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Skype Celebrates 9 Years of Disrupting Telecom, But What Comes Next?

Nine years ago today, August 29, 2003, the first version of Skype was made publicly available. Now in 2012 Skype celebrates it's 9th birthday - and first birthday as part of Microsoft... and it's still disrupting telecommunications.

Four years ago on Skype's 5th birthday I wrote at great length about how Skype has changed telecommunications and last year I wrote a retrospective as well - both of those posts still stand... Skype has only added more capabilities over the time. Skype is still one of the only applications that I can say I personally use each and every day. It's critical to what I do.

As I look back on my last year of writing about Skype, I'd note that they've finally gotten the app to work more similarly across operating systems, introduced amazing video quality, crossed over 40 million simultaneous users, made yet another attempt at a developer program and continually improved the Skype-on-mobile-device experience. Skype has also added a deeper Facebook integration, embedded Skype into more TV and other consumer devices, rolled out Skype on Windows Phone and continued to improve their video offerings.

But what comes next?

What will we be writing about on Skype's 10th birthday next year?

Jim Courtney captures this well in a post today on the theme of "Whither Skype?" The whole post is worth a read, but I'll highlight one paragraph in particular:

Where does Skype play a role going forward? Beyond its inherent calling features within Skype clients, Skype definitely provides the infrastructure for free chat, voice and video conversations. In one sense we have seen that through their relationship with Facebook. Besides its ongoing development and innovation on mobile devices, Skype will introduce opportunities for experience sharing into several Microsoft products. Skype is incrementally improving its mobile offerings every few months on multiple vendors’ devices. Its primary focus will remain on real time communications; the question is where does one want to launch and receive a “sharing experience” in the course of our ongoing social networking activities?

The whole "social interaction" is a key one... but let me expand on a couple of points here.

Old-School Telecom Fights Back

Skype's greatest challenge going forward is one that comes from its success - by most any measure, Skype is destroying the revenue for international long-distance. Telegeography released a report back in January showing the incredible growth of Skype calling versus that of traditional carriers:

A study prior to that in January 2011 had estimated that 25% of all international calling was via Skype... and the growth in this more recent chart can only mean that number has gone even higher.

UPDATE: Digging into the executive summary for Telegeography's latest report shows that they estimate the total global international long distance market in 2011 to be 438 billion minutes. Of that, Skype accounts for 145 billion minutes - or 33% of all international calls. Yes, 33%!

I was concerned that the 438 billion minutes did not include Skype minutes, but the caption to Figure 7 (which shows the 483 billion) on page 9 states:

Notes: Total traffic reflects TDM and VoIP telephone traffic transported by carriers, and international PC-toPC Skype traffic. Traffic from Skype-to-phone service is included in the telephone traffic totals.

Separately, Phil Wolff from Skype Journal indicated that he had some time earlier contacted Telegeography about this question and they had confirmed to him that Skype numbers were included in the total figures.

UPDATE #2: I was alerted that back in January 2012, Skype published a blog post about these Telegeography numbers in which they state that the Skype-to-Skype calling is NOT included in the "total" number and so now I am not sure precisely what to believe. If it not included, then the total number of international long distance minutes would be 583 billion, of which Skype's traffic would represent 25% of all global traffic. Still an amazing figure! I am going to see if I can contact someone at Telegeography to get a verification of the numbers.

I can say that from personal experience - I never make international calls using the legacy phone network. I use Skype for all those calls... either from my laptop or increasingly from my mobile devices.

In fact, at this point in time if you are NOT using Skype for international calling, I would say that is probably only because you don't have the requisite access to bandwidth or equipment... or simply aren't aware of Skype. (Or yes, you could be using one of the other competing services appearing.)

The traditional telcos, of course, are not happy about this. Particularly the ones associated with national governments for whom all those international long distance charges constituted a MAJOR source of national revenue.

They would like to get back into the revenue stream and force Skype and all the other "Over-The-Top (OTT)" service providers to somehow start paying them again. They would like to put this whole Internet and VoIP genie back into the proverbial bottle and return to the "good old days" when all revenue went through their channels.

