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Monday, September 29, 2008

Skype Journal Interviews Josh Silverman: The Way Ahead - Markets

This is the fifth in a series of posts resulting from an interview a week ago Friday with Josh Silverman, Skype's recently appointed President. In this post we talk about addressing the small-to-medium business market as well as various geographical markets.

Over its five years, Skype has built up, almost totally virally, a significant base of users who take advantage of Skype to not only reduce their business communications costs but also to communicate more effectively with colleagues and customers around the world. At the same time various Skype software partners have built offerings, such as Pamela, PamFax and Skylook, that either focus on Skype as a business communications tool or include Skype amongst their options for calling. Within Skype's own offerings, the Business Control Panel provides the tools for a system administrator to handle both the deployment of Skype and the administration of Skype accounts within a business's operations.

OnState is a primary example of the latter. They have built up a call center offering that takes full advantage of both instant messaging chat and voice in dealing with both inbound and outbound calls; they also take advantage of the three founders' combined over sixty years' experience participating in the call center market. Yet, they encountered many opportunities where they had to go back to Skype for assistance since, for one reason or another, Skype's program were insufficient to address business users' requirement. The result is that today OnState offers their customers "one stop shopping" whereby, on acquiring a customer, OnState takes on responsibility for addressing Skype subscription needs, hardware requirements (headsets and handsets, implementation issues and first level technical support.

The Business Control Panel has had its limitations also; the main fear has been to mitigate potential for fraudulent or unauthorized activity through transaction value and volume licensing limits.

As for geographical markets, Skype met a much larger need for communications cost reductions in Europe and Asia than in North America. As a result over 80% of Skype's revenues continue to come from outside the U.S. The two primary needs met in North America are for "Friends and Family" calling outside North America and small businesses who are working to grow internationally - both internally and with their suppliers and customers.

In growing internationally, there has been the challenge of building user bases in widely diverse markets; "free", "easy-to-install" and a whole lot of viral marketing action have introduced significant adoption around the world. But this success has led to more business-oriented challenges in working out termination agreements, establishing effective multi-currency transaction systems (although being an eBay co-unit of PayPal certainly helps), multiple language versions of software (27 at last count) and providing multi-lingual, internationally available technical support. (We'll talk about marketing and more about technical support in future posts in this series.)

We asked Josh about the Skype's approach to the business market:

JS: Skype in the business market. There's more that needs to be done. (you guys are smart, you're asking all the right questions). Platform is a huge opportunity for us; business is another big opportunity for us. About half of the communications market is business; we have a great solution, especially for small-to-medium size businesses. We haven't tailored that solution to businesses very much; we haven't communicated to businesses that we have that solution. In the new organizational design one of the pieces of that will be to build out a business unit focused on small-to-medium size businesses where we'll have some resources available to tailor our product and some sales and marketing resources to work ... I don't think that we'll be directly selling to small-to-medium size businesses but we can work with VAR's to help support them in bringing Skype to businesses.
(Note this interview occurred two weeks prior to last week's announcement of Skype for Asterisk, a program that leverages Digium's Asterisk reseller channel for sales, implementation and ongoing support requirements.)

We then moved on to ask about various geographical markets:

SJ: North America. (Thank God for Oprah!) Skype has become much more a household name this past year (with an acknowledgement to Don Albert, GM North America). What does it take to keep that business going forward in U.S. and Canada and what are the strategies for U.S. and Canada?
JS: We're very aware that the number one way to grow Skype is to build products the users love. That is our first mandate always. Once you have a product users love, we can accelerate it by some smart marketing programs. (By the way if you don't have a product that users love no amount of marketing on earth will save you, right?) So we do have a product that users love and I don't think we have done as much as we could to communicate that.

Oprah is a great example. It is not our intention and people should not expect massive multi-million dollar marketing budgets from Skype. But there are some smart tactical things we can do working together with evangelists like Oprah to build awareness. It's our belief that once you've grown awareness, people will try it; once they try it they'll love it. and the rest takes care of itself. At the Democratic national convention we were quite happy to see many of the national broadcasters using Skype as a way to expand their coverage and you should be looking for more programs like that in the United States in the year to come.

