Alec Saunders SquawkBox

eBay’s big mistake; Why the JoltID license was inevitable.

2009-11-07T07:30:49-08:00

Yesterday the end came to the Skype / JoltID lawsuit. Skype co-founders Janus Friis and Niklas Zennström have taken a 14% stake in the company, Index Ventures and Mike Volpi got the boot, and Skype users all across the world breathed a sigh of relief.

One thing that was never in doubt was that Skype would take a license from Friis and Zennström. Despite all of the breathless speculation that the company might buy Michael Robertson’s SipPhone and Gizmo5, it simply wasn’t going to happen. One doesn’t swap protocols for a half billion installed client applications at the drop of a hat. What was it worth to Skype to not have to do that? The deal values the JoltID license at $275 million, and the rumour mill pegged the price of the SipPhone deal at $50 million. Ergo, the cost of disrupting the Skype business by swapping out JoltID for SIP is at minimum $225 million. The disruptions to the business and to Skype’s enormous install base might have been far larger, however. A license was the only way to manage that risk. Skype knew it, Friis and Zennström knew it, and eBay knew it.

Exposed as rank neophytes in the world of software licensing, Meg Whitman’s acquisition team at eBay committed a costly error in buying Skype – not acquiring control of the entire asset. Even if the Skype founders had not wished to sell the Jolt-ID technology to eBay at the time of acquisition, a “paid-up royalty-free license in perpetuity” could have been made a condition of the deal. Licensing deals with these kinds of terms in them are common, and it’s unlikely that Friis and Zennström would have balked given the billions of dollars that eBay was already offering.

The lesson in all this? Deals involving technology licenses and acquisitions are common in business. When acquiring a technology asset, buyers must acquire the necessary control needed in order to protect the business. Either buy, or license in perpetuity, what you need to prosper. Unless your intent is to immediately begin work on a substitute technology, a license for core technology that needs renewal is a sure way to find yourself caught by the short-hairs in a future negotiation.

Om Malik said it best — “If my previous employer, Business 2.0, was still publishing the 101 Dumbest Things list, I would make eBay’s original Skype deal as the No. 1 dumbest thing…ever!”

Voxygen’s revolutionary “Caller ID” application

2009-10-30T10:17:10-07:00

Here at eComm, the last demo of the conference is one of the most impressive. Voxygen’s “next generation Caller ID” revolutionizes customer service by linking actions on a web site to a click to call button. The example they showed included a customer who browsed a camera shopping website, filled in a form for a call back, and then received a call from the customer service rep. At the call center, the representative received demographic and caller information, plus an entire history of what the customer had been browsing on the site, and up-sale tips. Result: A better and faster customer experience, with more revenue for the vendor, and lower costs.

The technology operates by assigning a unique temporary number to each support incident, and then attaching the information collected from the web site to the information popped onto the screen when the call center agent answers.

The commercial implications are obvious, but what about applications in support, learning, and coaching? The possibilities are endless. This is a winner for sure.

eComm Day 2: the shift to value

2009-10-30T02:03:09-07:00

Yesterday’s eComm saw an emphasis on value creation on telecom networks. Talks ranged from Dean Bubley’s instructive and provocative discussion of LTE and how it is being held hostage by ordinary telephony, through to demonstrations of applications that embed voice into the new categories of “flow” applications. Stuart Henshall showed how voice can be embedded into a twitter stream with his Phweet application, and Tim Panton showed a similar application with voice conversations embedded into Google Wave. Voxeo’s RJ Auburn showed how, with their platform, conversations can easily exist on either text or voice channels, transitioning simply from one to another, without the developer having to differentiate between media in the application.

Two investors joined the stage as well – Sean Park of Nauiokas Park, and Michael Jackson of Mangrove. A major focus of the day became value creation through disruptive technologies as a result. Adding fuel to the fire, Park argued that today’s telecom business should be two separate businesses, network management, and applications delivery because of financial considerations. According to Park, networks throw off predictable cash flows, which makes them appropriate for debt financing vehicles, while applications need capital infusions in the form of equity to get build.

Meaty stuff.

