Monthly Archives: May 2008

Skype a success? Define success.

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Alec did an interesting post about the coming-of-age of his Voice 2.0 Manifesto. But in the first paragraph, he says something I have to take issue with:

I wish them luck, if so. If there’s anything that the last 4 years have shown, it’s that it’s hard to build a PC based soft phone. Skype is really the only company that has made a success of it, and it’s only in the last 12 months that sound quality has reached acceptable levels.

Skype a success? Sound-quality may’ve improved, but as a business, Skype is anything but successful. Several things worked against Skype’s success over the last several years–and the majority of them are merely tactical shortcomings on the part of Skype’s management:

  • Relying too heavily on viral marketing rather than traditional brand awareness and even TOMA.
  • Not distributing prepaid calling-cards to retail a la iTunes store cards. Heck I can buy these in my grocery store. Imagine if the same convenience were afforded to would-be Skype customers. Sure, credits are prepaid, but selling them in traditional retail reinforces the Skype brand and would’ve created an uptick in adoption to people my age (31) and older.
  • No SIP. Makes the Skype network unattractive to businesses. Look, I’m not asking Skype to put SIP in the client, but SIP would be a great value-add to the SkypeOut/SkypeIn gateways around the world, especially when you consider the energy behind SIP-based products like Microsoft’s Office Communications Server.
  • Not integrating with eBay the way everybody wanted. Let’s face it–that was the only real tangible opportunity hidden in the multi-million-dollar Skype buyout, and the company dropped the ball. Years have passed and I still don’t have the option to click-to-call an eBay seller. Moreover, it was Google who beat eBay to the punch by putting click-to-call in their own AdWords ads.
  • Not offering client access using familiar technologies so people could expand the base platform. I mean, come on. VBScript, JavaScript, even Applescript. Where’s the client-side support that makes this thing accessible to mere mortals?
  • Call-recording.
  • Some kind of social network integration from the Skype client. Facebook status. MySpace status. Profile links in the buddy browser or better yet, a profile browser like Spyder build into the client. Yes, I know this is outside the bounds of Skype’s core functionality, but remember, we’re talking about the reasons they failed to receive mass adoption.
  • Free-calling-in-exchange for ringbacks with advertising in them. Skype alone was/is in a position to succeed with this model.

MS and Apple trade cash positions–here’s why

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Apple is not the startup eater that Microsoft is. Nor is it the wontonly-investing-into-ill-fated-projects type of company it used to be (and Microsoft remains).  When things change at Apple–like the introduction of new projects and initiatives, the world stands alert and gets excited.

Why? Because Apple, while breaking new ground at what often seems to be a snail’s pace–that is, folks always talk about things they wish Apple would do but Apple never does–Apple has identified sharply-defined, effective market verticals to embrace while stockpiling tons and tons of cash.

Microsoft once had 64 billion (with a b) in the bank. Today, they have 25 million (with an m). Meanwhile, Apple’s billions grow.

So, for Apple shareholders, the question is whether to be happy with the cash position or to begin wondering what their investment is going to DO with all that cash.  I mean, does Apple start taking bigger risks now? Or are things like a video-game console or a car-puter still too risky for Mr. Jobs?  Yet the paths to these ends are obvious.

The iPod Touch is already the basis of a car-puter. All it takes to complete that puzzle is GPS hardware.
And the Apple TV, for all its simpleness, already has graphics, storage, and memory horsepower to compete with the PS3, Wii, and Xbox. So could Apple do these things, with all the cash they have? Sure.

But will they?

Part of the reason Microsoft is where they are today is their history of arrogant rampantness. Yeah, we can dominate any vertical, right?  Not so, apparently. The Xbox isn’t the cash cow MS would’ve liked. Neither, then, is Windows Mobile. For that matter, neither is the Mac Business Unit.  But Microsoft dived right into these things believing that only dominance across the board would guarantee survival in the long term.

It turns out that you only need to dominate a few things–like music distribution–to survive, and, in Apple’s case, to flourish.  It’s still better to innovate than absorb, and creative thinking beats strategic thinking.  This is how Apple is beating Goliath: instead of fighting the battles Microsoft picked, they’ve created their own battlefield, and its name begins with a lower-case “i”.