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October 31, 2003
Skype Hype
Skype has been making the news lately, the new voice IM client from the same people who brought us the peer-to-peer music sharing system KaZaa. With over two million downloads since its launch this summer, and hosting over a 100,000 simultaneous users, Skype hype would have us believe that this is the Second Coming. Actually it is more like the fourth or fifth. The valley is still littered with the ashes of the companies who collectively raised hundreds of millions of dollars and used hundreds of man-years to develop essentially the same thing - free internet phone calling through your computer. Some of the companies are still running, but at orders of magnitude lower valuations. My former company Multitude's product Firetalk was one of the more feature-rich of the Internet phones at the time. We too had over two million downloads of our Windows application and tens of thousands of simultaneous users. The current version of Skype is reminiscent of the early versions of Firetalk - presence information, buddy lists, instant messaging, do-not-disturb signs indicators. The main difference is that Skype is built on a peer-to-peer architecture, which although limiting in conferencing functionality (Firetalk's server architecture allowed up to a thousand people on one conference call), is ultimately more scalable at a fraction of the cost. Unlike previous peer-to-peer Internet phones, Skype can work through firewalls, making user adoption much easier.
What Skype may find, as did we at Multitude and our colleagues at Hearme, Dialpad, Lipstream, and PhoneFree is that people don't really like to talk through their computer. It's awkward. Unless you have a headset, every conversation is a speakerphone conversation, and unless you have external speakers, not a very good one at that. Headsets are cumbersome as well. Although many tech friendly readers of this post may be happy with their headsets, cellular or otherwise, the masses of consumers still have a problem with them and for a good reason. We are used to the physical interface of the telephone. It's comfortable and optimized for a quality voice experience. Skype promotes its voice quality, but it is missing the fact that quality has more to do with the entire conversation experience, including latency, full-duplex voice (the ability to talk over each other), packet loss, and a familiar physical user interface.
Skype appears to be finding its following in Europe; most of the users listed in their directory are from places other than the US. This may be where Skype thrives. While deregulation and competition in the US have driven the marginal cost of domestic long distance down to zero with unlimited dialing plans, most people in other countries still pay steep per minute charges. Avoiding high long distance charges may offset the inconvenience of talking through a computer. The gimmick of voice at least will help establish Skype as a major IM player, and as we know, the more people you have on the network, the more valuable the network is to all.
Will Skype fulfill its promise as an end run around the phone companies? In my opinion, ultimately no, though it may do a good job of competing with AOL, Yahoo, and Microsoft's IM clients. What would be a great product in this space is something that lets you program sophisticated phone capabilities for your phone through a simple web browser, your own soft PBX so to speak. However, I can tell you from experience that you can’t get there from a Windows IM client.
BTW, here's a good blog on Skype: Unbound Spiral.
Posted by elise on October 31, 2003 to Computers
| Comments (3)
Comments
Been using SKYPE for a few days between Singapore and California.
Sound quality: B+ using broadband on both sides
Equipment: inexpensive mike or speaker phone
Easy of Use: B+
Intangible: A . Leave the Skype on as long as we want. Work and chat, no hurry. Speaker phone is able to pick up all the conversations going on among family members that are doing different things in the family room. Can join in with the conversation if wants to. Very relaxing. Good for brainstorming which would not work for direct phone call, too expensive. Good also for reviewing projects that might take hours.
Posted by: disney1234 at November 12, 2003 1:25 PM
what the hell happened to Firetalk? no-one seems to know. It was the greatest and then mysteriously fell off the planet??? Please Explain (if you know)
Posted by: Alex at September 7, 2004 8:51 AM
Hi Alex - Firetalk went bankrupt in April 2001. Not enough people signed up for the premium service while at the same time the advertising rates were plummeting. We tried to reposition the company as a service provider for CLECs but were unable to raise money to take the company in that new direction. At the time companies were crashing and burning all around us and no one could raise money. Within months of each other, Lipstream, Hearme, and Firetalk went out of business. In the bankruptcy PalTalk bought the Firetalk brand and user list. Jim Morris, who was the architect of Firetalk, has launched a new service based on the Firetalk technology at www.e4chat.com.
Posted by: elise at September 16, 2004 3:53 PM