All this pent-up anger and frustration with declining revenue is heading toward the World Conference on International Telecommunications (WCIT) in December in Dubai where many of the traditional carriers are attempting to use the International Telecommunications Union (ITU) as a vehicle to reign in the OTT apps like Skype. They (through various governments) want to see the International Telecommunications Regulations (ITRs) rewritten to force OTT apps to pay.

It's going to be a mess.

Just look at all the WCIT-related news stories. I certainly hope that sanity will prevail and that the Internet will remain much as it is today... but there are no guarantees and these next few months are going to be critical for the future of the Internet, for telecommunications and for companies like Skype.

The outcome of all of that may have a lot to do with what the future holds for Skype.

WebRTC/RTCWEB and Baking Voice Into The Fabric Of The Web

Another challenge for Skype will be the ongoing work of the "WebRTC/RTCWEB initiative" to essentially bake voice/video/chat communication into the fabric of the web. (Learn more about WebRTC/RTCWEB if you aren't aware of it.)

Skype hasn't really had a real challenger to its predominance as the major voice/video/chat provider for the Internet. Skype's super-simple installation and ability to "just work" has made it near ubiquitous. Add in the network effect of now having such a huge user base and it's clear why so many people use Skype.

BUT ... as much as there are many people using Skype, there are MANY more who use web browsers!

What if voice/video/chat gets moved into the web browser? What if you can go into Google Chrome, Firefox, Safari, Opera, Internet Explorer and initiate all your calls and chats from within your browser? What if you can do all this from your mobile web browsers, too?

What if you don't need to have a separate application any longer? What if you can just do all your "real-time communications" (RTC) through your web browsers?


That is exactly what the WebRTC/RTCWEB initiative is all about - putting the building blocks for RTC down into web browsers so that any web developer can work on building RTC applications.

In theory, many of these applications could reduce the need for Skype. Now, in reality, you still have the "directory" issue in that you need to find the other party with whom you want to communicate. Skype provides that easy directory. But look what Google is doing with its central accounts... look what Apple is doing with their Apple ID... there are a lot of players out there also building directory infrastructures. (Plus social services like Twitter and Facebook are also getting in that game.)

Now, Skype has been involved with WebRTC/RTCWEB from the initial meetings. Skype employs a number of the people who have been contributors along the way. Many have seen this as a possible way for Skype to roll out its own web-based Skype client and make that even more ubiquitous.

But Skype/Microsoft is no longer following the majority path of the overall initiative. They recently released their "CU-RTC-Web" proposal which deviates in some key ways from the current WebRTC/RTCWEB plans and proposals.

Will the divergence be resolved? Will there be a common solution? Or will Skype/Microsoft go on their own path? Will we see incompatible implementations? Will WebRTC/RTCWEB open up the possibility of some true challengers to Skype's dominance? Or will it wind up not delivering on the full promise of browser-based RTC?

Time will tell... but this next year will be a fascinating one.

The Microsoft Effect

Skype also faces the good and bad news that it is now part of Microsoft. On the one hand, there is a huge potential for Skype expansion into enterprises (a market Microsoft knows extremely well) and certainly some interesting synergies with Microsoft Lync and other products.

On the other hand, Skype is no longer the scrappy little Estonian startup that we used to write about. It's now part of the mainstream corporate world. It has matured - but with that maturity comes the need to maintain legacy compatibility, to make sure new things don't break old things, etc., etc.

As several of us wrote about back at the beginning of 2012, Skype has the real chance of becoming "boring", i.e. not as exciting to write about. As I said in my post:

Instead of the little company taking on "the Man", Skype has now become "the Man".

Add to that the fact that in 2012 Microsoft is not really seen in the larger media as a bastion of innovation.

Skype's success may lead it to be less exciting to write about and talk about - or not... we'll have to see what they are able to do within the new world of Microsoft.

