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Category: Skype
November 13th, 2009
Google increases potential of Google Voice with Gizmo5 acquisition
With very little fanfare, Google - wearing its Google Voice hat - this week acquired Gizmo5, which it defined as a “company that provides Internet-based calling software for mobile phones and computers.”
You know where this is going, right? With the technology of Gizmo5 - which was very much a Skype rival - Google has bought itself some technology that would allow Google Voice to become a softphone service, meaning it could place and receive calls using a Google Voice number. Currently, Google Voice is dependent on mobile or landline phones to place or receive calls.
That’s the obvious use of Gizmo5 - but Google isn’t saying that that’s what it has plans to do. In fact, Google is saying much of anything. A post on the Google Voice blog essentially puts the company on record as having made the acquisition but doesn’t reveal much more. The company writes:
While we don’t have any specific features to announce right now, Gizmo5’s engineers will be joining the Google Voice team to continue improving the Google Voice and Gizmo5 experience. Current Gizmo5 users will still be able to use the service, though we will be suspending new signups for the time being, and existing users will no longer be able to sign up for a call-in number.
The obvious integration is Google Voice - but where? Google already has an IM chat service, called GoogleTalk, built into GMail and that’s already empowering users to make video or voice calls. Surely, that service would be better with the ability to place and receive “phone calls” directly from the Gmail interface. And, with GMail gaining a bigger presence in both mobile settings and corporate settings - via the Go Google campaigns - there are some pretty cool “potentials” that could be explored.
I’m trying to think bigger than Gmail, though. Personally, I like what Google Wave is shaping up to be - a one-stop shop for collaborative communications. At some point, when Wave becomes a virtual meeting center, it will need the integration of voice services. Using Gizmo5 and Google Voice, I’m sure the engineers behind Wave will find a way to do that.
For now, though, we can only imagine.
November 9th, 2009
Skype snags chief technology strategist from Cisco
Skype said Monday that it has named Jonathan Rosenberg as its chief technology strategist.
The move comes shortly after Skype settled a distracting legal spat with the co-founders of the company, Niklas Zennstrom and Janus Friis.
Rosenberg most recently was a fellow at Cisco and directed strategy for the company’s enterprise voice portfolio (statement). Rosenberg is well schooled in Session Initiation Protocol (SIP), which serves as Skype’s bridge to the enterprise.
The move to hire Rosenberg sheds some light on Skype’s master plan, which is to become a larger enterprise player. Don’t be surprised if Skype bridges into more collaboration applications as it builds out its corporate presence.
Rosenberg will report to Daniel Berg, Skype’s CTO.
November 6th, 2009
Skype's legal drama finally ends; Time to start innovating
The on-going legal drama that has left a dark cloud over online voice and video communications company Skype has finally been settled. In the end, the co-founders get a 14 percent ownership of a new Skype, eBay maintains a 30 percent stake in the new company and consortium of private investors score the remaining 56 percent.
More importantly, though, the new company will finally be in a position to innovate and prosper - instead of being scrutinized under the quarterly earnings microscope of eBay to generate quarterly revenue growth. All of the previous disputes over core technologies and so on has been settled. The parties expect the deal to close by the end of the year.
Marc Andreessen, partner of Andreessen Horowitz, which is one of the investors, told VentureBeat that the company can now focus on building for the future. The company does have a lot of potential to become a powerhouse in markets that are just starting to realize their potential. Consider these forces that are changing the market for Skype:
- Smartphones, which have the ability to run Skype, are growing in popularity among consumers and businesses, opening a market for people interested in low-rate international calling from a device, instead of just a PC.
- Google Voice has hit the stage as a competitor in this space, notably on the international calling front, and has generated a number of headlines - and grabbed a lot of attention - because of Apple’s supposed rejection of the Google Voice app for the iPhone and AT&T asking the FCC to regulate Google Voice as a telecommunications service, instead of a Web service.
- Video conferencing is grabbing the attention of the cost-concerned enterprise. Cisco, for example, has made a big splash into enterprise-grade telepresence video conferencing, highlighting the money - and time - that can be saved by holding meetings by telepresence, instead of putting executives on airplanes.
I’ve long been a Skype user but must admit that my interaction with it has pretty much been limited to the occasional (more like rare) video chat. I’ve also been a long-time fan of innovation (what can I say? I’m a Silicon Valley native) so I’m happy to see the company fall back into the hands of the founders and investors who want to see the service grow and prosper.
