Category Archives: Instant Messaging

Avaya’s Kennedy Sends Cautious Signals on Post-Nortel Business

Reading between the lines of Avaya CEO Kevin Kennedy’s recent interview with Network World, I have the strong suspicion that revenues from Nortel’s installed base of VoIP and unified communications (UC) customers are not ramping as robustly as Avaya had hoped they would.

I get that impression as much from what Kennedy doesn’t say as from what he says. He’s bold and brash when talking about combined R&D efforts and product roadmaps, but he’s reserved when discussing revenue targets and near-term sales. He doesn’t say the Avaya-Nortel combination has been a commercial disappointment, but he’s not boasting of its conquests, either.

A few market analysts are noticing that Avaya’s acquisition of the Nortel enterprise business hasn’t resulted in market-share hegemony for the merged company. These market watchers seem surprised that Avaya didn’t take the Nortel customer base by storm and leave Cisco in its rearview mirror, choking on dust and fumes.

But that failure to reconcile with reality is at least as much the analysts’ fault as it is Avaya’s. Earlier in this saga, I noted that a Nortel-fortified Avaya would be fortunate to maintain any market-share edge over Cisco. It seemed an obvious conclusion to reach.

Unfortunately, though, when unwary market analysts examine a post-acquisition scenario, they will add the market share of the two companies involved, then assume the merged entity will maintain or extend its combined market share. For many reasons, however, that rarely — if ever — happens.

In the case of Avaya’s acquisition of Norte’s enterprise business, several complicating factors suggested that the merger, from a market-share perspective, would result in less than the sum of its parts.

First, there was the product overlap, which was not insignificant. Second,  there were channel-management issues, which also were considerable. (Some Nortel partners were concerned about having to deal with Avaya.) Third, Nortel’s enterprise business had been in distress for some time, and it was suffering market-share erosion before and after Avaya took control. Fourth, even among Nortel customers still in the fold, some eventually will choose options other than those presented by Avaya.

I think Avaya anticipated most (if not all) of these challenges. Just after the acquisition closed, for example, Kennedy sought to temper post-merger expectations. He cited external factors, such as the weak economy, as well as the usual post-merger integration challenges. His tone was one of cautious optimism rather than of unchecked exuberance. He knew it wouldn’t be easy, with or without Nortel’s enterprise business.

He’s staying on message, probably for good reason.

Apple’s Innovation Falls Short in Product Naming

Apple has a well-earned reputation as an innovator, a company that regularly and repeatedly brings industry-leading designs, products, and technologies to market.

Apparently that innovation does not extend to the naming of its products and technologies. In that area, Apple increasingly displays a covetousness for what other technology companies already have brought to market. At its Worldwide Developers Conference (WWDC) yesterday, Apple had much to announce, including a renamed iPhone OS — now called iOS 4 — and a video-calling service called FaceTime.

As Network World notes, IOS and FaceTime are well-established trademarks in the technology world. Anybody familiar with Cisco Systems will know that IOS has long been an acronym and trademark of its Internetwork Operating System, a multitasking OS that runs on the networking behemoth’s routers and switches. Less known is that FaceTime was the trademarked name of a company that provides security and compliance software for IP-based collaboration and communications, including instant messaging, unified communications, and (more recently) social networking.

To avoid being sued for repurposing commercial names already on the market, Apple has licensed the IOS (or iOS) brand from Cisco (for an amount unknown), and its has acquired the FaceTime trademark from the company formerly known as FaceTime. FaceTime has put the best possible spin on the transaction, the value of which has not been disclosed:

As you’ve probably heard, Apple has announced that it will use “FaceTime” as the trademark for its new video calling application

Our agreement with Apple to transfer the FaceTime trademark to them comes as we are rebranding our company to better reflect our capabilities. We will be announcing a new name in the coming months.

This announcement echoes our long held belief that the Internet is changing the way people communicate. Increasingly the Internet is about communications, collaboration and communities – whether it’s social networking, instant messaging or now video calling, users are bringing these tools into the workplace.

FaceTime Communications helps businesses realize the benefits of the New Internet through enterprise solutions that provide unified security, management and compliance across the broadest set of applications and modalities.

Apple continues to be prolific in ideating and delivering its own designs and technology innovations, but product naming is a different story. In that domain, it is more than willing to pay handsomely for rights to the creative fruits of others.