It All Comes Down To #$@%$! Batteries

It perhaps goes without saying that the future of so much of our communication is all about mobile and the use of smartphones, tablets, etc. As I wrote at the end of my recent post about Skype's photo sharing for iOS, Skype would love to see us just keep Skype running all the time on our mobile devices. They say as much in their blog post:

We've also improved the overall performance of Skype's mobile apps. We've made them less battery hungry when running in the background, so you'll now be able to answer Skype calls throughout the day when they come in. And, as you'll be able to keep Skype open, you can respond to or send IMs to friends and colleagues all day long.

This is their mobile challenge. I do NOT keep Skype running on my mobile devices for precisely this reason. Doing so has destroyed my battery life in the past. (In fairness, I've not yet tested this new version.)

I do, though, keep other apps running on my iOS devices and so I receive notifications and messages via those services.

Skype's mission is to get their mobile app to the point where people do keep it there running all the time.

The Social Impact

Finally, the "social" aspect is one challenge that Skype certainly faces. There is the ongoing reality that:

much of our "messaging" has moved to "social networks".

We use Facebook, Twitter, Google Plus, LinkedIn and a hundred other sites (and maybe soon) to share our messaging. On our mobile devices we've also added in other OTT apps like WhatsApp, Viber, TuMe and again a hundred others.

We're interacting in communities of "friends".

And we're not "talking" as much as we used to - in either voice or video. Oh, sure, we definitely are talking... and Skype's video usage, in particular, is no doubt increasing as more people discover Skype and also as Skype gets embedded in more video devices.

But overall the trend I'm certainly seeing is for people to interact and exchange messages in more text-based mechanisms... and again primarily through "social" services.

The question for Skype is how they best play in that space.

I don't do half of the Skype chats I used to do because many of the people with whom I might have IM'd via Skype now contact me via Facebook or Twitter. With Skype's Photo Sharing for iOS, I would honestly never think to use Skype for sharing photos... not just because of the battery issue but also because that's what I do with Facebook or Instagram or even Twitter. Not Skype.

The Facebook integration with Skype was an interesting move and I could see it for enabling real time communication from within Facebook... but I personally don't see the Skype application as a place to read Facebook updates and interact with them. I do that through Facebook's website - or through Facebook's mobile apps or other apps like Flipboard or Tweetdeck.

Even as a platform for exchanging status updates, Skype's apps no longer work like they used to. In Skype versions prior to 5.x (on a Mac, anyway), it was easy to see where you could enter your "mood message" and so it was common to update that somewhat frequently. The 5.x client brought us a "stream" interface so that we could see the updates from others - but then in a rather bizarre move they made it harder for you to update your own message! As a result I know I hardly ever update my message now. (and usually it's when someone pings me to tell me that the existing message is out-of-date!)

Skype's challenge is to figure out how they fit into the social ecosystem. Do they attempt to become the real-time communications infrastructure for social networks? So that when you do want to move your interaction to a voice or video call you can do so over Skype? Do they try to open up their massive platform to be a social infrastructure? Do they join the rest of the players in trying to be "the place" where you read your social status updates?

It's not clear what Skype will choose, but if they don't choose some path the continued rise of social interaction may render them less of a player as other players emerge.

In The End...

Skype... as Skype celebrates its 9th birthday, it's good to pause and think about all the incredible disruption they have caused. Few companies in recent history have done as much to shake the very foundations of the ways in which we communicate. Recently, my three-year-old daughter said to me:

Daddy, when I grow up I want to fly away on an airplane so that you can Skype me!

Earlier in her life when I called on the regular phone line she would look at the phone handset trying to understand why she couldn't see my video. She has grown up with video communications just being "normal" ... and with the idea that you would just talk to a computer screen.

Skype has done all of that, becoming a verb in the process.

Congrats - and happy birthday - to all the folks at Skype. As noted above, their tenth year is full of challenges... lots of crossroads and choices lie ahead, not all of them under Skype's control... but I look forward to seeing where we are next August as Skype crosses that 10-year milestone.

We do, indeed, live in interesting times.

UPDATE: Jennifer Caukin at Skype has published a post on Skype's blog with a timeline infographic outlining the growth of Skype over these past 9 years.

UPDATE #2: Phil Wolff is out with a humorous look at what the next 9 years of Skype could bring. Not sure about all of his predictions, but some are certainly fun to think about... :-)

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