Alec Saunders SquawkBox

I had a good chat with Jeff Pulver last week. We were long overdue.  Since the beginning of the year, Jeff’s been a whirlwind announcing no fewer than 4 events in the last six months.  Among the many things we discussed was his recent HD Communications Summit.  The event itself caused a stir.  Afterward, Jeff was on fire, talking about the people that had shown up and the enthusiasm for the technology.

Anybody who has ever experienced a Skype call will identify with the benefits of wideband audio immediately.  By increasing the spectrum of audible frequencies from the extremely limited capabilities of today’s telephone systems to something more akin to an FM radio, the experience becomes more engaging and less fatiguing. 

So far VoIP has been about cheap minutes, and not much more.  The VoIP “industry” (as opposed to the communications industry) has been a giant arbitrage play pitting toll based minutes against bandwidth.  Jeff thinks that HD voice could change that.  Now others are coming around to the same viewpoint.  IDC’s Rebecca Swensen was quoted by VoIPPlanet.com saying: “Originally, cost was the number one reason businesses moved to VoIP, with features and functionality becoming a distant second and third.  Now, features and functionality are running a tight race with costs for first place.”  And according to a recent survey by Global IP Solutions, fifty-seven percent of those surveyed felt that conference calls would be the biggest beneficiary of HD Voice. 

Welcome news. 

Today’s 3Khz audio standard dates back to 1937.  In an age of crystal clear video, and concert quality audio, all streamable across digital networks, it seems inconceivable that we wouldn’t want more from the telephone. 

You may remember Global IP Solutions, or GIPS, as the company responsible so many years ago for the audio infrastructure that made Skype sound so good in the early days.   Skype was the tipping point that ushered in the age of internet telephony, and in the process, they made GIPS a well known name in the industry.

Today they’ve announced that their VoiceEngine platform is now available to iPhone developers.  Want to build a voice-enabled WiFi application on iPhone?  This may be the easiest way to deliver a quality audio experience.

This particular announcement caused a minor flap last week when GIPS agency, High Tech PR, blind mailed some prominent bloggers with details of the announcement, but asked them to honor an embargo — ie not write the story until the news was released today.  You can read about it on Jeff Pulver’s blog, including the snippy response from the agency’s Terry May.

I get asked to embargo news all the time, and when asked I honor the request.  Usually I get mailed a teaser, and then I can make a decision about whether to accept the embargo.  The problem with Terry May’s mailing was that the entirety of the news was included in the mail — that GIPS was planning to VoIP enable iPhone.

Or… perhaps it wasn’t such a boneheaded move. Perhaps it was a canny strategy by an agency to gain coverage for a thin story… I certainly wrote about it.

Skype has just acquired Norwegian Company Sonorit AB and its US subsidiary Camino Networks for $27M in a moved designed, or so it seems, to make them less dependent on GIPS, and more competitive with MSN, and Yahoo. It’s a speedy exit for Sonorit, which was founded by ex-GIPS employees in June of 2005, and shipped their first product in Q4 of the same year. Unless GIPS suit against Sonorit has been resolved, though, Skype and GIPS destinies will be intertwined for some time. 

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. 

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.