Joltid Versus Volpi: The Antagonism Intensifies

The high-stakes battle for Skype already was contentious, even bitter.

It became poisonous today when companies controlled by Niklas Zennstrom and Janus Friis filed a motion for a preliminary injunction against Michael Volpi and venture-capital firm Index Ventures in the United States District Court for the District of Delaware.

In the motion and accompanying supporting documentation — filed by Joost US, Inc., its indirect parent company Joost N.V., and Joltid Limited — Volpi, formerly the CEO and chairman of video-sharing company Jooost, and Index are accused of a veritable panoply of chicanery and outright malfeasance. Many of the allegations are nothing short of incendiary.

Flowing from intellectual-property disputes and lawsuits relating to Joltid software technology, the motion is intended to prevent eBay from completing the $1.9-billion sale of a 65-percent interest in Skype to a group of investors that includes Index Ventures, private-equity firm Silver Lake, venture-capital firm Andreessen Horowitz, and the Canada Pension Plan Investment Board.

Zennstrom and Friis would like to own Skype, in whole or in part, and they’re desperate to stop eBay’s Skype deal from coming to fruition.

A press release announcing the preliminary-injunction motion spells out the plaintiffs’ immediate objectives:

The Motion for Preliminary Injunction asks the Court to enjoin Index and Volpi from using any of Joost’s and Joltid’s confidential information regarding (among other things) the Global Index Software, the technology developed and owned by Joltid that provides the peer-to-peer capability embedded in the Skype program. The Motion also asks the Court to enjoin the defendants from:

(i) using the confidential information in connection with the operation or strategic planning of Skype;

(ii) communicating such information to other parties in the “Buyout Group” that has made a bid to acquire Skype from eBayInc.;

(iii) soliciting employees of Joost and Joltid with offers to join Skype;

(iv) having communications with current or former employees of Joost orJoltid regarding the companies’ confidential information; and

(v) further participating in the Skype acquisition or assuming any position with Skype until a final adjudication of the merits of the case.

Citing allegations made against Volpi and Index Ventures in a lawsuit filed on September 19, the filing flatly asserts that “the entire transaction is . . . . infected with Volpi’s misconduct.”

Those who haven’t been following this complex and personally fraught conflict can be forgiven for not understanding the complicated drama without the benefit of an annotated program. As I attempted to explain in an earlier post, the allegations are centered on former Cisco wheeler-dealer Volpi’s tenure as CEO and chairman of Joost, a company founded by Zennstrom and Friis.

Like other companies – such as Kazaa and Skype – launched by Zennstrom and Friis, Joost leveraged and licensed underlying peer-to-peer software code from subsidiary companies (including Joltid) also owned by Zennstrom and Friis.

In 2008, during Volpi’s unsuccessful reign at Joost, he is reputed to have led an effort to shift the company’s client-based software and p2p architecture – based on Joltid’s Global Index (GI) software, which also provides the underpinnings for Skype — to a web-based model with a centralized server-based architecture. Although he cited business and technological reasons for the move, Zennstrom and Friis contend skullduggery was afoot.

Essentially, the plaintiffs assert, Volpi used inside knowledge of how Global Index and other Joltid software worked to help Skype violate terms of an executable-license agreement it had struck with Joltid for use of the General Index software. Unlike Skye, Joost had a license for the source code.

Meanwhile, Joost’s fortunes were waning while Skype remained popular with millions worldwide as a means of conducting presence-based voice, IM, and video communications.

At some point, in early 2009, while he still was the CEO of Joost, Volpi is accused of conspiring with his colleagues at Index Ventures on a plan to gain a controlling interest in Skype, partly through his knowledge of how Joltid’s General Index functioned. The plaintiffs allege that Volpi, trading on confidential technical information he obtained at Joost, made himself indispensable to the “buyout group,” and that he subsequently met with senior executives at Skype to discuss technical workarounds that would extricate that company from its lawsuits with Joltid over use of General Index code.

Volpi is also alleged to have attempted to poach employees at Joost who had intimate knowledge of how the disputed p2p software worked.

A welter of email correspondence and other documentation has been adduced by the plaintiffs to support their case for an injunction. Some of those background documents make for fascinating reading, particularly Volpi’s email correspondence relating to the structure of the Skype deal.