Now, Skype execs can quit worrying about how they’re going to appear on eBay’s financial statements and can get back to work on making the service better, landing new partners and holding on to its brand cachet before a newcomer (Google?) comes along and unseats a pioneer.
Also see:
September 23rd, 2009
Skype aims for small business via Cisco interoperability
Skype continues its march to be an enterprise telephony player. On Wednesday, Skype said its Skype for SIP service is now interoperable with Cisco Unified Communications 500 Series designed for small businesses.
The Cisco deal (statement, Techmeme) coupled with an interoperability pact with ShoreTel, indicates Skype is developing a solid enterprise partnership roster. The beta version of Skype for SIP launched in March. SIP stands for Session Initiation Protocol, which is a standard for voice over Internet protocol used it corporate networks. Skype will now connect to corporate phone systems so you can Skype fixed line phones and mobiles from a traditional PBX system—your standard phone set-up.
September 17th, 2009
Joltid vs. Skype: Is there a workaround?
The legal tussle between Skype and its co-founders is getting ugly, but eBay may have some other technical options at its disposal to undermine the case.
Niklas Zennstrom and Janus Friis, who control peer-to-peer software company Joltid, filed a copyright lawsuit against Skype in the U.S. District Court of Northern California on Wednesday (Techmeme). The suit seeks to derail the sale of Skype, which eBay offloaded to a series of investors.
In the complaint, Joltid outlines the technology in question:
Joltid, Limited, is a company that develops and provides peer-to-peer based software products. As the world’s leading developer of peer-to-peer technologies, in 2003 Joltid created a new software technology known as Global Index (GI Software). The GI Software, Joltid’s flagship product, is the world’s most technologically advanced, scalable and field-tested peer-to peer technology. Peer-to-peer technology involves computer architecture that eschews a central database server configuration in favor of a distributed system that harnesses the collective computing power of client computers utilizing the Internet worldwide. GI Software creates a self organizing and self-healing distributed storage, transportation and data object management system that eliminates the costs of traditional datacenter solutions and enables a range of applications from communications to broadcasting and beyond. Joltid owns all intellectual property in the GI Software, including copyrights and patents.
In a nutshell, Skype licensed that GI Software, but then got into a license squabble with Joltid. Joltid wants to prevent Skype from using its technology. Skype says it licensed the technology fair and square. Skype sale is also complicating matters. Now everyone is in court.
So what’s next? Bernstein analyst Jeffrey Lindsay handicaps Skype’s options. Lindsay writes in a research note that a permanent shutdown of Skype is unlikely. Nevertheless, eBay, Skype and Joltid are likely to have a protracted court battle. Meanwhile, there’s a UK case that will be heard in June 2010.
Is there a tech fix? Possibly. Lindsay writes:
We think eBay has several options which it is likely to be pursuing such as converting to SIP protocol (like Vonage) or licensing an alternative VoIP technology such as Google Voice or even AOL’s IM technology which is voice capable. Success with any of these alternatives would likely undermine Joltid’s case considerably and accelerate a settlement or a dismissal.
Skype licensing Google Voice would be quite interesting (as would some of the other options). The big question is whether Skype’s user base would notice a change in the underlying technology.
September 16th, 2009
Report: Skype founders sue eBay; could complicate Skype sale
eBay’s $2 billion sale of Skype to a group of investors could be complicated by a lawsuit filed by a company owned by Skype’s founders. According to a Wall Street Journal report, a company named Joltid, which is owned by Skype founders Janus Friis and Niklas Zennstrom, filed suit in U.S. District Court in northern California seeking an injunction against Skype, as well as damages for copyright infringements.
The dispute stems from a peer-to-peer technology owned by Joltid and is used in Skype’s software. Joltid reportedly terminated a license for the software in March and the two sides have been battling in a UK court since, according to the report.
The suit seeks profits earned while the technology was being used in breach of its license and estimated daily damages of more than $75 million daily.
Earlier this month, eBay announced that it would unload 65 percent of Skype for $1.9 billion to an investor group led by Silver Lake and including Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board.
Joltid’s suit includes the investors as defendants.
September 9th, 2009
ShoreTel gives Skype's enterprise plans a lift
ShoreTel, a big enterprise telephony player, has just given Skype’s business plans a boost.