EComm: Time to change the station

2009-10-29T03:51:07-07:00

I’ve spent a little over a day at eComm meeting people, listening to the conversations and presentations happening and reflecting on what I’ve heard.

During the panel yesterday afternoon, I noted that I spend less on voice, data, and text messaging each month than I ever have, but more money on communications over all. What has made up the difference? Music, and applications. The carrier’s share of wallet is in decline, although I spend as much or more money than before. When I asked whether the panelists were worried by this trend, there was no good answer.

It’s time to start a new dialog in the emerging communications community. It’s time to abandon conversations about whether carriers will or won’t survive. They will. Yes, margins are under pressure, but networks need to be managed and operated. Better the carrier manage the network than, perhaps, a government entity.

Perhaps carriers will be the pipes companies, and as many people observed yesterday at eComm, that’s a great business. Perhaps they will be applications developers, although I think that’s highly unlikely. The vertically integrated model this implies necessarily constrains innovation. Perhaps they will be aggregators of third party applications; several carriers I spoke with yesterday expressed support for this viewpoint.

It is, however, time to stop talking about the death of the incumbent. Let’s instead change the conversation – acknowledge that the carrier network is a platform, and that the carrier has a need for an application community, and begin the dialog between network partners and developers about the ability for those operators to help us get to market.

While we’re at it, let’s also change the channel, dial away from the conversation about “mash-ups”, and focus instead on user needs, the user experience of communications, and the economics associated with that user experience. By focusing on the business value of the services being developed instead of the technology platform, we can all become better able to reach the customer with game changing new communications services.

Make sense? It’s an idea who’s time has come.

BlackBerry Doomed?

2009-10-29T02:05:46-07:00

Toktumi’s Peter Sisson asks Is the BlackBerry Doomed? and goes on to compare his recent experience of developing for BlackBerry with his experience as an iPhone developer. Many of his complaints – non-standard hardware and OS versions in particular – are the same issues we ran into two years ago when we developed and delivered iotum’s Talk-Now presence application for BlackBerry. Ultimately we gave up on the BlackBerry, believing the return on investment of developing for the web would be higher. And, in fact, Calliflower on iPhone is a hybrid web / native application, proving that hypothesis. The bet that we’ve made is that web development will be as powerful on handheld devices as it is on computers.

RIM is addressing some of the issues that Peter raises already. In particular, an upgraded web browser is in the works, which will make hybrid development strategies like ours much more appealing. Moreover, the business terms for selling applications through BlackBerry AppWorld are more attractive than Apple’s iPhone App Store. However, there are still holes in RIMs strategy which need to be addressed.

In particular, the user experience associated with getting an application onto a BlackBerry is a pale shadow of the iPhone user experience.

Installing an application on iPhone is a process of searching the App Store, clicking a download link, paying if necessary, and then a short wait.
Installing an application on BlackBerry is a process of determining where to get the application – AppWorld, another store, or direct from the developer – downloading the application, accepting a bunch of scary but mostly incomprehensible security questions, and frequently accepting an often lengthy license agreement.

Why? When RIM announced the AppWorld, their strategy was to be:

Carrier friendly, allowing multiple stores, including carrier specific stores.
Developer friendly, sharing 80% of of the revenue with the developer of an application, and permitting applications to be delivered directly by the developer to the customer, without RIM’s approval.

As a strategy, RIM was attempting to find a position that would allow them to counter the complaints about Apple’s high-handed process. In courting carriers and developers with these concessions, however, RIM has created barriers to adoption of those applications by the customer, which may ultimately cause more harm than benefit.

eComm Europe kickoff

2009-10-28T01:46:33-07:00

At eComm this morning, Martin Geddes kicked off the event with a talk on what the world looks likes when the value of minutes disappears. He cogently makes the argument that business models based on charging for minutes leak cash for corporations that buy those services – the call centers, and so on. He then went on to show how voice could be used to augment business processes using two common technology vectors – social media and voice mail systems. He argues that telco’s need to understand their customer’s business processes in order to add value to the corporation.

Bob Frankston’s talk on Ambient Connectivity argued that the meters on the net need to come off, and that we should think of the net as a utility. Frankston’s position is that connectivity is a given, and that we should be allowing to anyone to connect to the network in order to unleash innovation.