I might revisit some of that content in future missives. Suffice it to say, Volpi’s remark about Charlie Giancarlo – now with Silver Lake Partners, but formerly an executive counterpart of Volpi’s at Cisco – will raise eyebrows.

Said Volpi of Giancarlo: “Charlie is a good guy, but not a superstar . . . . His core asset at Cisco is (sic) that he was much more inclined to say “yes” to John (Chambers, Cisco’s CEO) than I was.”

Volpi’s Joost Tenure Key to Understanding Skype Saga

Perhaps the key to understanding the increasingly bitter battle for Skype can be found in what transpired during Michael Volpi’s tenure as the CEO of Joost, the video-sharing startup founded by Niklas Zennstrom and Janus Friis.

In the current context, what’s important about Volpi’s reign at Joost is that it coincided with an architectural change in how the company delivered video over the Internet.

I was reminded of Joost’s architectural overhaul by Julian Cain, an engineer who worked on Kazaa and is familiar with Joltid, bluemoon, and Skype. Cain, as you’ll recall, was a source for an earlier post I wrote on the deepening antagonisms between Skype’s founders and its current and would-be owners.

Zennstom and Friis originally set up Joost with the p2p architecture that formed the technological basis for companies the pair had founded previously, including Kazaa and Skype. In 2007, Michael Volpi became Joost’s CEO. Under his leadership, and evidently as part of a project he led, Joost slowly began an architectural transition away from its p2p roots. As Cain explained in a email message last night:

In case you don’t know how the Joost migration worked, well, it simply began to use p2p less and the long-tail providers more. Killing the Joost client for an ActiveX/NPAPI plugin with a p2p runner application for p2p services, and then removing the Joost plugin from download, is what abolished the p2p network for good. If the website could not load the Joost plugin, then it used Adobe Flash. It was seamless;, however, they didn’t have to deal with paid services and such a large user-base and other factors. Of course, look what Joost is now.

That architectural change looms as a central issue in the lawsuit Joltid, the company owned by Zennstrom and Friis, filed against Volpi and his colleagues at Index Ventures last week. That, of course, was the latest in a series of legal dustups between Zennstrom and Friis on one side and Skype and eBay on the other.

At the time of the architectural shift at Joost, Volpi claimed plausible reasons for the change. The justifications were commercial and technical. Other video-sharing sites, namely YouTube and Hulu, had proven far more popular. Meanwhile, some Joost users had complained that videos were slow to load.

Nevertheless, Cain contends those weren’t necessarily the only reasons Volpi pushed for the architectural overhaul.

Volpi’s move from p2p to Adobe Flash while at Joost wasn’t in any way to do with the lack of gain at that time. If they wanted to (do so), they would have been pushing HD content (both live and prerecorded) over p2p with long-tail back-off by now without any real competition . . . . . Volpi broke that into myths and theories based on what he wanted to do, not technical facts, trends, statistics or analytical data.

Still, Volpi had successfully transitioned Joost from the Joltid p2p foundation on which it was based. He’d moved it onto a server-based architecture that used Flash-based clients at the end points. He’s done it once. There’s no reason to think he couldn’t do it again, this time at Skype.

If the conflict plays out the way Cain believes it will, Zennstrom and Friis will not back down and neither will Volpi and his confederates.

In my last post on this topic, I suggested a settlement might be possible. Cain believes that isn’t in the cards. Both sides are playing to win, and neither is in the mood for accommodation. One way or the other, it will be settled in court.

I also said in my last post that eBay and Skype’s new majority owners would have to rebuild Skype from the ground up to obviate the lawsuit Joltid has filed regarding the disputed “Global Index (GI)” software, the patent for which became active early this year. While it remains true that Skype would have to be reconstituted from scratch, the reconstruction effort could be completed earlier than I anticipated.

A means of getting there faster is represented by technologies offered by Adobe. Henry Sinnreich and a team of SIP experts have worked for Adobe for a long time now, and Cain reminded me that Adobe Flash supports SIP p2p with NAT traversal. He explained as follows:

Don’t forget Adobe Flash has SIP and p2p with NAT traversal as well. This would be very easy to offload the client without much interruption; however you can kiss the desktop client and p2p network goodbye.