ShoreTel said Wednesday (statement, Skype blog, Techmeme) that it is interoperable with the beta version of Skype for SIP, which launched in March. SIP stands for Session Initiation Protocol, which is a standard for voice over Internet protocol used it corporate networks. Skype will now connect to corporate phone systems so you can Skype fixed line phones and mobiles from a traditional PBX system—your standard phone set-up.
Also see: What’s Missing from Shoretel’s Skype-for-SIP Deal
Makes sense now: eBay unloads Skype; Gets $1.9 billion in cash and keeps 35% stake
The problem: There weren’t a lot of corporate phone systems connecting to Skype. Enter ShoreTel, which has 11,000 enterprise customers. ShoreTel customers can now register for Skype for SIP. Given the need to save dough don’t be surprised if more than a few enterprises give Skype for SIP a spin.
ShoreTel customers can get inbound calls through their unified communication systems from Skype’s 400 million registered users. ShoreTel users can also use Skype to get low rates on outbound calls.
Add it up and ShoreTel’s plunge is likely to give Skype for SIP some momentum among potentially skeptical enterprise customers.
September 1st, 2009
Makes sense now: eBay unloads Skype; Gets $1.9 billion in cash and keeps 35% stake
EBay has officially sold Skype in a deal that values the telephony company at $2.75 billion. The online auction company will get $1.9 billion in cash and retains a 35 percent chunk of the company.
There was some questioning about whether it made sense for eBay to unload Skype (Techmeme). Given the valuation of the deal and the fact that eBay keeps a stake of Skype, the deal makes a lot more sense now.
An investor group led by Silver Lake and includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board will give eBay $1.9 billion in cash and a note from the buyer worth $125 million. EBay will own 35 percent of Skype when the deal closes in the fourth quarter.
In a statement, eBay CEO John Donahoe called the transaction a “great deal”:
September 1st, 2009
eBay finds its Skype exit and it's probably for the best
EBay is reportedly ready to sell Skype to a group that includes Andreessen Horowitz and private equity firms. The big question is whether a sale makes sense right now.
According to the New York Times, eBay will announce a sale of Skype as early as Tuesday (Techmeme). EBay is looking for $2 billion for the unit, but the New York Times couldn’t nail down a price. TechCrunch first reported eBay’s potential sale of Skype last week. EBay announced in April that it planned to spin off Skype in an IPO.
April 15th, 2009
Skype could be bought before any IPO; Gauging valuation
Analysts were busy Wednesday figuring out what Skype would be worth as a public company—$1.5 billion to $2 billion seems to be the consensus—but few prognosticators ever expect to hit the stock exchange. Why? Another entity will buy Skype before it goes public.Â
EBay on Tuesday announced plans to launch a Skype IPO in 2010 (Techmeme), but what the company really accomplished was establishing a price band for the VOIP service. Meanwhile, eBay also indicated that it would be more focused on e-commerce and is serious about shareholder value.Â
In a research note, Gabelli analyst Robert Haley reckoned that Skype was worth $1.5 billion to $2 billion as a publicly traded company. But by signaling an IPO for Skype eBay also seems to have opened the auction floodgates.Â
He wrote:
Considering its growth and margin profile, we believe multiple of ~10x is justified, and believe that Skype could be valued at $1.5-2.0b. EBAY is carrying $1.8b of Skype goodwill on its balance sheet.
Haley noted there are multiple possible Skype acquirers including:
- Telecom or cable companies looking to add a brand and large user base to their VOIP and triple play offerings.
- Google, which would integrate Skype into everything from Gmail to search to Google Talk.Â
- Microsoft, which could integrate Skype into Windows. Skype, meet Sharepoint.
- A social network like Facebook.Â
William Blair analyst Jack Murphy is also arguing the Skype-will-be-bought-before-an-IPO case. Murphy wrote:
We believe that management has been actively looking for buyers, but concluded that a Skype IPO would create the most value for eBay shareholders. While management plans on a 2010 IPO, we would not be surprised if a private market deal transpired first.
In any case, eBay could seriously cut its losses on Skype deal. EBay paid $2.6 billion and payouts for Skype in 2005 and still carries $1.8 billion in goodwill on its books. If eBay could get $2 billion for Skype that would go a long way toward closing one big detour from its core business.
