and I’ll leave that little bit of hyperbole for later. (For more posts on Skype)

Various reader questions today caused me to stop and think over Skype’s likely conference business model, being always-on, running panel conferences, using Skype for gaming applications and presence (to be posted separately). BTW the current link to the SKYPE conference beta is here. There’s been plenty of talk over years of call costs going to zero. However I’ve never heard it promoted that conference call will be zero cost. As I think back over scenarios and ideas I’ve heard — no one ever seems to ask:

  • What would the impact be if all conferencing capability was instantaneous and free?
  • Who asks what a world is like in which 75% of the calls made are conference capable?
  • Who knows what happens when people go from seconds per month in conference calls to hours and hours?
  • What happens to wireless providers when people find they like an always on capability? Will the current networks cope? I don’t think so…

    We know that every day wireless steals minutes from landlines and the internet steals viewing time from TV. And yet combined it is more! These wild card don’t above don’t appear to be common questions. They are as difficult to ask and answer as it was in the early 80’s when trying to predict the market for PC’s. Who would have predicted in 1980 that by 1990 the market would be 25million per annum? IBM certainly didn’t.

    On reflection I believe Skype will retain a free conference calling for up to five people matching their original free telephony statement. This will be enabled because people will want multiple numbers or profiles which were suggested here. I’ve ranted on Personal Communications Exchanges before and clamoured for conference calling from my second Skype post.

  • As a telephone company how do you compete with not just free global calling but free conference calling and persistent presence?
  • Will your current model dispense with the concepts of lines and numbers? Will it embrace profiles, presence and collaboration?
  • How will the bundling arguments and the investment by Cingular in AT&T wireless make sense? What happens when the economics behind their whole infrastructure is destroyed?
  • How long until the consumer can actually buy the mobile phone of their choosing? Is the “free-cellphone” contract close to breaking point? At what point will WiFi force a change in headset pricing strategy? Skype and hotspots anyone?
  • Will stupidity on the parts of telecoms and phone providers enable the HP IPAQ’s of the world to bridge the consumer gap?

    That’s my rant of thought starters today.

    More questions for “Always-on”
    Bill Campbell wrote me and says he can see the opportunities for games and social situaltions but wants more examples for applications in the business world. He provides these illustrations: “A taxicab radio is “always on”. What is it used for? Sharing of information so you can adjust your path and position your vehicle to produce optimum economic value. Similarly: FedEx parcel info is sort of “always on”. Customers can track their freight, and the knowledge used to better plan their resource scheduling in their facility”. So asks what’s an always-on conference? Or how would companies use an “always on capability? Chatrooms are at form of what they might be. So rather than focus on the capability to initiate impromptu ad hoc conferences in moments lets take a look more structured use where a conferencing capability is just second nature and becomes as integrated as the phone on your desktop.

    Let’s make a couple of assumptions here and project towards a possible launch. As we noted here there exists a plausible “chargeable model” for premium services as soon as you have more than one profile you can potentially have the profile “stuart” and another “stuart’s meeting room”. Stuart’s meeting room has auto answer enabled and is on hold at any time the room is empty. It may just be playing my itunes files. Should someone enter then a persistent reminder to me is provided. The presence of those in Stuart’s meeting room could be made visible to others on my buddy list or say to those on my corporate profile list. It would be nice to be able to share the topic too! Sorting by profile is bound to become a premium feature. Similarly the conferencing feature that enable group chat will also enable group notification to all that are subscribe to that profile. Notifications may also involve auto call features.

    Thus my “who’s online” window increase to show which of my buddies are running public conference capabilities and their topics. They may even have the times scheduled and present. So this is the formal aspect of arranging virtual meeting spaces. The informal aspect is just the same as it is in a physical space. I see a few people over the cubicle going into a meeting I think I need to catch them and so I walk down the hall at the appropriate minute. In our virtual system I see that Bill and Bob are in a conference call with agency exec Sarah and I just got an update from Fred on our budget. I can IM in, or simply join the conference. What was once done inefficiently physically may now be done even better virtually. In a world like this the majority of my calls to customers are conference capable and topic visible. Concurrently my boss might be in another conference and yet they could put their participation in that one on hold and join mine if it makes sense. IM backchat can make these introductions even more seamless. Thus the power of Skype’s conferencing solution is even more powerful than you might at first glance expect.

    By talking the cost of bridging and joining additional people into calls to zero the approach to business calls will change. While many calls may remain one on one, more collaborative calls will accelerate decision-making. Creating sales call environments where multiple “expertise” is available at a click or customer service environments where you aren’t transferred to a supervisor but joined by is a powerful capability. It’s a small step change. It’s also a killer for current online call centers. Under skype you can patch someone into the conference and then put it on hold while you start with another caller. It is also functionality that the traditional telephone structure has not been able to bring us.

    What’s most interesting about this observation is Skype has no need to make its basic conference calling capability chargeable for less than five people. Premium services would use the multi-profiles and thus enable the “virtual room” features. That’s a seats model in companies and in the home. There are other slick things that can be done to the sound to add additional value to conferencing. For example stereophonic placement consistent with the multiple pictures in the call window. 3-D stereo is also a must for gaming applications.

    On Gaming and the Skype conferencing capability:
    Take a look at X-Fire and now ask Skype to activate it or partner with it as some sort of plug-in..

    Xfire automatically keeps track of when and where gamers are playing PC games online and lets their friends join them easily. It works regardless of game type, server browser, or gaming service that a player is using. Xfire eliminates the hassles of running multiple programs like IRC, instant messengers, or in-game buddy lists to keep track of when and where a gamer’s friends are playing.

    Given the low cost of conferencing via Skype it becomes the gamers natural companion. For game developers and providers it makes no sense to centralize a large rack voice server when friends would rather play as a team and enter battle. If you are a game company you invest in porting your soundscape into Skype on demand. It’s just another chargeable or premium aspect that Skype can provide. So whether you are WebEx or Electronic Arts the phone system is free. For the games the effort goes into piping sound and location in the game into the conference. That may still provide some challenges…..

    Potential Skype Talkback conference:
    Some months back I suggested that Corrante sponsor for the first Live Panel broadcast on Blogging using Skype and involving audience participation. The potential was proven with some experiments where callers from around the world could call into an internet radio show. Or try this one. Now that Skype has a simple conferencing capability a similar experiment should be tried.

    Here’s how it would work. Using TDavid’s orginal approach set up two computers and connect output and input perferably by a simple mixing board. The second computer is for generating the live feed via shoutcast and winamp to the web. Start your conference on the host computer. Invite up to three other experts in. Start the discussion. During the conference all of them can receive questions directly from the audience. Concurrently run an IRC channel. The conference moderator can call individuals who have submitted questions and bring them in and out of panel discussion.

    In this realm and with the discussion above it seems only natural that notification for “public” conferences may all go out by RSS and perhaps Atom feeds would enable more secure invites!

    That’s enough speculation for one post.

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