Alec Saunders SquawkBox

It’s a pretty exciting time around here.  My oldest is heading off to University in a few days time.  We’ve been working on planning and budgeting.

Over the weekend we did some digging into the cost of communications. We compared a Bell Canada land line, a Bell Student Cellular plan, and  Rogers “Campus Calling” Student Cellular plan.  Our current plan is for him to have Rogers Student Cellular plan, plus Hullo.  Here’s how all three stack up: 

The Bell Landline includes nothing more than unlimited local telephone service.  No voice mail, no call waiting, caller ID, or any of the other things you might expect in a package.  On top of that you pay a $4.95 per month Network Charge.  To get the basic call waiting, voice mail, caller ID combination, you have to buy the “Flexibility 4″ package for an additional $15.95 per month.  Bell’s long distance package is $.10/minute, or, budgeting for 150 minutes per month, $15.  The total package, with taxes, comes to $62.18 / month.  Setup fees are waived if you buy the feature package (the “Flexibility 4″), giving a total cost over 8 months, after purchasing the phone, of $527.40.

The Bell Mobility Student Package has a service fee of $20, which includes 250 minutes of daytime airtime, and unlimited nights and weekends (9PM to 7AM).  The features package is include.  However, at 250 minutes per month usage, we’ve budgeted an extra 50 minutes (at $0.30 / minute) for overage, given that the average household uses 300 minutes per month of talk time.  Your mileage may vary.  In addition, the system access fee is $8.95 / month and the cost of long distance on Bell Mobility is a little higher, at $.12 / minute.  It works out to $71.48 per month, with a onetime $35 connection fee, and a budget of $70 to buy a telephone on a 3 year contract.  Total for 8 months of phone service: $676.82.

The Rogers Student Package is the best of the bunch.  $40/month includes all the features, 250 minutes of daytime airtime, unlimited incoming local calls, unlimited calls between other Rogers “Campus Calling” student customers at his school, unlimited evening and weekends and 150 minutes of LD.  I haven’t budgeted for an excess usage charges, reasoning that  between the unlimited incoming local calls, and unlimited evenings and weekends, there shouldn’t be any excess.  In any case, all in, the Rogers package costs $54.09 / month, or (with setup costs) about $537.74 over 8 months.

When on campus or out with friends, he’ll be using his cell phone to make calls.  In his dorm room, he won’t have a landline.  We’ve given him a headset and a very nice HP DV1000t laptop that he can use to make calls with Hullo to friends at other Universities, as well as to friends at school. Essentially, Hullo has replaced his dorm room landline.  And we’ll make our calls to him with Hullo also, because it will reduce our costs and Hullo’s find / follow feature will allow us to always find him the most cost effective way.

With Hullo and a Rogers cell phone, he’ll pay less to talk more from wherever he is, and his friends and family can save money too. 

What could be better?

P.S.  If you would like to do your own calculations, here is a link to my Excel spreadsheet.

This is an interesting academic study of how the Skype network operates.  Some of the findings:

• Skype usage peaks during normal working hours.  Usage is significantly reduced during the evening — by 40 to 50%.  20% fewer users are online during the weekend as well.
• Calls on Skype are longer than PSTN calls.  The average Skype call in the study lasted nearly 13 minutes, versus the well known “3 minute average call length” cited on the PSTN. 

This is just a single study, but it suggests that a significant proportion of Skype calls may be business calls, and that, because of the Voice 2.0 ”voice is free” phenomenon, people are talking for longer. 

 

Andy Abramson has taken a swipe at recent tech industry parties, including the Hullo event I attended the other night.  He calls it the “return of the dot com party craze”.

A really worthwhile read that bears on this topic is Al Ries and Jack Trout’s 1992 Classic 22 Immutable Laws of Marketing.  Ries and Trout advocate publicity vehicles for brand building, and advertising for defence.  Essentially, they maintain that once you’ve exhausted the news, testimonials, and other third party “free” vehicles for building your brand, then, and only then, you should maintain awareness by paying for space.  Seth Godin says similar things in Unleashing the Idea Virus, when he advocates finding the “sneezers” in your ecosystem, and innoculating them. 