April 14th, 2009
eBay: We're spinning Skype off in an IPO
EBay will recoup some of its losses on Skype via an initial public offering. Or at least that’s what the online auctioneer is hoping.Â
In a statement, eBay seems to have given its reply to the buyback plans of Skype founders Niklas Zennstrom and Janus Friis. Zennstrom and Friis were reportedly rounding up private equity partners to buy Skype back from eBay for about $1 billion.Â
EBay apparently thinks it can get more value through an IPO. The company says it plans to spin off Skype in the first half of 2010 with one massive caveat: Pending market conditions.Â
CEO John Donahoe notes:
“Skype is a great stand-alone business with strong fundamentals and accelerating momentum. But it’s clear that Skype has limited synergies with eBay and PayPal. We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential. This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications.”
My translation: eBay wants Zennstrom and Friis to raise their price for Skype. And the threat of a Skype IPO is one handy way to get that price up.Â
Inside Skype for iPhone–photos
The good news is that Skype has a nice chance as a standalone business. Skype’s 2008 revenue was $551 million, up 44 percent from 2007. Skype expects more than $1 billion in revenue in 2011. Surely Skype can get more than 1x revenue in an IPO right?
Meanwhile, you could argue that now is a good time to take Skype public. It’s growing, it has a critical mass and it could be a fine acquisition target in the future—for a company other than eBay. By plotting an IPO eBay is clearly stating that Skype is worth more. Game on.
Also see:Â eBay starts undoing bad acquisitions: Sets StumbleUpon free
April 14th, 2009
Seven big tech acquisitions to watch for in 2009
In this economy, cash is king. Since in the end of 2008, big tech companies have been stuffing cash under their mattresses in case the current recession goes longer and deeper than expected. Â Even companies with strong balance sheets have been cutting costs, laying off workers, and scaling back projects in order to build up their war chests.
As a result, you have companies racking up huge cash reserves, including Cisco ($26.7 billion), Apple ($24.5 billion), Microsoft ($19.7 billion), and Google ($14.4 billion).
Meanwhile, with the stock market shedding half of its value between July 2007 and January 2009, the market price of a lot of public technology companies has essentially been put on a “50% off sale.”
March 30th, 2009
Skype coming to iPhone, BlackBerry: Does it need 3G support?
Skype is officially coming to the iPhone and BlackBerry, but is being limited to WiFi for now. Simply put, don’t expect Skype working over a 3G network anytime soon.Â
Various reports have Skype unveiling its service for the iPhone on Tuesday and BlackBerry in May. Skype will also work with the latest iPod touch.Â
But Skype had to compromise to get its software on mobile devices. Wireless carriers have viewed mobile Skype as a threat so for now it is being limited to WiFi. Apple limits voice applications in its App Store so they only work over WiFi. Skype has already been announced on Windows Mobile, Google’s Android and Nokia phones.
Inside Skype for iPhone–photos
Carriers will still get the data plan revenue from Skype, but it’s unclear how limiting the WiFi only mandate will be. For starters, I won’t be trying Skype mobile out at all on my BlackBerry since Verizon Wireless generally doesn’t do the WiFi support thing.Â
However, the iPod touch has become more interesting. Will limiting mobile Skype just to WiFi really accomplish anything?
March 23rd, 2009
Skype goes enterprise: It's about time
Skype on Monday announced a beta that will allow it to connect to corporate telephone networks across the globe.Â
Technically, Skype’s beta is dubbed Skype For SIP for Business users (statement, Skype blog, Techmeme). SIP stands for Session Initiation Protocol, which is a standard for voice over Internet protocol used it corporate networks. Simply put, Skype will now connect to corporate phone systems 
so you can Skype fixed line phones and mobiles from a traditional PBX system—your standard phone set-up.Â
For now, Skype’s pricing once the beta runs its course is to be determined. In the meantime, standard rates—a little more than 2 cents for most global calls—apply. However, it’s likely that the margins might be a little better than its current a few pennies here and there to call a land line setup. If not, Skype may at least get more volume if it’s an official member of the corporate network club. Skype already works with corporate hardware and integrates with Outlook and Salesforce.com, but its latest move solidifies its corporate standing and at least allows for better enterprise support.