SJ: China is your biggest market?
JS: In terms of total users it's one of our top markets; the answer is yes.
SJ: QQ is still kicking butt in China? What strategy do you have in your existing partnership with Tom?
JS: We have a great partnership with Tom who knows the local market very well. Tom is also a very entrepreneurial, innovative, fast moving company. We're very pleased to be partnering with them; they're the right partner to continue building our presence in China.
SJ: Do you have your own people in Asia?
JS: A couple of people in Asia who work with our partners to make sure they're getting the support they need and also giving us real feedback from the market on what we need to be doing on [our] core platform to be able to support Asia better.
SJ: How about India?
JS: We don't have anyone working in India. We don't have a partnership in India to announce but we are seeing good growth in India but we think it's a terrific market and we are expecting to have more focus on that in 2009

My observation, five months in, [is that] markets where Skype has the most power are markets where you have high broadband connectivity, you have a large ex-pat population, and where the local telephony system is not as efficient as it could be. Many of the developing markets meet that profile so we think we have a huge opportunity in developing markets such as India and it's our intention to focus more on that in the coming year.

SJ: To succeed in the mobile market place, mobile device manufacturers have had to build carrier relationships. What does Skype need to do with either handset manufacturers and/ or carriers to succeed in the mobile market?
JS: I don't think the carriers should be able to dictate what software the users get to use. any company,. the smallest startup in the world, if it has really outstanding software ought to be able to take on the whole world and not have to hire 50 people to develop relationships with 300 carriers.
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11 Comments:

At September 29, 2008 at 6:30 PM , Anonymous jan geirnaert said...

I can only smile (rather grin) when I read that SJ interviewed JS (Skype CEO) and asked this question (source : Skype Journal Interviews Josh Silverman: The Way Ahead - Markets ). I find that SJ comes closer and closer to being Skype Cheerleaders. Always asking the safe questions, never going into the controversial topics anymore… Otherwise if they did they could not be unofficial Skype consultants right… anyways here is a something to read :
SJ asked Josh about the Skype's approach to the business market:
JS: Skype in the business market. There's more that needs to be done. (you guys are smart, you're asking all the right questions). Platform is a huge opportunity for us; business is another big opportunity for us. About half of the communications market is business; we have a great solution, especially for small-to-medium size businesses. We haven't tailored that solution to businesses very much; we haven't communicated to businesses that we have that solution. In the new organizational design one of the pieces of that will be to build out a business unit focused on small-to-medium size businesses where we'll have some resources available to tailor our product and some sales and marketing resources to work ... I don't think that we'll be directly selling to small-to-medium size businesses but we can work with VAR's to help support them in bringing Skype to businesses.”

What a joke, really…. Is that all they can up with from the perspective of questions and answers ? This is what I call the public relations blog marketing. The questions are too kind, not thorough and really asked from the perspective “we have to make sure we remains Skype’s friend, let’s not ask them the question that will annoy them, because we have to be friendly, for our future partnership. This is not journalism, this is about 2 bloggers who want to sound nice to the community and maybe they will get some assignments along the way. If that is really the case, then let it be clear.

My questions would have been :
- Can Skype compete with the likes of for example Avaya and provide a proper service level agreement ?

- A few days ago (and this is factual) I asked the Skype business dept, t o send me a proper pricing for the Vosky box. I ask the same question to Vosky but I did not even get an email reply. Is this the way how Skype intend to develop the business market ?

- Why does ebay not use it’s existing offices to assist Skype in developing it’s business market ?.

- Why does Skype not authorize certain people to become Skype certified reseller. The only thing Skype has today is Skype certified boxes with a logo on. Neither Skype or the hardware resellers seem to provider proper support on this matter.

- Why does Skype not have a telephony helpdesk ? Is that not a legal requirement for a VoIP telephony company ?

- How come that the asian dealer of Vosky, just like some resellers tell me that they only have the vosky boxes of last year. Is Skype and it’s hardware dealers not refreshing the hardware ? How much of those Skype business appliances have been sold anyways ?

- How business (I see very few testimonials) have been implementing Skype hardware devices. Why are the figures of that not publicized.

- How many of your 350 million users are Skype business users.

- What solutions have you developed the past 12 month to provide companies with proper Skype business solutions ?

- How long will the partnership with Asterisk last. Maybe Skype is a just a welcome plugin channel to give asterisk some more users ?

 
At September 29, 2008 at 6:31 PM , Anonymous jan geirnaert said...

next thing needed to put on skypejournal is a skype certified nice blog logo. "we do the community PR of skype". we are the friends of Skype, unlike jan geirnaert from www.skype-watch.com (just a url) with whom neither parties is affiliated who still dears to ask some controversial questions, which is why he is not working for skype in any way.

 
At September 30, 2008 at 4:22 AM , Anonymous Jim Courtney said...

We are asking the tough questions that set a benchmark against which the new executive team has to perform over the next year. These are the questions about "real change". It's not about the details at this point; it's about getting the overall business restructured so that it can handle those details. It's not about the technology; it's about the processes that are needed to make dealing with Skype almost totally transparent. At this point we're looking for how the new leadership and how their team of real people will make all the pieces come together.