Word of mouth, and third party endorsements are the secret of all brand building.  These are the tools used by Microsoft to create the massive buzz around the Windows 95 launch a decade ago.  Word of mouth enabled Harley Davidson to rebuild without ever spending money on advertising.  And it was word of mouth, along with a savvy choice to allow concert goers to freely record shows and swap tapes, that kept Grateful Dead fans in the family for decades. 

Fundamentally, a party is a marketing event that’s about brand.  At a party you’re not going to sell anything, recruit anyone, or position your company or product any differently. The only thing you can do is brand.  In fact, if you want to decompose that one step further, the only branding activities you can undertake at a party are to increase awareness of an existing brand. You can’t build a new brand at a party, unless your goal is to position your company as a great company for parties. 

In other words, sponsoring events can work really well for an established brand, but are likely to be ineffective for a new brand.

So, let’s contrast a couple of recent parties: TechCrunch 7, and the Hullo launch. It’s a bit of a one-sided comparison, but it illustrates the point nicely:

Starting with numbers:

• Both parties had a limit of 500 people.  TechCrunch, which has a very strong brand, filled those 500 slots in between midnight and 6 AM the day the party was announced.  Hullo had (I estimate) between 200 and 250 people in attendance. 
• Blog mentions: TechCrunch 7: 1900, Hullo Launch: 2 (one of whom was me).
• Flickr photos: TechCrunch 7: 712, Hullo: 3 (taken by me)
• Press in attendance: TechCrunch 7: 25, Hullo: none.  TechCrunch had the tech media, the local press, and CBS and Fox News.

Most tellingly, Hullo is supposed to be targeted at the college crowd. However, there is not a single reference to hullo.com on MySpace.

Hullo had a good party, but nobody knew about it, and afterward, nobody talked about it.

Why was that?  Well, first, nobody knows about Hullo, period.  A Google link query on TechCrunch returns 381,000 other site references pointing to TechCrunch, whereas the Hullo link count is just 109.  Hullo is too new to have attracted any attention. Hullo needs to build some Google juice, by focusing on the press, bloggers, and other influencers out there.  They need to build a name. 

Was a party the right strategy then?  No. The money would have been better spent on a blogging and PR campaign targeted at students, the market they want to go after. A simple, cost effective strategy would have been to:

1. Build a focused PR campaign targeted at student newspapers in selected schools in North America.  Explain the benefits of hullo to the student population.  Students will use this.  Free calling is just too much of an incentive to skip past.
2. Seek out the opinion leaders among student bloggers / myspace users.  Again, these are out there.  Get them writing about hullo.
3. Build a myspace widget that every myspace user can incorporate into their site.  Leverage the viral spread of social networking sites like MySpace. 
4. For back to school 2007, once you’ve established a brand, amplify that brand by working with student unions to target frosh week parties on campuses across North America. 

Parties can work.  A party worked really well for Mike Arrington’s TechCrunch for a number of reasons:

1. TechCrunch is a brand already.  It’s been around since 2005, and is one of the highest profile blogs on the net (currently ranked #11 by Technorati).  
2. In Mike’s own words, TechCrunch “is a weblog dedicated to obsessively profiling and reviewing new Internet products and companies.”  By inviting new companies, the news media, and VC’s to the party, he’s reinforcing that brand.
3. He makes news, and his audience is the industry, venture capital, and general media.  A TechCrunch party is an opportunity for those people to mix and network.  He’s taken the “sneezers” of the industry, put them all in one place, and set himself up as the matchmaker.  A TechCrunch party is a megaphone for reinforcing the TechCrunch brand and mission to the rest of the world. 

I don’t want to dump on Hullo too hard.  Their party was fun, and their product is really really good.  If you haven’t tried it, you should! Their launch strategy, however, was backwards.  An event can’t build brand.  You have to build your brand first, and then amplify it with vehicles like events.

Jon Arnold’s ongoing Podcast series on Canadian VoIP Thought Leaders has Jim Van Meggelen this week talking about open source telephony.  Great stuff.  Jim is a true Asterisk believer, and one of the authors of O’Reillys book Asterisk: the Future of Telephony.

