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Spillikins #119. Skype is Going on Sale Ц Last Days of Freedom
Another business trip for me this week and again in the US. I can't get used to the jet lag and transatlantic flights. I have a bunch of interesting news for you concerning various services but I am going to talk about them separately. This week Bert Nordberg the Sony Ericsson CEO is going to visit Russia on his farewell tour Ц by the end of the year he will initiate a wave of layoffs in the company and then leave. The formal reason for that is the Q2 2011 losses as well as the coming losses of the second half of the year. While the Q2 losses are apparent the second half results are heuristic and are obvious from the fact that the company's products are not very popular. Sony Ericsson Play failed on all markets and Arc sales are very low and the company can do nothing about it. There is austerity rhetoric in the company that also presupposes the closure of the Kiev department. Enough for the sad news Ц the week was reach for events. I also want to wish you a nice and productive week.
Undoubtedly, the news that Skype has been sold and not to just anyone but to the Microsoft corporation was the most discussed event of the last week. Opinions about this deal range from highly negative to quite positive evaluations. Most of the critique was not based on the deal itself but rather on emotions towards Microsoft.
Only a few facts are known about the deal: the price is $8.5 billion which is much more than the actual market value of Skype. Several sources close to the deal report that the initiative to sell Skype was put forward by its investors Ц eBay and Silver Lake Partners. They have been looking for a buyer for a long time because despite the great number of Skype users in the world the company remained unprofitable and even the IPO would not solve this problem. So the Microsoft offer was a blessing for them that actually solved all their problems. In the same time it has been announced that the Skype development strategy will remain unaltered.
Microsoft announced that their priority is to integrate Skype into XBOX360, Kinect and Windows Phone 7. The irony is that today WP7 is the only smartphone platform that still does support Skype while it is available on Android and iOS. The independent Skype saw the Android platform as its priority but now things are going to change. The problem here is that there are no good prospects for WP7 and whether it will support Skype or not is not a question of essential functionality but rather of the general development of the OS. So the exalted comments of some investors in regard to Nokia have been dictated by a mere desire to hear good news. The short growth of the Nokia stock turned into a rapid fall. Skype on a mobile platform can be profitable now only if WP7 becomes the most popular mobile OS which will not happen. Microsoft have noted that they are going to continue Skype support for other platforms but their statement have been rather vague.
However, the turn of events will not depend on Microsoft's initiatives but on the reaction of other market players. There is also groundless rhetoric that some carriers, especially AT&T Ц the main MS partner in WP7 promotion, may see cheap VoIP as a threat. The carriers are ready and anyway will have to compete with VoIP. So to them Skype propriety will be rather a tool than a threat. But this is a domain of pure speculations and I suggest we set this issue aside for a while. Let's just keep in mind that the carriers will not be sabotaging Skype.
There is however Google that has a similar service called Google Voice and it will be actively promoted on future Androids. Google does not need a competing Microsoft product and Skype might get banned from the Android OS. This would be a heavy blow to Skype. I must note that there have not been any official statements from Google in regard to the Skype deal so far. But we may see Google to take some actions in Q2 2012 when Android is scheduled to receive VoIP functionality (a new Voice version with new functionality).
This Microsoft purchase is completely beneficial for Facebook, as strange as it may seem. Microsoft has purchased a small stake in the social network and will probably allow Facebook to use the Skype infrastructure for Facebook Chat and other applications. This will be a great symbiosis. I think we are going to see a very handy fusion of two services. Also the Microsoft corporate services will receive some extra functionality.
Now about the downers Ц unfortunately, Microsoft has already declared that advertising in Skype will become more aggressive that means there will be more ad banners and other ad formats. The users never like it and as a result some of them will switch to Skype alternatives. By the way, tell us what VoIP you know and use and I promise to discuss my findings in the next issue of the Spillikins, thanks in advance.
