I am 100% tired of the topic of operators boycotting Windows Phone due to Skype. This has been introduced by Tomi Ahonen – known Microsoft/Elop antagonist – and I’ve covered it in this blog before.
The idea that operators hate Skype and do anything to slow down its development is compelling but the logic (or the lack of it) breaks down rather quickly. You see in order to boycott Skype the carriers are supposed to boycott Microsoft (who owns Skype) and Windows Phone (MSFT’s own OS). And while performing this masterminded boycott carriers sell 95% of their phones running Android or iOS – both having better Skype app (and in many cases better Skype integration) than Windows Phone.
Under the boycott theory marketed by Ahonen this action of selling Android and iOS devices magically slows down the Skype adoption rate and “punishes Microsoft”. Please do understand that with all the losses Microsoft has done on Windows Phone they just reported a quarter with best ever revenue (and close to best profits). That is how little the low market share of Windows Phone damages Microsoft, that is the amount of effect this non-logic Skype-originated boycott would be having on Microsoft if it was true.
On the other hand:
Microsoft by its current strategy is “Devices and Services” company. What comes to the services part, OS is irrelevant. For a service it doesn’t matter if there are 300 million users making Skype calls on Windows PCs, on Android Phones/Tablets, on iPhones/iPads or on Windows Phone. What matter is that ALL of those platform provide access to Microsoft services.
But the theory thrown by Mr. Ahonen has quite interesting approach: By that theory carriers see that Microsoft pushes Skype to desktop/laptop users of Microsoft products and this boycott is the way carriers prevent those users from moving to use Skype also on mobile. If Tomi Ahonen really thinks that carriers expect their customers to be so dumb they can’t install Skype from App Store, he better cross the “I know this industry and most of my clients are the carriers. I know how they think” part off from his recent blog post.
This all said, the topic takes so insane start I really don’t have time or energy to do more on it but Dean Bubley wrote a comment on my blog roughly two years ago. While I have no regrets lacking any more posts on the Skype topic ever since, I do regret that I didn’t turn Dean’s comment to a blog post before. Two years later it is still equally valid (and some points about technologies being late are more true now than they were then). So here is his comment, in full:
The relationship of operators with Skype (and other Internet VoIP & IM players) is a very complex one which I think is underestimated by both Ahonen AND Elop.
The opinion you get very much also depends on which person you speak to an a given operator, and how much they understand the dynamics & technology around voice and VoIP. It’s probably true that the people who select handsets don’t have full knowledge of the industry’s wider strategic machinations around voice and personal comms. If you speak to an MNO’s head of voice services you get a more nuanced view.
Plenty of operators have already partnered with Skype (Verizon, Telus, 3, KDDI, Telkomsel etc) to drive data attach-rates, reduce prepaid churn or for other reasons.
Plenty of operators have their own Skype-style VoIP offers (what I call Telco-OTT) or are actively partnering with various VoIP players. Telefonica’s TUMe and T-Mobile Bobsled are the most well-known, but there are many others as well
Privately, many telcos (both fixed and mobile) know that IP-based communications is inevitable, not least because they themselves are transitioning to all-IP networks which *need* some sort of VoIP. The issue comes down to whether “official” standards are a) good enough and b) early enough to protect their historic revenue streams. They also know (implicitly if not explicitly) that connecting two people for them to talk to each other was a neat, valuable trick 100 years but now isn’t really anything that special. They don’t want to accelerate the shift, but as operators move to bundling approaches to pricing the explicit value of standalone “telephony” starts to matter less.
LTE brings a huge challenge, as VoLTE (the official VoIP stadard) is at least 2 years late (I’d say more like 5 years) and has no clear business model given that prices of telephony are falling (as is usage in many places). Partnering with Skype or its peers is a Plan B, while Plan C is Telco-OTT, and Plan D is allowing users to “bring their own voice”).
Overall, it’s possible that there are some kneejerk or emotional reactions to the Nokia/MS/Skype linkage from people who don’t understand these issues. But a rational discussion would point out numerous flaws in that logic – especially as Skype is (as Elop points out) already well-evolved on iOS, Android and PC platforms.
It’s also worth noting that the VoIP capabilities of Microsoft’s Lync (or its ownership of Skype and its Azure portfolio) doesn’t seem to stop operators offering happily Office 365 as a Cloud SaaS offering. Maybe fixed operators are just a bit more mature about this sort of thing.
If any operators want a full analysis of Skype, the “future of voice” and other VoIP platforms, please get in touch with me at information AT disruptive-analysis DOT com
Once again, thank you Dean.
ADDITIONAL COMMENTS FROM ME:
If you are Vodafone UK offering unlimited voice calls and SMS in your plans, you really don’t care whether your customers use Skype, WhatsApp, iMessage, LINE, Facebook or none of these. (Actually, you do care. You WANT them to use Skype, Tango, Facetime or alike for video calls so that your customers will crave for constant high-speed connection to Internet, a 4G data plan and will pay higher monthly fees.)
Also: Some partnerships were mentioned by Dean. Take Verizon as an example. Already before Microsoft acquiring Skype they so hated Skype that they added instructions to their webpages for downloading Skype mobile “by visiting the Skype mobile page or by texting keyword “SKYPE” to 2255 from your mobile phone“. (Oh the irony of using SMS for that.)
And what about today? Instructions for international travelers on Verizon website recommends to stay in contact to home (using a Global Data feature from Verizon and/or over Wi-Fi) via social networks such as Instagram or Facebook or via…
And last (but definitely not least) the Skype as a threat to operators compared to the other services on field: Tomi Ahonen explained it to us that in order to compare the size of OTT services you need to understand that the more users the service has, the more of your real life contacts you are able to find, more attracted to that service you are and the more people get invited. His guideline was to user power of two to compare the respective sizes, i.e. a service with 3 times the users is 9 times as big of a threat. And by this comparison he made it clear that Skype is the baddest of them all since (in his words) Skype “is 6 times bigger than iMessage (ie 36 times more dangerous) and it is 12 times bigger than BBM (ie 144 times more dangerous)“.
Let’s keep that math.
Next figures are from 2013 and I use them merely because Skype and Facebook numbers are dated close to each other (and therefore being suitable for comparison). All of the services have grown since, of course, but they rarely report numbers like this.
Skype had 280 million active users each month, according to Skype itself. In his post dated a year earlier Tomi listed 900 million registered users but it’s not the same thing. Guess what? At the same time Facebook reported they have 1.06 billion people using the site each month (once again, not just registered to service).
By offering free Internet calls (currently in 24 countries and only on iOS & Android but I’m sure it will expand), Facebook is – by Tomi’s math – over 15 times bigger OTT threat than Skype!
(And this is before Facebook bought WhatsApp – that has 400M active monthly users being twice as big OTT threat than Skype by itself.)
Wonder how come Tomi forgot Facebook from his OTT post? It was only mentioned once and that was in update from May 11th, mentioning it being used over twice as much as Skype (in US statistics). Over twice as much as Skype!
Yet Facebook never registered under his radar. 🙂
So get this:
When Tomi Ahonen – on his mission to prove that Microsoft in mobile is doomed – talks about OTT services, he does not even mention Facebook.
When chief of Sonera (consider Sonera as “Verizon” of Finland) in interview December 2012 names the service which has eaten into their SMS revenue – actually pretty much blames it for current situation where SMS revenues are declining – the service he mentions is Facebook.
There are plenty of real and even daunting challenges that MSFT faces in mobile but Skype is not one of them and Tomi’s fixation with it makes no sense.