Om Malik wrote a post in 2008 that foresaw the implications of Adobe’s work in this area. Commenting on the advent of Flash p2p, Malik wrote:

The reason we should pay attention to this product is Adobe’s distribution strength. The company can easily upgrade its Flash clients and instantly become owner of one of the largest p2p services. What that means is that now anyone can contemplate a Joost-like service that works within a browser. Using AIR to extend those p2p abilities to the desktop would be fairly easy as well.

So, the move to a new client architecture could be achieved with relatively minor disruption to Skype’s operations. Meanwhile, the service’s registration index would have to be transferred to a centralized server-based model.

It appears Volpi and company have a solid plan in place, and one can assume they’re well on their way to executing it. Not for the first time — and certainly not for the last – I stand corrected.

Joust at Joost Bears Watching

Mike Volpi made his industry bones as Cisco Systems’ preeminent wheeler-dealer during the networking giant’s frenetic run of acquisitions through the mid-to-late 90s and slightly beyond. At the risk gross understatement, I would say those were better times than the current dark ages for people who engage in that sort of high-octane dealmaking,

No fool, Volpi recognized the end of an era when he saw one. For a time, he became a business-unit VP at Cisco, with all the responsibilities that such a job entails, before leaving Cisco in 2007 to park himself briefly in the venture-capital community while waiting for an opportunity to run a startup company.

He didn’t wait long. Volpi got his chance with Joost. a much-hyped online-video site that was launched by Niklas Zennström and Janus Friis, the technological tandem behind previous P2P phenomena Kazaa and Skype. Given the accomplishments and past performance of the founders, Joost was handicapped to succeed in a packed field of video-site contenders.

Joost never did make a serious run, though. It was an underachiever from the outset, and it now seems destined for an ignominious end.

Nonetheless, the drama surrounding the company and its erstwhile principals is far from over. In a statement issued to the Wall Street Journal and other media recipients, Joost announced the following:

“Mr. Volpi was removed from the board of directors and from his position as chairman of Joost by shareholder vote. The company and its board of directors is conducting an investigation into Mr. Volpi’s actions during his tenure as CEO and as chairman.”

Previously, it was assumed that Volpi first resigned as CEO, then later gave up his role as board chairman. After relinquishing the CEO role, Volpi took a gig as partner at venture-capital firm Index Ventures, which, like Joost, is based in London.

Index Partners was a player organizing the group of investors that is attempting to acquire Skype from eBay. It is Volpi’s role in that pending transaction that seems to have triggered the antagonism of Zennstrom and Fris ,who still control ownership of Joost and were involved with a competing bid to wrest Skype back from eBay.

Much remains unknown about the nature of the investigation Joost’s board of directors is pursuing regarding Volpi’s actions as CEO and chairman of the company. It is apparent that the board suspects Volpi of skullduggery, but, beyond that, the situation is clear as mud.

It’s a situation that bears watching, however. Zennstrom and Fris also control a company, Joltit Limited, that owns P2P technologies leveraged by Skype and Joost. In an SEC filing, that company is mentioned as a potential irritant in the consummation of eBay’s sale of Skype.

Garlinghouse’s New Employer Resembles Former Corporate Home

Brad Garlinghouse, former Yahoo senior vice president and author of the “Peanut Butter Manifesto,” has taken a job at AOL.

He will serve as president of Internet and mobile communications at AOL. As the New York Times explains, Garlinghouse also will head AOL’s Silicon Valley operations, which will be expanded, and lead the West Coast arm of AOL Ventures, a unit in charge of investing in start-ups and spinning off businesses.

It’s a bigger remit than the one he owned at Yahoo, but the two companies are similar in many respects. His role at AOL covers some of the same operational ground he oversaw at Yahoo.

In his Peanut Butter Manifesto, which was leaked to the Wall Street Journal back in late 2006 and was circulated widely inside and outside Yahoo, Garlinghouse argued that his former company was spread too broadly and not sufficiently focused to achieve meaningful business success. There was truth to that argument, and much else that Garlinghouse had to say about the dysfunction and institutional paralysis within his former employer.

Now, though, he’s joining another Internet portal. When one looks at AOL, whether at its front door (www.aol.com) or at any of the properties that lie behind it, one sees a company that is similar in many respects to Yahoo. If one were compelled to identify a primary competitor to AOL, or a company that AOL most resembles, Yahoo would be at the top of the list.