There is also another angle at this deal. On the very first day after the deal the Skype blog videos became inaccessible without a Silverlight plugin Ц Microsoft are taking a hard line and use every opportunity to promote their technologies. This is just a tiny but speaking for itself detail.
I wonder what would happen to the Skype developers in the first six months after the deal Ц will they stay or establish new companies or leave for other employers? It is also risk factor for MS which should not be underestimated.
What do you think about this deal as a Skype user? What will be the consequences? Do you think it will be good for you as a user? Sharing is much appreciated.
I find it funny the way companies fight over the AppStore brand. Apple was the first to create an application store that they renamed it into AppStore and patented this brand following according to patenting routine. A coalition of HTC, Sony Ericsson, Nokia and Microsoft are now attempting to annul this patent claiming that AppStore is a common expression. But even if they succeed it won't make their app stores any more successful. Besides a name a company needs an understanding of the situation which Apple's competitors lack.
About a week ago I received a commercial LG Optimus 2x as a gift and I have been using it as my primary phone since. In the review of this phone I was saying how fast it is Ц one of the fastest on the market. There are two weeks left before my Samsung Galaxy S II arrives so it is only natural I want to compare this phone. Also I am now writing a review of Optimus Black which I liked back in January and I wanted to compare these two as well. Frankly, I am disappointed. The release version of Optimus 2x with the new firmware is very laggy, sometimes it is painfully slow. Synthetic test do not show any significant loss of performance but in the practice proves different. I have no doubt that it is the fault of the firmware. The company was too hasty trying to get this phone out on the market before other dual core phones and took a sloppy path Motorola followed with their Atrix 4G and the Xoom tablet.
Unfortunately, the software on P990 and P970 is basically the same I found same issues on the little brother. It also lags, crashes and the camera works painfully slow. LG paid little attention to phone testing and subsequently very interesting handsets are going through growing pains. This week I will publish my review of LG Optimus Black Ц the phone is very interesting but its performance is unstable.
In Europe the LG Optimus 2x even signed a petition to the company asking to fix the phone's firmware. Taking into account the sales rate the number of the petitioners might get pretty impressive. You can read the petition here.
The main Google developers conference gave a number of news concerning Android. A new version of Android has been announced Ц Ice Cream Sandwich. I have mentioned this OS version before as an attempt to once again create a unified platform both for phones and tablets. There will be no more divide between a 2.x and 3.x version for phones and tablets respectively. The company did not announce any specific terms but it is logical to presume that Ice Cream Sandwich will not be out until the end of this year or more likely the beginning of 2012.
Meanwhile, Google updates Android Honeycomb from 3.0 to 3.1 Ц the first tablet on this OS will be Samsung Galaxy Tablet 10.1 which will be released in early June. In the end of May this update will be available for Motorola Xoom 3G. You wonder why they ignored regular tablets. I think this is because the update concerns mainly certain connectivity functionality.
The new statistics about the number of Android activations is out - now it is about 400.000 devices a day which means that Android has become the most popular smartphone OS in the world. I expect the growth to continue.
The company has launched the Google Music service for the US market Ц it is a music sharing service built around Google of course. So far the service is undergoing beta testing and is available only by invites and only in the US. If you are a US resident you can download the client on Android Market or following this link: http://music.google.com.
The music industry did not show a lot of enthusiasm. There are rumors that Google has failed to sign agreements with the major music content suppliers Ц this is a big disadvantage that can hinder the development of this service or even kill it.
And finally you can rent movies on Android Market. This is an adequate response to iTunes Store Ц it will be very interesting to compare the range of the movies and the prices between the services.
But the main news of the conference is that Google is going to control firmware updates on Android phones. The company has announced that it will be demanding the manufacturers to support their phones with new firmware version for at least 18 months after the release. This will allow most phones to receive latest Android version and provide an illusion of updating. Why illusion? Because it is already a common practice for most phones Ц within the 18 month life cycle of a model it receives one OS update and then the support is ceased. So this initiative leaves a natural skepticism.
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Published 17 May 2011
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