 
At September 30, 2008 at 4:43 AM , Anonymous J.A. Watson said...

Garbage. Absolute, total, unmitigated garbage. You aren't asking the "tough questions", you're throwing out the easiest, most general puff-balls possible, to avoid any possibility of embarrassing or insulting someone who has been on the job for quite some time now, and has made absolutely no difference whatsoever, unless you include encouraging every possible Skype employee to keep parroting the misleading, idiotic trash about "over 330 million registered users" at every possible opportunity.

 
At September 30, 2008 at 10:31 AM , Anonymous Phil Wolff said...

@J.A.Watson. What questions would you have asked?

 
At September 30, 2008 at 11:01 AM , Anonymous Not Josh Silverman said...

Q. Can Skype compete with the likes of for example Avaya and provide a proper service level agreement ?

NJS: What's an avaya? (laughs) Seriously, they are not in our business at this point.

We do offer service level agreements for technical support for a fee to select technology partners. Check our developer site for details.


Q. A few days ago (and this is factual) I asked the Skype business dept, to send me a proper pricing for the Vosky box. I ask the same question to Vosky but I did not even get an email reply. Is this the way how Skype intend to develop the business market ?

NJS: I'm sure our salespeople have forwarded your request for a quote to a VAR in your market.

Q. Why does ebay not use it's existing offices to assist Skype in developing it's business market ?.

NJS: Skype is a separate company, owned by eBay but operated independently. So it would be inappropriate for eBay to act on Skype's behalf.

As for partnering with Skype, Skype's products are not quite ready for full integration with eBay's web site and technology platform. That day may come and when it does we're sure eBay and other companies will put Skype's services to work.

Q. Why does Skype not authorize certain people to become Skype certified reseller. The only thing Skype has today is Skype certified boxes with a logo on. Neither Skype or the hardware resellers seem to provider proper support on this matter.

NJS: Actually we have authorized resellers in parts of Europe and the US. They sell Skype Certified hardware, Skype starter packs, small business kits, and Skype credits.

We don't have a VAR program today. How would VARs add value for Skype customers? for Skype itself? Skype minutes have very little margin, and little to no room for sharing those margins. Don't VARs usually resell products with high margins that require lots of integration and customization? We've been working very hard to design away the need for technical support. Our new Skype for Asterisk may create opportunities for VARs but that was only announced last week and won't be out of beta for months. Please check back with us then if you think Skype would be a good feature for your Asterisk-based product.

Q. Why does Skype not have a telephony helpdesk ? Is that not a legal requirement for a VoIP telephony company ?

NJS: Digital workflow helps us serve more people, faster, and more accurately. While an support rep can serve 30 people an hour using our web support process, they'd be luck to support four or five using voice. This means waiting times are shorter and we have complete records of each problem and resolution.

And no, there are no laws defining how we provide customer service. Just our desire to keep our customers delighted with our services.

Why do you ask?

Q. How come that the asian dealer of Vosky, just like some resellers tell me that they only have the vosky boxes of last year. Is Skype and it's hardware dealers not refreshing the hardware ? How much of those Skype business appliances have been sold anyways ?

NJS: You'll have to address those questions to Vosky.

Q. How business (I see very few testimonials) have been implementing Skype hardware devices. Why are the figures of that not publicized.

NJS: Since Skype only cobrands other hardware products, you'll have to ask Vosky about their policy regarding disclosing hardware sales figures.

Q. How many of your 350 million users are Skype business users.

NJS: We've been using the 30% ballpark figure for years now. Studies we commissioned in the last few months may have new data for us.

Q. What solutions have you developed the past 12 month to provide companies with proper Skype business solutions ?

NJS: Take a look at our new Skype for Asterisk offering. It offers great promise for integration with IVR, CRM and other enterprise systems.

Q. How long will the partnership with Asterisk last. Maybe Skype is a just a welcome plugin channel to give asterisk some more users ?

NJS: I'm sure this is the start of a wonderful and enduring friendship. We both have so much to offer Asterisk developers and their customers. And we've only just begun.

 
At September 30, 2008 at 12:13 PM , Anonymous J.A. Watson said...

Q. The name Skype has become synonymous with poor to non-existent service and support over the past couple of years. In fact, Skype support is so bad that we have even had cases of desperate Skype users coming to the Skype Journal looking for help in getting Skype working. Even considering that something like this won't be fixed "overnight", there has been absolutely no visible improvement in this since you took over. When would you expect that there might be some visible signs of improvement?

Q. There have been numerous reports recently, both in the press and in your own User Forums, of Skype accounts being hacked and the credit being drained from them. Skype has never commented on this publicly, other than to blame the users for being careless, and we (The Skype Journal) never got a reply to our request for comment from your PR department (try not to laugh when you say that part). Do you have any plans to try to find out how these accounts were compromised, and improve the security so that it doesn't continue to happen?