Focus will be essential to AOL’s success. It needs to select areas where it can win, against Yahoo and against others, and then execute effectively and precisely. Despite the changes at Yahoo since he left, Garlinghouse knows his former companies strengths and weaknesses and presumably is uniquely qualified to position his new company for competitive advantage against his former employer.

Having performed admirably and candidly as internal critic and corporate dissident at Yahoo, Garlinghouse now finds himself in a role where he will be given a full opportunity to put his ideas into practice.

That won’t be easy. AOL’s parent, Time Warner, has grown impatient, and it would like to divest itself of its Internet sibling at the earliest possible opportunity. AOL is a brand that has been in chronic decline, losing market share steadily. It has a few properties that are performing well, it has been given a new strategic mandate, but it still appears to be a hodgepodge of services rather than a coherent whole.

Still, Garlinghouse must have relished the opportunity to do at AOL what he believes should have been done at Yahoo. Apparently he passed on other job offers to set up shop at AOL West.

Ballmer Intent on Throwing Good Money After Bad

I have said it before and I’ll say it now: Microsoft does not have the market mandate to aggressively pursue and capture consumer markets. In most cases, consumers only buy Microsoft products and services when they have no other choice.

Zune has been a nearly unmitigated failure, Xbox and Xbox 360 have been qualified failures, and Microsoft’s Internet services, with the exception of Microsoft Messenger, have been perennial also-rans.

Admittedly, consumers — most of whom also have jobs (except the the kids, of course) — also use Windows and Office, but those can hardly be defined as consumer offerings. For the most part, people have used Office not because they have any special fondness for it but because their work necessitated its adoption. All that might be changing, but that’s for another post at a later date.

In a textbook instance of throwing good money after bad, Microsoft profligately expends resources in pursuit of a consumer market it can never own, at least not a degree that would justify the overall investment.

At Microsoft’s annual meeting with analysts, as covered by the Wall Street Journal, the company’s CEO Steve Ballmer signaled that Microsoft will continue to fight the trend, irrespective of past performance and current capabilities.

From the Wall Street Journal coverage:

Investing in search is important, he said, because it is a foundation for creating other consumer Internet services.

“Search is one of the starting points on the Internet,” Mr. Ballmer said. “It’s the best place to distribute new Internet services to the consumer.”

What Ballmer says is true — search is a foundation for the distribution of new web services to consumers — but the consumer, generally speaking, has shown little inclination to patronize such services when they carry Microsoft’s brand. Ballmer, as is his wont, blithely ignores this reality, much as a captain of a doomed frigate might ignore an iceberg in his path.

I’m not saying Microsoft can’t be a player in web services. In the enterprise, where it has, after much trial and tribulation, finally developed products that put it on a favorable competitive footing against Linux and Unix, Microsoft has an excellent opportunity to prosper from web services.

I just don’t buy Microsoft as a consumer juggernaut. That train has left the station a long time ago. Ballmer missed it. Somebody at Microsoft should advise him to play to the company’s strengths rather than to its weaknesses.

Considering the Fallout of Microsoft’s Failed Bid for Yahoo

As Microsoft ends its acquisitive pursuit of Yahoo — for now, anyway — many questions linger. I’ll explore two of them here. The first is, should Microsoft have raised its bid to close the deal? The second is, should Yahoo have accepted Microsoft’s offer?

Let’s deal with the first question up front. I think it’s the most interesting one to address.

Regardless of what one might attach to Yahoo as reasonable valuation, Microsoft’s pursuit of the company never made sense to me. It only illustrated, along with Microsoft’s ridiculously overvalued stake in Facebook, that the Redmond software giant has no coherent strategic plan for Internet computing.

Microsoft made its bones as a major-league purveyor of packaged software, both operating systems and applications. Ever since the Internet came into its commercial prime, Microsoft has made repeated missteps in trying to harness its power. The problem, it seems, is that Microsoft always has viewed the Internet as a subset of its Windows and Office empires, rather than seeing it as a technological juggernaut that subsumes — or will eventually subsume — everything in its path.

Oh, sure, Microsoft executives make the right noises when it comes to talking about the primacy of Internet computing and software-as-services business models. At the end of the day, though, Microsoft owns huge franchises in packaged software, and that’s where the company earns its prodigious fortune.

In big companies, especially public ones, money talks, walks, and dominates all else. Even with firewalls between different business units and divisions, Microsoft’s top executives and its board members will invariably show deference to and favor the Windows and Office money spinners. It’s impossible for them to do otherwise. It would be against the laws of nature.

