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Skype's Sale As Media Feint
ansak writes "Bob Cringely's latest article shows evidence that some aspects of the 90s bubble are indeed back: Why would Rupert Murdoch think of paying $3billion for a mostly free online service like Skype? But his last line shows a keen understanding of Murdoch's skills and methods: 'By putting Skype in play, he distracts for no money at all most of the major media companies. And while they try to figure out how to respond to VoIP, old Rupert will be attacking them on some completely other front. He'll be stealing their shoes.'"
Bob Cringely's latest article shows evidence that some aspects of the 90s bubble are indeed back: Why would Rupert Murdoch think of paying $3billion for a mostly free online service like Skype?
This is the classic fake left and go right. It has been around as long as competition in business. Why is it that as soon as you throw in a 'net, eThis, iThat, or whatever other technology related slang, people immediately get stupind and forgetful? It's business plain and simple. Make your competitor concentrate on one part of the market and you have free reign in the rest. It's that simple.
I have never understood why Skype is considered good quality VoIP. Perhaps my experience is the only bad one? I tried Skype for an international chat whether the other machine was on a dial up connection (mine on DSL). Skype worked well only the first time and all that I got on later attempts was weird voice quality, long lags, etc. Nowadays, I have settled on Yahoo Messenger which does an amazing job of voice chat - beats the latest MSN Msgr hands down; rarely a lag, excellent quality, near instant call connect. I have uninstalled Skype a long time ago. Did anyone else have a chance to compare Skype with the IM voice chats?
$3b is a lot but Skype has a large and loyal user base. They could tie in a lot of things like: legal online music sales, expanding SkypeOut and SkypeIn and banner ads in the software. With Skype expanding out of the PC (like how Motorola is adding Skype to some of their phones) it has a lot of potential.
It's a little like someone looking at buying Apple. While they have good hardware and software they are so much more. Maybe that's what Murdoch sees for the future of Skype.
But is it worth $3b? I don't know.
"I hate to advocate drugs, alcohol, violence or insanity but they've always worked for me" - HST
Perhaps there is a connection.
You are being MICROattacked, from various angles, in a SOFT manner.
To call his son when he moves to Australia.
Great Cingely post. Rupert has been "feinting" on Internet matters with his peers for over a decade. Notable is his speech to his peers a few weeks ago. See http://mp.blogs.com/mp/2005/04/ss_15.html His recent announcement of a Fox Internet unit also has these elements. More here: http://mp.blogs.com/mp/2005/07/on_news_corp_cr.htm l
GizmoProject uses SIP, which makes it a little bit more open.
I like Cringely's articles because they are always insightful, always look at things from a different angle, and almost always feature a prediction that I find very unlikely but compelling enough to make me look at the given topic in a different light (which is strikingly different from Dvorak articles, which are always inept, look at things from the same angle as everyone else but with cracked bifocals, and prove the adage that even a blind squirrel finds a nut from time to time).
That having been said, Skype is a very dangerous thing for the big telecom providers. As Cringely points out, the big phone companies can't buy it to kill it because something else would take its place. But he misses that this also holds for cable companies.
I use Skype Out regularly to call internationally, and I know that nobody calls to PSTN networks for less unless they own the switch on both ends.
Comcast et al want to sell VoIP on top of broadband, but Skype (or its successor) is free with broadband -- which brings up the whole bit about synergy and technical capabilities and whatnot.
Since the whole Skype backbone is P2P there really isn't a whole lot of infrastructure involved, other than the database for paying customers. There's no real physical infrastructure because the users are the network. As I understand it, Skype only has a few dozen employees (but I may have read that a while ago, before they had 20 million regular users).
The fact that there's basically no infrastructure means that it will be hard for a big incumbent operator to leverage its network size to take advantage of something like Skype. The whole Skype network costs its operators next to nothing to run right now, so how is MegaCableTeleCom, Inc (with all its buildings and employee unions, and executive bonuses, and specialized equipment, and miles and miles of plain-old-copper/coaxial/fiber lines, etc) going to keep it cheap enough to compete with free without losing?
Cringely's right -- Murdoch won't pay $3 billion, but somebody probably will. Only what's for sale is not the network but the customers. And those customers will flee in a minute if whoever runs Skype starts acting like a phone company -- cryptic bills, mystery charges, line-carrier fees, connection charges, etc. After all, something better and cheaper will come along any day now. For $3 billion, I'd sell.
I've been thinking about VOIP as a way of ditching my landline. Switch from
$80/mo for landline, local calls, and DSL/ISP
to
$20/mo for cable modem
$16/mo for most basic cable
$16/mo for Vonage VOIP
Total $52/mo, and I get more TV than I got before,
have a phone line in the house (I use my cell more anyway), and prepare myself for the next great thing....Netflix trickle download to TiVO in about 6 months.
Really, I've paid WAY too much for DSL for the last 5 years, in about a week I'm gonna tell the bells I don't need their landline. Its gonna be an interesting phone call to say the least.
But this comes back to the value of Skype...my Italian colleague here in the states talks to his Dad for free every morning at 5AM (our time). That is an unreal technology. Now, he wouldn't talk to his old man so much if it was not free, but it is, and his phone usage would be over $100/mo on landlines, free on Skype.
My other colleague (a Canadian/Israeli double citizen) uses Skype as her landline. Her laptop goes everywhere with her, and she is on broadband about 3/4 of the time, reachable on her Skype phone line.
The phone company landlines are challengeable by VOIP, for a tiny fraction of the cost since the user provides the "last mile" access over broadband. Its a great business model, and I expect Vonage and Skype to make a mint - those two Scandanavians that started Skype are gonna be even richer....