Over dinner yesterday evening I chatted with Bob about some of his ideas. Charming and effusive, he is as always the radical seeking to destroy the current order. I was struck, however, by the similarities between what Martin and Bob had to say. Martin’s position is that the telco needs to reinvent itself because the old business model is broken. Bob’s point of view is that we should just blow up the telco in order to allow innovation to flourish.

The reality is that telco’s who don’t reinvent themselves will turn out as Martin suggests. As appealing as Bob’s radical view is, it’s simplyu not a requirement to legislate minute models out of existence. The Voice 2.0 trend is doing it already. Just look at Vonage’s subscriber numbers to prove it to yourself.

Windows 7 launches

2009-10-22T05:48:36-07:00

Today is Windows 7 launch day, the day that Microsoft hopes to erase the ghosts of Windows Vista, and move forward. After many months of using the beta versions of Windows 7, I feel confident declaring it the best Windows yet. Windows 7 is solid, it performs well, and the rough edges of the new user experience pioneered in Windows Vista have been shaved off.

I run Windows 7 on a variety of hardware – a couple of Core2 Quad PC’s equipped with 6 and 8 gigabytes of RAM respectively, an Athlon 3800 single core with 2 gigabytes of RAM, a core2 Duo with 2 gigabytes of RAM, and an HP Mini 1000 with an Atom N270 single core processor and 2 gigabytes of RAM. Windows 7 performs well on them all. The single biggest performance factor is having sufficient RAM. Microsoft’s system requirements page says that 1 gigabyte of RAM is sufficient for Windows 7. In my experience with the beta, that’s not enough. 2 gigabytes is a requirement for acceptable performance. A gigabyte of RAM is a $30 to $50 investment – spend the money!

And what of Apple? Coming off outstanding financial results at the beginning of the week, Apple sought to trump Microsoft’s launch by announcing new products of their own. Nicely played!

In the short term, we shouldn’t expect Apple’s marketing tactics to take a new tack, even though Windows 7 is launched. Yes, it will be more difficult to attack Windows 7 than Windows Vista. However, the prize money in this battle is in shifting the upgraders – those who have held off on Windows Vista and are still on XP. Their computers are old, and many are not likely candidates for Windows 7 because of hardware constraints. Even if those computers are capable of running Windows 7, Windows XP is not a supported upgrade to Windows 7. Can those consumers be persuaded to move to Macintosh instead of buying a new PC?

DISCLOSURE: Until 2000 I was a Microsoft employee, and a member of the Windows team. I’m not a Microsoft shareholder (it has been a terrible investment, and I sold Microsoft out of my retirement savings portfolio years ago), nor do I hope to work for the company at any point in the future, which is to say I’ve no vested interest in seeing them succeed.

Geddes on Business Models

2009-10-22T05:19:01-07:00

In advance of next week’s eComm Europe in Amsterdam, organizer Lee Dryburgh has posted a fascinating interview with BT’s Martin Geddes on business model innovation. Martin’s thesis? The bulk of the profits from the technical innovations in the telecom industry will come from business model innovation, and the real money is in serving businesses in the ways that they want to interact with their customers. The interview also strays into some of Martin’s pet topics, including presence.

The most valuable part of this entire discussion was the clear and concise way in which Martin describes business models in general. I predict that his succinct description of cost inputs and revenue outputs will become a staple of start-up business plans.

Get your inner entrepreneur on at the Ottawa Startup Bootcamp

2009-10-20T13:12:56-07:00

The Ottawa Network is hosting a Startup Bootcamp this weekend at the University of Ottawa. The idea? Get together with like minded people, design and prototype a business, and pitch it… between Friday evening and Sunday evening.

The most promising proposal wins $5,000 in seed funding, when they incorporate and start the business within 45 days of the competition.