This explains Microsoft’s conundrum. It wants to milk the Windows and Office cows for as long as possible, but it recognizes the looming competitive threat that Google represents. The trouble is, recognizing the problem and resolving it are not the same thing. Microsoft is trying to time its transition to new platforms and business models, looking to ensure that it only makes the move at a juncture where service-based, web-delivered software will not deliver a premature death blow to its big-margin, shrink-wrapped franchises.

Timing patterns of this sort are difficult to pull off, not least of which because competitors, namely Google, are not under the same constraints. Google will aggressively seek to cannibalize Microsoft’s installed base at every opportunity, as expeditiously as possible, whereas Microsoft will eat its own only when it believes they are long past their best-before date — which, when you think about it, is an inherently unhealthy, not to mention risky, practice.

This explains Microsoft’s desultory, seemingly random forays into Internet computing. The Facebook investment, for example, appears capricious and uncharacteristic in retrospect. Who would have imagined Microsoft would invest so much money for so little tangible business value and equity? It was a roll of the dice, a spin of the wheel, on social networking’s hottest trendsetter; but, as a strategic play, it was madness, the first notable sign of early senility in Redmond.

Then came the acquisitive run at Yahoo. Microsoft has failed repeatedly at the portal game, and it wouldn’t have done anything with Yahoo that Yahoo cannot already do for itself. In fact, Yahoo probably could do better on its own, though its shareholders won’t see the instant financial gratification they would have derived from a Microsoft buyout.

You say, what about search and attendant advertising? Well, what of it? Combined, Microsoft and Yahoo still would have trailed Google by a large margin. Agreed, by getting rid of Yahoo as a search rival, Microsoft would have consolidated share gains, but the simple Yahoo+Microsoft market-share equation wouldn’t have come to pass. It rarely works that way in merger aftermaths, as the history of technology-industry mergers makes abundantly clear. Would Microsoft’s acquisition of Yahoo have been worth $47.5 billion? This isn’t 1999, so think carefully before you answer that question.

What else would Microsoft have gotten from Yahoo? Some market-share gains would have accrued from combining or consolidating instant-messaging and web-based email services. That would have been worth something, I suppose, but I didn’t see anything revolutionary in Microsoft’s post-merger plans that would have unlocked additional hidden value.

So, on the whole, no, I never understood Microsoft’s big-money pursuit of Yahoo. Any acquisition would have demanded that Microsoft spend lots of money (one way or the other) and make considerable effort at organizational assimilation and integration — at potentially great risk to its corporate culture and Yahoo’s — for modest business gains. The risks heavily outweighed the rewards. To think that Microsoft not only considered such a move but made it, well, that tells you all you need to know about how adrift the company is with its Internet strategy.

Microsoft should be grateful that the deal was rebuffed by Yahoo.

As for Yahoo, the story is more complicated. Now that Yahoo has seen off the Microsoft bid, its shareholders will pressure the company’s board and executive team to pursue an alternative that offers at least as much recompense as the Microsoft offer represented. That won’t be easy.

It will look at search advertising deals with Google, it will evaluate tie ups with AOL, and it will look at whether anything can be done with Rupert Murdoch’s News Corp. Now that Microsoft has withdrawn from the picture, however, those parties might be less inclined to cut deals with Yahoo, partly because the latter is no longer in mortal danger and partly because they don’t feel the same sense of urgency that Yahoo has to make a deal.

Who knows? If Yahoo falters, Microsoft might return with the same bid or a lower one. It might even seal the deal next time. I still contend that it would be the wrong move for Microsoft.

What should Microsoft be doing? I’ll deal with that question at a later date.

Platitudes from Balsillie

Senior executives in the technology industry can be as bad as politicians when it comes to speaking in vacuous cliches and foggy ambiguities. Statements can be so vague as to be meaningless, yet there will be obsequious toads who come away proclaiming that what they’ve just heard from a CEO somehow points the way to a bright, if decidedly nebulous, future.

RIM’s co-CEO Jim Balsillie was at it again at the GSMA World Congress in Barcelona earlier today. First, he spouted the hackneyed old saw about carriers having to be choose between being pipes and platforms. How long have I heard this one? For too many years, I’m afraid.

