Why the Skype-Facebook deal is awesome for Facebook

Via GiGaOm Pro:

Skype, the Internet telephony company that is in the process of being acquired by Microsoft, has one ambition: to get to a billion users, even if it risks the company losing control over its customers. At the same time, the company also wants to become synonymous with video calling.

“For us, the most important thing — our goal is a billion [users] and this will help us get there, ” Tony Bates, chief executive officer of Skype said at a press event earlier today. He is betting that Facebook will be able to get Skype’s paid products in front of more people. “I did allude to the fact that there’ll be a way to get Skype paid products,” he said.

“Today is the start of a long strategic partnership which will include exposure to free and PAID products for all Facebook users. Makes perfect sense for us,” said Skype spokesperson Brian O’Shaughnessy. He pointed out in an email that CEO Bates wants Skype to equal video calling, and this helps the company get to that point — and will help make ”video is fundamental to the new social construct.”

Skype had added support for Facebook in its Windows client recently, but it is still not clear how that integration has worked out, both in terms of generating revenues and more engagement between the two services. In the fourth quarter of 2010, Skype averaged more than 145 million connected users per month. Facebook has about 750 million members.

Same Skype, Just Thinner

Bates pointed out that Facebook’s video chat was using the same peer-to-peer technology that is used by Skype. “Same free Skype service, but trimmed down to fit within Facebook,” is how he described it. In order to use the service, you need to download a java plugin — if you don’t have it installed you are invited to a video call, and given the opportunity to download the plugin (you don’t need a Skype account to use the service).

Even if we buy into the argument that Facebook can get Skype a lot of new customers, I still think it is a highly risky strategy, and it runs the risk of the company losing a grip on its customers. Let’s remember that at one point even IBM thought Microsoft was only going to help them sell more computers and make more money.

Facebook could learn a lot more about Skype’s customers through this partnership, and then try and woo them into Facebook and obviate the need for Skype all together –theoretically speaking, Facebook could replace Skype with its own video-chat backend and no one would notice. In fact even today, if you don’t look hard enough you will miss that Skype logo when the chat window opens up. It is there, and yet it is not there.

Good for Facebook isn’t Great for Skype

Furthermore, even if Facebook plays clean and straight, how much does Skype get from this deal. My skepticism stems from the fact that Facebook is skewed almost entirely towards average folks, while Skype’s premium video services are largely used by professionals — whether they belong to a startup or work for a big company. More importantly, if Google’s Hangout becomes popular like I predicted, Facebook won’t have an option — it will need to roll out group video chatting. Guess what is Skype’s premium service? Group video chatting & conferencing. And let’s not forget, Skype has some challenges around monetization, without Facebook.

Some of my fellow Skype watchers feel that it is not such a bad deal. Alec Saunders, a veteran of internet telephony argued that since Skype is too quirky for his wife and too weird for his mother, Facebook’s version actually might be a good thing for Skype usage and will get them to a billion people.

The questions is to what end? Andy Abramson who blogs about internet telephony believes that in the end it will be about Facebook vs Google. To that extent I agree. Ironically Skype, which at one point wanted to turn carriers into dumb pipes is being turned into a dumb pipe itself.

Don’t get me wrong — I am glad Skype and Facebook friended each other. For the record, I had suggested last year and again earlier this year that Facebook buy Skype. Why?

In one swoop, Facebook would dominate what I’ve maintained is both the new age and classic social networking. They will have people’s credit cards; they have their real-world phone information; and in the end, they have a better, more useful, social graph than Facebook itself…..A simple search box inside the Skype client, and the two companies are starting to take attention away from arch-nemesis, Google.

Obviously that didn’t come to pass. Instead, the next best thing happened. Facebook’s rich grandpa – Microsoft decided to spend $8.5 billion on Skype. And somehow I feel that Zuckerberg just got a sweetheart of a deal.

Facebook + Skype = Video Chat. Is it finally happening? – Facebook

Yesterday, TNW posted that Facebook is about to announce something awesome. Speculation runs high that Facebook will finally release its iPad application, filling a hole which has been desperately wanted by its mobile-loving users. But another consideration is that Facebook is finally partnering with Skype to offer live video chat to its users. Whatever product is released, it has been built by Facebook’s 40-person Seattle team.

