Replies to post #395 on NEW EDIG

[cksla]

Communications portals are coming
Commentary: Video, voice, chat - the next new normal

By Bambi Francisco, MarketWatch
Last Update: 7:23 PM ET July 25, 2005


SAN FRANCISCO (MarketWatch) - Over the weekend, I was in the Downieville, California where more people mine for gold than speak on cell phones.

It's really not a surprise for this Sierra-mountain town nestled in the heart of gold country. But we all know that outside metropolitan areas -- such as San Francisco -- cell phone coverage drops like clockwork.

It makes me wonder how much people really care about futuristic video-cell-phones when they are still waiting for ubiquitous, uninterrupted phone coverage.

But after reading some recent media and blog reports about Skype -- the online service that lets computer users make free, or very cheap, calls using something called voice over Internet protocol (VoIP) -- I was left wondering whether video calls might not be the next new thing. That is -- cheap calls on WiFi mobile phones that let you also see who you're speaking to.

Well, video cell phones may not be around the corner, but a video and voice calling, instant messaging all-in-one communications hub on our desktop is becoming a reality. When it does, it will certainly improve upon the primitive instant messaging clients on our desktop.

Last week, at Tony Perkins' Always On conference, I interviewed Niklas Zennstrom, the CEO of Skype, along with Tim Draper, of Draper Fisher, who invested $10 million in Skype.

The interview was conducted via the Web. Tony and I were on stage while Zennstrom and Draper were both in Estonia. It was the first time that Skype displayed its video capabilities. It's a service that is still in the testing stages, and no release date has been given.

Admittedly, I was more intent on learning about Skype's business model, and its chances of survival against cable companies, like Comcast (CMCSK: news, chart, profile) , phone companies, like Verizon (VZ: news, chart, profile) , and, of course, Microsoft's (MSFT: news, chart, profile) MSN, Google (GOOG: news, chart, profile) , Yahoo (YHOO: news, chart, profile) and Time Warner's (TWX: news, chart, profile) AOL.

They all want a piece of Skype's action. Skype has 46 million registered members who use it to make free phone calls over the Internet. About 1.7 million pay to use SkypeOut's service, which allows subscribers to use their PC's to call regular phones.

The one-hour interview was 100% Web based. It cost both Skype and Always On practically nothing to beam these boys in.

If we were to have done the interview via satellite, the hour interview would have cost $850. That doesn't include the cost for a truck and crew. Actually a satellite hookup to Estonia would have required 2 satellite hops, so the cost would really have been $1700. The interview is available on Always-On. Click here.

Zennstrom wouldn't comment on speculation about Yahoo's interest in buying Skype for $100 million. Additionally, neither Zennstrom nor Draper would comment when I asked whether Skype is on a run-rate to generate between $6 and $10 million on sales.

But what Tony and I failed to ask more questions about was the video technology itself.

So, here's a brief explanation of just what the 600 or so attendees watched, and why it was worth showcasing.

The video quality was pretty good. And, that's important to note considering most video quality over the Net has been grainy and choppy. There was a minor operator failure (by me) in the beginning when I couldn't find the right button to hit to expand the video image of Draper and Zennstrom. But overall, the video demonstration proved that video over the Internet will be a reality soon enough, and that the experience will be enjoyable, and not just bearable.

Importantly, it will be a must-have feature that's graduated from the experimental stages.

Microsoft's MSN rolled out an enhanced version of its messenger client with an integrated audio/video PC-to-PC VoIP solution back in April. To date, MSN said in one day it supported 8 million Webcam sessions. AOL, which introduced video integrated with its instant messaging client in February 2004, is expected to roll out a new a unified communication service (code name Triton) that will become the default AIM service. This new client may likely have some video capabilities integrated as well.

What about taking Skype mobile?

Today Skype can be used on a PDA, which runs PocketPC. But I cannot run Skype on my Palm (PALM: news, chart, profile) Treo because it runs the Palm OS, which Skype does not run on.

Skype will have a dedicated Skype WiFi phone, so Niklas tells me.

"A Skype WiFi phone is a phone that looks like a mobile phone, but it has the Skype familiar user interface in the display, where you can see if people are online or not," he said, via e-mail. "The phone connects to a WiFi access point instead of the expensive cellular networks."

As for video on cell phones, here's what Draper had to add: "On cell phones, there will be a great opportunity for Skype video. I suspect that WiFi phones will also soon have video capability."

Sound off: What do you think of Skype's technology and would it be a good acquisition target for Google? Ping [e-mail] or go to Bambi.blogs.com



Bambi Francisco is Internet editor for MarketWatch in San Francisco.