But wait a minute. Who said subscribers (you know, the common folk who pay the freight) want carriers to be anything more than a pipe? It’s clear to to me that carriers don’t have a clue how to build a platform, certainly don’t understand content or creativity, and can’t be depended upon to deliver consistent innovation. But they know how to turn the taps on and off and bill you accordingly at the end of the month. Let’s not push them into unknown territory where they can only injure themselves and others. 

So, given the self-evident limitations of carriers, why does Balsillie encourage their harmful delusions? Oh, yes, now I remember: They’re his customers. He’s got to get them to dream big, or they won’t buy the products he’s pushing alongside his latest industry narrative.

He’s good at more than cliches, though. Balsillie also speaks in sweeping generalities that are superficially plausible but lack any particulars or corroborating substance. Exhibit A: His prediction of a "business-to-business social-networking revolution." Look, I like revolutions as much as the next guy, but could we understand exactly why we’re revolting, and what we’re going to get once we’re done? Unfortunately, not many details were to had.

Said Balsillie:

"Once social networking becomes a B2B phenomenon–not unlike IM and texting–I believe every single social-networking user will want a data plan."

Some obvious question to which I don’t think we’ll find ready answers: How will social networking become a B2B phenomenon? Just what is B2B social networking, anyway? Why will people want it, and why will their employees feel compelled to pay for it? Or, will you be selling it, like consumer services, to single social-networking users?

I know, I know: I’m ruining the dream, complicating things with cavils and questions, sweating the small stuff.

At some point, though, we in the technology community have to demand clearer messages from the people who run the show.

Building on Industry-Wide Trend, Yahoo Integrates IM with Web-based Email

In another example of how online applications are becoming richer and more useful, Yahoo announced today that it will embed instant messaging into its web-based email program within the next few months, allowing  users to partake in live chats from Yahoo Mail and to obviate the need for installation of a desktop IM application.

As reported by CNET’s News.com:

With the new feature, users will be able to see if their contacts are logged on to Yahoo Mail and easily chat with them. They will also be able to see the online status of contacts who have Yahoo Instant Messenger, chatting with them as well. Eventually, they will be able to chat with MSN Messenger users too. Yahoo and Microsoft made their instant-messaging applications interoperable in July.

The auto-complete function in Yahoo Mail will indicate if a contact is online, and starting a chat will be as simple as clicking once, Yahoo said. Users will also be able to easily send a copy of chat sessions to people in an e-mail and to copy e-mails into chat windows.

Garlinghouse told CNET that the new embedded-IM feature will be introduced to Yahoo Mail users in the next couple of months. Today Yahoo Mail users receive presence indications as to when their Yahoo Messenger contacts are online, but they must have IM clients installed on their PCs if they wish to initiate IM discussions.

While neither AOL nor Microsoft has integrated chat into their online email programs, Google offers IM integration in its web-based Gmail messaging service. According to Rafe Needleman of CNET’s Webware, however, the degree of IM integration provided by Yahoo goes beyond what Google delivers:

In the new version of the Yahoo Mail beta, which will roll out "in a few months," you can start to compose an e-mail just as you always would, but if the recipient of your e-mail is online (on Yahoo IM, MSN IM, or on Yahoo Mail), you’ll be able to exchange your e-mail composition window for a chat window. Or, of the recipient comes online while you are writing an e-mail, you’ll get an alert, and will be able to invite them to chat. When you do, the e-mail you’ve been writing will get copied into the chat window. Likewise, if you’re chatting and they drop offline, the transcript will get copied into the window as it changes from chat to e-mail.

This integration should make it very easy to maneuver between the two communication types, and it will also help people new to IM to get with the program. It doesn’t require a downloaded IM client; directly from the Yahoo E-mail web page, you’ll be able to chat with anyone.

As Needleman suggests, the next step for Yahoo and Google, as well as the others, is to add voice and video conversations and conferencing to the mix. It seems inevitable that all the major players will offer integrated online unified communications.

A continuing problem, as I’ve noted here before, is the lack of support for the SIP signaling and session-management protocol standards, as well as for IM and presence protocols such as XMPP and SIMPLE.

Although we will see compelling unified-communications services online, they’ll be disparate islands or silos of communication. Side deals, such as the one between Microsoft and Yahoo, will provide degrees of interoperability, but we’re a long way from an open, standards-based approach, such as the one that gave us the SMTP protocol and the seamless communications ubiquity of email.