From the website:

“The event will place 75-100 people into functional business teams around ideas for businesses. The participants, composed of developers, business managers, start-up enthusiasts, marketing gurus, accountants, lawyers, graphic artists and other roles will work together during the week end. At the end of 54 hours, they will have turned a business idea into a business plan ready to start on the Monday. A review panel at the end of Sunday’s presentation’s will determine which of the opportunities is the best developed and award a prize of $5,000 as the first seed money to start the business (e.g. incorporation costs, start a website, etc.). Similar networking events have evolved very successfully in other parts of North America with this one being the first in Ottawa.”

Lots of developer and biz dev tickets have been sold, but the business teams are still going to need folks from the financial, legal and operations disciplines. If you’ve got an interest in starting a company with like minded folks, then hustle on over to the Ottawa Network, check out the event, and buy a ticket.

Does Blackberry need a PR rethink?

2009-10-17T10:50:17-07:00

Gizmodo’s Brian Lam is ticked off. The Blackberry PR team didn’t provide him with a review unit of the new Storm 2 before launch, and consequently he didn’t write a review. Only the New York Times, and the Wall Street Journal got the units, apparently.

RIM has consistently ignored bloggers for a very long time, so Brian shouldn’t be that suprised. Their strategy looks like a hold-over from their enterprise sales days. The Journal and the Times are two of the biggest publications read by business leaders across the US, and so they get the review units. As RIM continues their assault on consumer markets, however, it seems clear that they’re going to have to change the way they approach media outreach. They’re going to have to come up with programs that target writers in enthusiast markets, and in mainstream publications.

The best at providing review units and opportunities for writers is Nokia. Nokia’s “blogger relations” program was started by Andy Abramson five years ago. The program cultivates a community of enthusiastic geeks (like myself) who are always pleased to get a chance to see and play with their latest offerings, and to write about them – good and bad. It has paid off for Nokia with a large and loyal following of enthusiastic customers.

Over to you, Waterloo.

Links for 2009-04-22 [Digg]

2009-04-23T00:00:00-07:00

A Cyber-Attack on an American City
Just after midnight on Thursday, April 9, unidentified attackers climbed down four manholes in the Northern California city of Morgan Hill and cut eight fiber cables in what appears to have been an organized attack on the electronic infrastructure of an American city. Its implications, though startling, have gone almost un-reported.

Links for 2009-04-21 [Digg]

2009-04-22T00:00:00-07:00

Link building vs Link optimization
Valuable advice on how to optimize the links back to your site.

Links for 2009-04-15 [Digg]

2009-04-16T00:00:00-07:00

An Incidental Interview #17 - Robert Scoble and Sheryl Breuk
Proof positive that Robert Scoble brings value and has important things to say.
Three possible outcomes for Nortel after bankruptcy
Good analysis of what Nortel bankruptcy means, and who the suitors for the assets are.
Farting Permitted, Politics Prohibited?
HuffingtonPost covers the issue of Apple blocking and/or delaying games with political satire.

Links for 2009-04-14 [Digg]

2009-04-15T00:00:00-07:00

Use THIS & convince your IT department to give you an iPhone
New Forrester Report reverses their previous critique of iPhone and says "Hell yeah! iPhone is just fine for enterprise use."
Last day of 14 day free trial of Calliflower Premium
Today is the last day of iotum's special offer to trial Calliflower Premium for free -- unlimited document sharing and unlimited conference calling in 17 countries.
Skype to IPO in 2010
Huge news. Skype, with $550 million in revenue this year, expects to IPO in the new year.

Links for 2009-04-09 [Digg]

2009-04-10T00:00:00-07:00

Billy Bob Thornton's blown opportunity
How would you handle the situation if you were Billy Bob? Probably not the way he did.
Thinking about writing an iPhone App?
This is the first installment of a developer tell-all -- what went well, what could have gone better, and what was totally WTF!

Links for 2009-04-07 [Digg]

2009-04-08T00:00:00-07:00

Reinventing the conference call - Great improvement ideas
Great ideas for improving those painful teleconferences ... Even more in Sasha Dichter's reference, http://sashadichter.wordpress.com/2009/04/07/telephonitis/

Links for 2009-02-03 [Digg]

2009-02-04T00:00:00-08:00

Calliflower on iPhone Releases
remains faithful to the Calliflower experience on the web, while taking full advantage of the iPhone experience giving you the hands down BEST mobile conferencing experience ever.