Skype’s customer base is mostly consumer, but it has been reaching out to be more business friendly. Call quality and security have been ongoing concerns, but it’s not like Skype has been locked out of the business market—Skype calls for business happen all the time on the sly.
Here’s what this latest move means to Skype:
- Skype can go from being an ancillary product that enterprises support quietly to one integrated into phone systems;
- Click to call will be more of a reality for businesses as Skype 405 million users connect to corporate systems;
- Skype will get incremental revenue because businesses will throw business at it to save on global calling.Â
For the enterprise, Skype for SIP means businesses can manage Skype calls, use their existing equipment and software to route calls and buy online numbers.Â
And the key point:
During the beta period all calls will be charged at standard Skype rates. Further pricing details will be announced when the product is fully launched later this year.
That pricing, which is likely to be tweaked for corporations, is likely to translate into more revenue for Skype and its parent eBay, which may be looking to unload it. Perhaps eBay can use Skype to drum up more corporate business.
Also see:Â Plantronics aims to solve ‘last 10 feet’ problem with unified communications
March 11th, 2009
Plantronics aims to solve 'last 10 feet' problem with unified communications
Unified communications has been a topic in IT management circles for years. It’s a topic that can lead to packed houses at conferences and Cisco, Avaya, Microsoft and IBM all have extensive unified communications suites. The problem: Users.Â
Here’s the unified communications blue print: Enterprises spend heavily on suites that bundle instant messaging, Web conferencing, video presence, collaboration and email so there are secure communications that enhance productivity. The reality: Those suites can be tough for users to navigate and some folks don’t quite get that PC as a phone thing. As a result, the unified communications bandwagon doesn’t quite fill up like IT execs hoped. And then we all go about our Skype, AOL and Yahoo messaging anyway.Â
Plantronics is aiming to alleviate some of those problems. Plantronics, which is best known in the enterprise as a headset maker, also owns a bunch of audio assets–including Altec Lansing. Simply put, Plantronics makes audio gear for everything from the iPod to the Federal Aviation Administration. And now it’s even dabbling in software to act as a unified communications traffic cop.Â
January 13th, 2009
Apple's future: It's in the Touch
A guest post on ZDNet yesterday posed the question: Has Apple gotten lazy? It’s not the first time I’ve heard it asked, considering Apple’s headlines in recent months: a pullout from Macworld, the distractions of Steve Jobs’ health and relatively low-key announcements out of Macworld. Sure, upgrades to iLife, iWork and the Macbook line were each newsworthy, just not keynote worthy. That doesn’t make Apple lazy.
Still, I think the author of the post is on to something when he says that Apple will need to do something soon if it wants to keep Wall Street (and the fan base) happy. It seems that Apple would want to keep the wraps on anything worth showcasing so it can be unveiled at the company’s own event, not a trade show. I suspect folks are hard at work at Apple, designing the next big thing without racing the clock to meet a production deadline for a trade show release. Instead, when it’s ready, Apple will summon the tech press to some sort of cryptically-announced event and we’ll all ooh and aah (or not.) But here’s the thing: maybe the next big thing isn’t something we hold in our hands.
Instead of calling Apple lazy, I would counter that the company is in a transitional mode. No, that’s not suggesting transitional in the sense that an ailing Jobs will be passing the reins anytime soon. Instead, it’s transitional in the sense that the focus seems to be shifting away from the hardware side and honing back in on the software, err, applications business. Aside from a handful of product categories, the fun techie stuff is less touchy-feely than it used to be. The cool things no longer come in the form of breakthrough gadgets. They come in the form of apps for the iPhone, links between iPhoto and Facebook, virtual piano lessons from within Garage Band.
In terms of a breakthrough gadget, the next big thing is already out there - and has been for more than a year. The iPod Touch (horrible name for it) is the real breakthrough device here, not the iPhone. When it was announced back in September 2007, the Touch got buried by news of a $200 price drop to the iPhone and announcements of an new iPod Nano look, an iPod classic upgrade and a WiFi iTunes music store for the iPhone (and Touch). It’s older cousin, the iPhone, continues to steal the thunder. But as carrier exclusivity (and subsequent connection problems) become deal-breakers for some potential buyers, the Touch becomes an real alternative.