RBC Note Says Skype Growth Tapering

In a note to clients issued earlier today, RBC Capital Markets analyst Jordan Rohan said recent inquiries made by him and his colleagues found that downloads of Skype software are declining and that growth in new users has begun to taper.

Wrote Rohan:

Our recent checks indicate … that the user growth is no longer accelerating. Ebay may need to spend on marketing or offer price promotions to reaccelerate growth heading into 2007. If eBay chooses to do both, margins would fall short or our revised forecast.

Rohan indicated that Skype, which provides presence-based VoIP and instant-messaging (IM) sessions over the Internet, is on track to record 51 million downloads of its free software in the third quarter. The analyst believes that number is slightly lower than what Skype recorded in the second quarter.

Rohan also wrote that Skype is likely to add about 18 million new users during eBay’s fiscal third quarter. That would be about the same number of new users that Skype added in eBay’s fiscal second quarter.

As a result of his findings, Rohan lowered his 2007 revenue estimate for Skype to $400 million from $475 million. He also reduced his price target for shares of eBay to $31 from $32 and slashed his estimate of eBay’s 2007 earnings to $1.18 a share from $1.20 a share.

Notwithstanding RBC’s research note, I think eBay might have bigger problems than Skype.

Even if growth in downloads and news users is slowing, Skype has a large base of regular users that could be persuaded to use the peer-to-peer communication service with greater frequency. With more collaborative features, video calls and videoconferencing, and a promotional campaign that stresses Skype’s strengths — integrated presence across communications media (which improves the productivity of communications), improving voice quality, and attractive inbound and outbound calling rates to accommodate one’s contacts who don’t reside within the Skype cloud — there’s no question that Skype could mine greater riches from its existing users.

In many ways, Skype is what SIP-based communications should have become. It allows for NAT and firewall traversal, incorporates various modes of communication with built-in presence, and it facilitates session mutability, allowing users to start a discussion via instant messaging and then switch it to voice as required. It also allows other participants to be added to a discussion already in progress.

Standards-based SIP should have filled the role that Skype occupies, but it seems to have gotten lost in an IETF labyrinth of technological overreach, logistical fog, political gamesmanship, and general incoherence. It’s a shame, really, because while Skype continues to do many things right — and still has better prospects than the RBC note might lead you to believe — it is no substitute for a more open approach that would allow for interoperable IM and voice communication spanning other voice-capable IM platforms.

Let’s hope somebody in the industry — Google, perhaps — sees that opportunity and seizes the initiative. There’s still time for somebody to get it right.

McAfee and Skype Collaborate . . . On Paper, Anyway

McAfee and Skype claim to have formed a security alliance of sorts, but, if you read the press release announcing the relationship, it’s difficult to conclude that there’s anything of substance to announce.

The press release says McAfee’s Internet Security Suite 2006, VirusScan 2006, and Personal Firewall 2006 products have been "Skype Certified," which apparently means they meet Skype’s "strict standards for security, quality, and usability."

Okay, but how do the McAfee products add value, in the form of essential security, to a Skype user’s online experience? Well, it’s here that the two companies fail to make a persuasive argument. While one can imagine McAfee wanting to make a strong case for itself as a guardian of Skype communications, Skype is having none of it.

Reads the press release:

 . . . files sent using the Skype file transfer function can be easily scanned by the Skype certified McAfee products, adding an extra layer of protection to documents shared in an already secure environment. Skype calls and chats have always been and will remain private and protected using Skype’s encryption technology.

So, McAfee products provide additional protection to documents and files being shared in an environment that’s already secure? If the environment is secure, and the documents already are protected by Skype, why the need for the added protection? It sure reads as if McAfee’s value proposition, at least in relation to Skype traffic, is entirely superfluous. Skype even makes the additional point that its IP-based telephony and IM chats are protected by its own encryption technology, so there’s nothing for McAfee to add there, either.

For McAfee’s sake, I hope it has a stronger marketing hook for its products than the negligible security protection it offers to Skype users. As for the Skype Certified program, at least in relation to security, why bother? If Skype’s application traffic is as impregnable as the company claims, why establish security partnerships?

I think the marketing teams at both companies should have asked themselves some basic questions about the nature of the relationship and its objectives before they drafted and issued today’s press release.