Softphones are Platforms
While I was at VON I was reminded once again that platform strategy is one of the most misunderstood business models in technology. I dropped by the booth of one of the big name softphone vendors to have a chat and find out what it would cost to license their SDK, which was the primary offering they were pushing at the show. As software developers, we think it would be interesting to more tightly integrated Iotum’s boomerang with a softphone, and these guys certainly get the mindshare. They seemed like a good candidate.
Except that they have taken a deep dive into the well of insane business models.
I was told by their VP of Sales, that the entry price for the SDK was $300K. Yes, it includes 50,000 distribution licenses for the eventual client, but the price to get in the game is $300K. Oi!
They completely failed to understand that they are in the platform game now. Their product is not technology anymore, but rather APIs. The software people pay for is simply a distribution channel to get their APIs into the market. The only way to win as a platform is to have the mass of software developers behind you, and the only way to win developers is to give the API to them for free.
The company that does this better than anyone else in the world is, of course, Microsoft. The Windows 2000 launch is a great example. Of the 5000 people who worked together to build and launch Windows 2000 (the last Windows launch I participated in during my days at Microsoft), fully 1100 of these people were technology evangelists. These are guys who fan out into the market seeking out complementary technology providers in the ecosystem around Windows, educate them on the technology offerings, and at no cost (usually) provide development tools and assistance to get them on board with whatever API Microsoft wants them to use in the next OS. Every time one of the 24,000 companies in the Windows ecosystem embeds a Windows API into one of their products it ensures the longevity of the Windows business, and gives Microsoft the leverage it needs to negotiate the best deals it can with the PC manufacturers who ship Windows on their PCs.
So, back to my point. Softphones are platforms, plain and simple. Microsoft’s Communicator has a rich API, Xten’s Eyebeam has a rich API, SJPhone has an API, and GIPS delivers an open source softphone built on reSIProcate with their sound system as well. Softphones are not about being a substitute phone on a PDA or a desktop PC, or a convenient tool for you to use from a hotel room while you’re on the road. They are the the platform integration point for the IP communications experience.
What that means is that there will be no more than two or three players who survive in this market. Microsoft is going to be one of them. The market will support one or two more, just to have an alternative to Microsoft. One will likely be an open source solution, and that leaves room for one more. It won’t be the guys who are high on their own PR and think they can get $300,000 for an SDK.
August 25th, 2005 at 11:36 pm
[...] As I pointed out in March of this year, the softphone is evolving into a desktop integration platform for VoIP. Expect to see presence become a widely used feature in all sorts of line-of-business applications. And, because presence doesn’t (yet) include the idea of relevance, expect to see many abuses of the technology as well. As Mike Gotta of the Burton Group said in the news piece: "Some people may not want to be pinged by someone they don’t know. There are some etiquette and user interface and communications techniques that developers have to define for the presence enablement of applications." [...]
August 31st, 2005 at 8:48 am
[...] There’s a very interesting story on the wire this morning. Microsoft has acquired Teleo, a San Francisco VoIP startup, and plans to offer VoIP services (both paid and free) through MSN. Repeat after me: softphones are platforms, softphones are platforms. [...]
August 31st, 2005 at 3:30 pm
[...] Om Malik on the Long Term Impact of Combining VoIP and IM. As he says "Voice will soon become an embedded feature in most applications" — a platform component. You will see voice in games, IM, business processes, web sites, and many many more places. [...]
September 2nd, 2005 at 2:05 pm
[...] Once again, close your eys and repeat after me: softphones are platforms. [...]
September 12th, 2005 at 11:30 pm
[...] AFP: EBay takes on Internet telephony with Skype deal. "EBay said Skype will add more functions including video and toolbars for Microsoft Outlook and Internet Explorer, on top of premium services already on offer such as voicemail, call forwarding and conference calling." Softphones are platforms! [...]
April 25th, 2006 at 7:52 am
[...] As I have said many times in the past, softphones are platforms. The future role of the softphone is an integration platform for desktop applications. Skype’s platform strategy, today, is only half there. It relies on old IPC technologies, and forces developers to always have the Skype GUI front and center. This move would address the deficiencies of their current strategy, and would give developers the ability to create bots, specialized Skype softphones for different classes of users (think business), and potentially native Skype devices rather than the PC attached handsets of today. It’s a very smart move, and has been a long time coming. [...]