After all, its the non-phone parts of the iPhone - the Touch - that’s seen noteworthy success. Applications have become a sweet spot - both in development and downloads. Some of the key apps from the desktop/notebook computing environment - photos, music and now games - are key apps on the mobile devices. With WiFi connectivity, there’s access to the net and cloud apps such as Google Docs, Yahoo mail, Flickr, Facebook and even business apps such as salesforce and Oracle. Eventually, Skype will release an application that will turn telephony services into just another app - so why does anyone need the carriers again?
There’s been some anticipation around a netbook announcement from Apple but I think we already have access to Apple’s netbook - or at least a predecessor - in the iPod Touch. I suspect forthcoming announcements will focus less on gadgets like the iPhone and the Touch and more on the services, features and tools FOR the iPhone and the Touch. I’ll continue to assume that Apple is hard at work and no where near becoming lazy.
October 17th, 2007
eBay's financials excluding Skype charge shine
eBay handily topped Wall Street expectations for the third quarter excluding a charge related to the Skype acquisition.
In a statement, eBay reported third quarter earnings excluding the Skype charge of $564 million, or 41 cents a share, on revenue of $1.89 billion. That revenue tally was up 30 percent from the same quarter a year ago.
According to Thomson Financial eBay was expected to report earnings of 33 cents a share on revenue of $1.83 billion.
Including the previously disclosed Skype charge, eBay reported a loss of $936 million, or 69 cents a share.
eBay countered that loss with a strong fourth quarter and 2007 outlook. For the fourth quarter, eBay projected earnings to be about 39 cents a share to 41 cents a share on revenue between $2.1 billion and $2.15 billion. For the year, eBay sees earnings excluding charges of $1.47 a share to $1.49 a share on revenue between $7.6 billion to $7.65 billion. Those projections handily topped Wall Street expectations excluding charges.
eBay noted that eBay International, PayPal, StubHub, classifieds and advertising businesses all performed above expectations. eBay’s Skype unit was left off the list.
By the numbers:
- eBay users posted 556 million listings in the third quarter, down 5 percent from a year ago. Yet the listing generated gross merchandise volume of $14.40 billion, up 14 percent from a year ago.
- PayPal revenue totaled $470 million, up 35 percent from a year ago.
- Skype was profitable excluding charges on revenue of $98 million. Skype ended the third quarter with 246 million registered user accounts, up 81 percent from a year ago.
October 1st, 2007
eBay: Skype wasn't all that after all
eBay confessed its Skype sins on Monday. The price tag: A $1.4 billion asset impairment charge, a new Skype CEO and missed financial targets.
A little more than two years ago, eBay bought Skype (all resources) for $2.6 billion in up-front cash and stock and “potential performance-based consideration.” Turns out Skype just didn’t perform that well.
eBay said in a statement that it will pay $530 million to settle its obligations under an earn-out agreement. The earn-out agreement totaled $1.7 billion based on user, revenue and gross profit targets in 2008. eBay said the payment “is reasonable given the progress and anticipated rapid growth of Skype’s active user base.” Actually, that growth wasn’t rapid enough or eBay would have paid more.
“The implication here is that Skype has not met up to its initial expectations, a point we believe the market has long since discounted into eBay shares,” said Citigroup analyst Mark Mahaney in a research note.
Given Skype’s results, eBay has revamped management. Out: Niklas Zennstrom as CEO of Skype. In: Michael van Swaaij, eBay’s Chief Strategy Officer, as acting CEO until a permanent successor is found. Henry Gomez, Skype’s president, will go back to being senior vice president for corporate affairs and report to eBay CEO Meg Whitman.
Update: Zennstrom has fired back at eBay in an interview with Thomas Crampton.
So what’s next for eBay’s Skype experiment?
Henry Blodget argues that eBay should sell Skype, an idea which makes some sense. Russell Shaw reckons that Skype may be operated more as an eBay division or spun off somehow. More clear is what isn’t going to happen. Here’s eBay’s initial vision from the 2005 Skype announcement:
Online shopping depends on a number of factors to function well. Communications, like payments and shipping, is a critical part of this process. Skype will streamline and improve communications between buyers and sellers as it is integrated into the eBay marketplace. Buyers will gain an easy way to talk to sellers quickly and get the information they need to buy, and sellers can more easily build relationships with customers and close sales. As a result, Skype can increase the velocity of trade on eBay, especially in categories that require more involved communications such as used cars, business and industrial equipment, and high-end collectibles.