Q. You say that it is important that Skype be "everywhere, on everything", but it looks like Skype is struggling even to keep up with the platforms they already have; the Windows version is racing ahead to version 4, with changes in the beta version which have met with a lot of scorn (including here on The Skype Journal), while the Linux and Mac versions have been left languishing at version 2, with very poor support for most of the newer features that you have personally said are critical to the future for Skype. How do you expect to develop across even more platforms, if you are struggling with the ones that you already have?

Q. Jonathan Christensen recently said that one of the "pillars" of future communication systems will be presence reporting. There have been many reports that Skype presence reporting is erratic and unreliable, there have been bug reports open on it for more than a year which Skype keeps trying to close with each new release, and has been forced to reopen every time. Even Andy Abramson has noticed this and commented on it recently in his VoIP Watch blog. How do you expect to move effectively into the future when one of your "pillars" is extremely shaky, at best?

Q. Skype's communication with their customers has been poor, to be charitable; on one hand they say "We Love Our Customers", and on the other hand they withdraw London SkypeIn numbers with only a month's notice at the peak of the Christmas shopping season; they cancel Skypecasts with only a matter of days notice. How can users be expected to trust Skype, when they never know what is coming next even for the immediate future, and what do you expect to do to attempt to establish some sort of trust in the future?

Q. You, and everyone else who speaks publicly at Skype, keep claiming to have "330 million registered users". A lot of people, including a lot of avid Skype supporters, think that number is at the very least extremely misleading, if not knowingly deceptive. At a time when you are trying to establish some credibility and trust for the future, perhaps you could explain to us where that 330 million number comes from, how many of those accounts you believe are actually "real, individual or business accounts (not including spammers or pornographers)" which can still be considered in any way to be active, or have any hope of becoming active in the future? Alternatively, since your focus seems to be on "monetizing" Skype, if one were to accept the 330 million number, what does that say about your average annual revenue per user?

The point here is, it's easy to talk in grand generalities, and it's VERY easy to serve up a lot of softball questions which give the CEO a chance to hit one "home run" after another in the eyes of those who are already besotted with Skype. But in the real world, if you go in talking about draining the swamp, and discover that you are surrounded by alligators, then even if you somehow succeed in draining the swamp but find that you are still surrounded by hungry pissed-off alligators, you haven't accomplished a whole lot. Ignoring the huge current problems and concentrating on where you want to be at some indeterminate point in the future doesn't make those current problems go away.

jw 30/9/2008

 
At September 30, 2008 at 12:42 PM , Anonymous Phil Wolff said...

Thanks, Jaime.

You had an invitation to meet face to face with Skype executives long before we did. Why didn't you take them up on the chance to ask these and other questions?

 
At September 30, 2008 at 12:55 PM , Anonymous J.A. Watson said...

Because Skype executives have absolutely no credibility as far as I am concerned. I felt that there was no point in me wasting time listening to them tell me how much they loved their customers, how hard they were working on doing whatever the subject of the moment happens to be, and how much better things were going to get "real soon now". If there had been any indication at all that anything had been changed, or improved, or even that a genuine effort was being made, rather than a never-ending stream of empty talk and promises from Skype, I might have considered the offer. This also relates to what I said above about credibility; when they insist on going around squawking a number that IN MY OPINION is a bare-faced lie, without even making any attempt to explain or justify it, that not only doesn't inspire confidence in anything else they say, it simply makes me believe that anything else they might say to me is equally lacking in credibility.

jw 30/9/2008

 
At October 6, 2008 at 11:14 AM , Anonymous Phil Wolff said...

Jaime, that explanation doesn't ring true. You have a chance to ask questions directly and get direct answers, no intermediaries, no spinmeisters, just you and the people with the power to steer Skype in directions you'd favor.

You had nothing to lose but your fears, and your precious frustration and anger. You're holding on to your vitriol because it's easier to be angry at a monolithic corporation than at human beings with faces who are working hard and living life. It's painful to confront the inner turmoil that you've been bleeding all over your blog, so I can see your challenge. So I'm sad you let your anxieties get the better of you.

Excuses aside, it seems to me your mind is made up, closed, locked tight. You see Skype one way and you won't let facts and new realities affect this view. You have an exclusive opportunity for face time with Skype's leadership and to become a constructive part of the conversation, a voice to make things better.

If you don't engage when you have the opportunity, your whining loses its authority. It is becoming the voice everyone can quietly ignore.

 
At October 6, 2008 at 10:22 PM , Anonymous Anonymous said...

How Can I get in touch with Skype executives?

 

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