Great stuff!  (and I’m not just saying that because there’s a nice plug for iotum in there…)

For some time there have been rumblings of disatisfaction within the Skype ecosystem.  It just seems as if they won’t go away, either.  The latest broadside is Katie Fehrenbacher’s Is Skype Neglecting Its Developers?

The grumbling comes from developers who feel that Skype isn’t doing enough for them, or that Skype is stealing their features.  Folks like EQO founder Bill Tam, who is unhappy that Skype chose to work with a competitor, or British startup Connectotel, unhappy that Skype built a competing feature, are openly criticizing the company for the quality of their developer program. 

The fundamental premise behind an ecosystem strategy is that innovations by others make your own innovations more valuable.  As the vendor, your goal is to position yourself as the platform of choice for launching new and innovative applications in your market. You want lots of developers supporting your product.  Doing so allows you to position your company and product as a platform for innovation, especially amongst the highly influential (and notoriously early adopter) developer community.  You may expect any of these benefits as a result:

1. Increases the value of your product to existing users
2. Enables existing and new applications
3. Unleashes innovation
4. Creates Buzz amongst customers
5. Attracts new users
6. Opens new markets
7. Reduces churn
8. Increases ARPU
9. Creates opportunities to leverage ISV $$ in support of your brand

Clearly there are a lot of benefits to a successful platform play.

So, what makes a good platform play?  A good ecosystem program?

Well, let’s start with developers.  A developer is going to ask five fundamental questions:

• How big is the opportunity?
• How easy is it for me to get started?
• How easy is it for me to participate?
• How and where do I find the information I need?
• How long will it take?

These questions translate into working through some or all of the following checklist:

1. Is there an Extensible platform
1. published API’s
2. rich, easy-to-use developer tools
3. well written, clear and concise documentation with examples including sample code
4. Developer resources, including support team, knowledge-base, bug reporting and support forums.
2. Is there an Existing Customer Base ?
   1. How large and approachable is the community of users?  It has to be big enough to provide a realizable revenue opportunity for the developer! 
3. Does this Enable lots of developers ?
   1. No artificial barriers (i.e. $50,000 to join the program )
   2. Are there others? Existing Developers working on parallel, vertical or horizontal applications
4. Are there mechanisms for monetization?  For example, is there a real business in building MySpace widgets?
5. Are there well defined Opportunities for Co-Marketing, Cross-Marketing, and Cross-Promotion?
6. Are there any Success Stories?

The Skype program isn’t mature, but it also isn’t the failure that many are claiming.  The biggest gaps are:

1. The platform isn’t as extensible as it could be.  Key API’s like Call Transfer are still missing.  The outdated COM object model for invoking the Skype client is a hassle to work with.  The fact that every application must invoke the client on the desktop is a constraint which prevents many new kinds of applications from being developed.  The GUI should be separated from the engine.
2. Mechanisms for monetization are limited. Skype itself gives away features, and monetizes the application primarily through the use of network charges, thus undermining the developer who might wish to charge for product.  Skype needs to steal a page from Google, and find a way for developers to participate in their revenue stream. 

Expect Skype’s strategy to mature quickly, however, now that players like AOL are starting to more aggressively build ecosystem plays. 

As for the allegations of unfair play, that’s par for the course in the platform game.  By nature, platform vendors are fast followers, and applications developers need to be deep and fast innovators.  If you don’t have sufficient intellectual property, and sufficient depth in your products, then expect that the platform vendor will simply absorb your features in a future release.

Update:  Later this evening, after this was posted, I got the following note from Bill Tam…

Hey Alec, I agree with many of your comments about what it takes to have a successful developer program. All developer programs go through a process of evolution and refinement. Skype’s is no exception. There’s no question it’s getting way better and we’ll all benefit from that.

We enjoy a great relationship with Skype and as I’ve mentioned many times before, their API makes it incredibly easy for third party developers like ourselves. We’re the most popular mobile download on Skype’s developer forum and we couldn’t have done that without Skype’s support. There’s absolutely no whining on our part. We are confident that our relationship with Skype will continue to flourish and that there will be opportunities for multiple partnerships..

Bill

I’m very happy to hear that Bill and his team have a good relationship with Skype, and that they view the current situation as nothing more than a growth phase in the Skype ecosystem.  Good on you, guys!