The acquisition also enables eBay and Skype to pursue entirely new lines of business. For example, in addition to eBay’s current transaction-based fees, ecommerce communications could be monetized on a pay-per-call basis through Skype. Pay-per-call communications opens up new categories of ecommerce, especially for those sectors that depend on a lead-generation model such as personal and business services, travel, new cars, and real estate. eBay’s other shopping websites — Shopping.com, Rent.com, Marktplaats.nl and Kijiji – can also benefit from the integration of Skype.
That vision just didn’t pan out.
August 21st, 2007
Skype: Microsoft patches didn't spark our outage
Skype offered up some more details about its two-day outage last week and noted that Microsoft patches were not to blame.
This point was fairly clear in its initial blog posting on the incident. Microsoft’s Windows update was a catalyst not the reason for the outage.
Skype said Tuesday (see Techmeme for more):
We don’t blame anyone but ourselves. The Microsoft Update patches were merely a catalyst — a trigger — for a series of events that led to the disruption of Skype, not the root cause of it. And Microsoft has been very helpful and supportive throughout.
The high number of post-update reboots affected Skype’s network resources. This caused a flood of log-in requests, which, combined with the lack of peer-to-peer network resources at the time, prompted a chain reaction that had a critical impact. The self-healing mechanisms of the P2P network upon which Skype’s software runs have worked well in the past. Simply put, every single time Skype has needed to recover from reboots that naturally accompany a routine Windows Update, there hasn’t been a problem.
Unfortunately, this time, for the first time, Skype was unable to rise to the challenge and the reasons for this were exceptional.
So what was different this time around with the patches.
Skype said nothing was different.
In short – there was nothing different about this set of Microsoft patches. During a joint call soon after problems were detected, Skype and Microsoft engineers went through the list of patches that had been pushed out. We ruled each one out as a possible cause for Skype’s problems. We also walked through the standard Windows Update process to understand it better and to ensure that nothing in the process had changed from the past (and nothing had).
More importantly Skype said it has squashed the bug that led to the outage. As for the lessons learned they still apply for Skype.
August 20th, 2007
Skype's outage: Lessons learned
Skype has its official response to its nearly two-day outage: A software bug was unearthed after numerous restarts over a Microsoft patch download.
Russell Shaw has more, but here’s what Skype had to say:
On Thursday, 16th August 2007, the Skype peer-to-peer network became unstable and suffered a critical disruption. The disruption was triggered by a massive restart of our users’ computers across the globe within a very short timeframe as they re-booted after receiving a routine set of patches through Windows Update.
The high number of restarts affected Skype’s network resources. This caused a flood of log-in requests, which, combined with the lack of peer-to-peer network resources, prompted a chain reaction that had a critical impact.
Normally Skype’s peer-to-peer network has an inbuilt ability to self-heal, however, this event revealed a previously unseen software bug within the network resource allocation algorithm which prevented the self-healing function from working quickly. Regrettably, as a result of this disruption, Skype was unavailable to the majority of its users for approximately two days.
So what are the key learnings here (Techmeme has more):
1. Patch management is a headache. As anyone that reads Ryan Naraine knows patch management is a pain–a monthly one. You download the patches and applications break. The systems and processes you have in place when managing patches are critical. Hopefully, patch management is automated to some degree. And it’s not just Microsoft patches. The entire industry patches about the same time. That means you better have a strategy to ease the pain.
2. Skype’s reputation as a phone replacement took a hit. Skype did a nice job of keeping people updated during the crisis, but its reliability reputation took a hit. The rub: You really have to wonder if Skype can replace your land line. Is that fair? Maybe not, but at last check my plain old telephone wasn’t impacted by patches, algorithms and software bugs. The damn thing just works.
3. Peer to peer isn’t perfect. Skype noted that it had self-healing functions, but it stumbled. There’s a bit of a debate over whether Skype’s outage reflects on P2P. Once you delve into the nitty gritty Skype’s outage may not apply to P2P. But as the poster child of P2P Skypes outage will hurt perception.
4. Skype’s goals are unclear. If Skype is supposed to be a phone service that could replace a land line this line should probably been edited.
“This disruption was unprecedented in terms of its impact and scope. We would like to point out that very few technologies or communications networks today are guaranteed to operate without interruptions.”
Two-day interruptions don’t fly at the corporate–or even consumer–level.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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