This is going to be about speculations on Skype possible future moves. If you don’t know Skype, the Internet telephony software that just works, go try it out and come back after.

Skype said they plan to make money by selling premium services, like calling real phones (available) or voice mail (might come), while keeping the basic service free. This makes perfectly sense. But such premium offers don’t need to come only in the form of optional services, they could also take the form of devices or accessories that work with Skype. They are already doing it by selling accessories like headsets, but I’m thinking at pushing this further and build wireless handsets, in other words a Skype Phone. Apple has said their iTunes Music Store doesn’t make any money, but helps selling iPod. There is some value to get from hardware when this hardware allows you to get access to a valuable service.

It is of course possible to port Skype to PocketPC or Palm devices and use it with Wifi. Although being very useful, this still limits the usage to Wifi covered areas. Additionally, the number of PDA users is relatively low compared to mobile phone users, and decreasing. What would be really useful is a mobile phone with Skype integrated. Unlimited data plans for a fixed fee have started to appear in the US and some countries in Europe. Current GPRS technologies, with their high latencies, would probably not make VoIP applications possible, but with 3G networks it’s a different story.

The device would really be voice-communication centric. A GSM/GPRS phone, with basic phone functionalities (SMS, address book, etc), instant messaging as in Skype. Color screen, although not necessary for the features, seems to be a must for a phone today. Adding a browser and email capability wouldn’t cost too much, but the focus shall be on keeping the device voice centric, like Skype: Small, simple to use, cheap.

A limitation comes with the impossibility of calling Skype from a normal phone. However I don’t think it’s really a problem. The old phone number system is slowly becoming outdated. Broadband is becoming ubiquitous and anybody can run Skype. And finally the device will still be a normal cellular phone with a normal phone number.

But why would operators offer Skype phones, as it allows user to give calls for free? They probably wouldn’t, but it doesn’t really matter. By keeping the Skype Phone hardware relatively simple (again like the iPod), its price could be kept in reach of users, even without the phone being subsidized by operators. User would buy a GPRS-unlimited contract by the operators without a phone and get the Skype Phone separately.

Distribution channels might have to be Internet based, relying on the viral marketing strategies that prove so successful with the PC version of Skype. And using reference design HW and protocol stack like those provided by TI should ease validation and approval.

Not selling a phone through the operators is quite radical and disruptive, it’s pushing the operators in being only the pipe, but that’s what Skype is doing with the old telecom industry.

This entry was posted on Saturday, November 6th, 2004 at 5:47 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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