And do you know what is near Seattle? Microsoft. And what has Microsoft just bought? Skype. And have you heard how chummy Facebook and Microsoft are? While they’ve had their disputes in the past, the two are financially in bed with one another. Facebook’s ties to Microsoft began 2006 when they first signed an advertising deal; the two companies still continue to have an ad partnership powerful enough to make Google shiver. And no small detail: Microsoft has owned 3% of Facebook since it invested $240 million in the social network in 2007.

We reported on the possible Facebook and Skype partnership last September when discussions between the two companies reportedly began. After numerous Skype updates, including an October update that allowed Skype 5.0 users to SMS, chat or call their Facebook friends via Skype right from the News Feed, news remained quiet. That is, until March, when rumors swirled again starting from a report in Bloomberg that Facebook had resumed talks with global VoIP service Skype, a partnership that would offer Web video calls to anyone with a Facebook account within the social media platform.

Tech Crunch’s Mike Arrington has gone so far as to confirm this speculation. He writes: “Next week, says a source with knowledge of the partnership, Facebook will launch a new video chat product, powered by Skype, that works in browser…The product has been built on Skype and will include a desktop component.”

via Facebook + Skype = Video Chat. Is it finally happening? – Facebook.

Carriers stunned by Apple’s execution of SMS – Jobs has killed our cash cow | TechEye

It seems that the carriers are less than impressed with Steve Jobs’ latest software offering.

The new iMessage instant-messaging feature for iOS devices, much like Blackberry’s BBM, aims to kill off the carriers’ lucrative SMS business and what seems to have surprised everyone is that Apple failed to tell its partners that was what it was doing,

Daring Fireball’s John Gruber’s sources say Apple’s carrier partners only found out about iMessage when Jobs revealed the service on-stage.

If they had known about it earlier they might have had a word or two in Jobs’ ear about how they might not allow the service.

While iMessage does use a data connection, potentially adding to the amount of data allowance each user will require, it could also significantly reduce SMS and MMS use. Aside from cross platform messaging, TechCrunch agrees too – it will be a severe blow.

The iMessage functionality will be an integral part of iOS5, which means that it will be used far more than any SMS service offered by the carriers. True, they already have to compete with similar functionality from Skype but they might not like the idea of being shafted by their own partner who is flogging a phone which is heavily subsidised by their cash.

If Gruber is typical of iPhone users, then they will all cancel their SMS plans the moment iOS5 comes out. That is, if the carriers allow phones to upgrade to the new operating system with iMessage intact.

We are actually with Jobs on this one. SMS technology is extremely out of date and incredibly overpriced. However, as a matter of tact he should have wrestled with his partners before going public with it. He does rather seem to see them as slaves to his latest idea.

via Carriers stunned by Apple’s execution of SMS – Jobs has killed our cash cow | TechEye.

Breaking news! Microsoft Buys Skype: What the Web Is Saying: Tech News and Analysis «

Very few people saw a Microsoft deal for Skype coming, so when Om first reported that it was in the works, the idea was met with a lot of skepticism. Now that Microsoft has confirmed the deal and the price of $8.5 billion, the news is still leaving many scratching their heads. Others, however, say there is some wisdom in the move — although it still comes down to Microsoft making the deal work, which is far from a given.

Many are wondering if Microsoft can actually make good on the purchase and not botch it, something most large corporations have a habit of doing. Dave Winer, the father of RSS, expressed what a lot of people are wondering:

“Can’t imagine really using a Microsoft product again. How can they not screw it up?

Peter Bright of Ars Technica questioned the price of the deal, which comes down to more than $1,000 per registered Skype user. He said Skype, while not a well written piece of software, could be valuable as an addition to Microsoft’s Messenger/Lync platform, though it also represents a lot of overlap with existing products. It could be integrated into Windows Phone 7 but that could make it unattractive for carriers. And he wondered how lucrative each customer will be for Microsoft.

via Microsoft Buys Skype: What the Web Is Saying: Tech News and Analysis «.