Sunday, December 13, 2009

Why Skype UI OpenSource?



When legacy proprietary companies start all of a sudden OpenSourcing their software, a lot of questions are raised. Of course they have their own explanations for the facts, although frequently are not the whole true about the fact.
Since Skype announced their OpenSource UI, I received some email asking why would that happen and what are the reasons behind the curtains.
Here is a personal explanation based on some facts:

Background Story:
  • Skype started their business in a market almost empty of competition. VoIP indeed existed, but was NOT directed to end users, neither mass market.
  • OpenSource would not make sense as it usually (for big companies) takes way more time and money to build solutions on top of standards then creating your own black box with the solutions of your own problems and challenges inside. And the lack of demand for a standard format was about 99%.
  • Another reason is the "secret" factor, as the first ones, they have to create all the buzz around their holly grail and of course ensure the domination.
  • That is why(among other reasons) Skype made their business on top of proprietary routing algorithms and proprietary protocols and encryption.
Early VoIP Market:
  • In the other hand for very small VoIP services the picture is different as they started on top of OpenSource platforms, even in a time that most of them were experimental. The reason is, the target market was massively smaller than Skype targets. And of course the money to invest was way smaller as well.
  • SIP adoption was adopted in almost 99% of the rising small providers that started popping up everywhere in the world.
  • Interesting fact is that most pioneer small VoIP providers started with virtual PBX system, not even SIP routers and big platforms. Basically "grow on demand" strategy was adopted as well.
Current VoIP Market Snapshot:
  • VoIP is way more spread in the world since Skype started the massification. We have large number of companies building equipments, client soft-phones, VoIP platforms etc...
  • We have a ridiculous huge number of VoIP providers which anther ridiculous range of different prices and quality.
  • SIP is the main driver for major market. It is used on landlines in Europe and US, it is massively used in company PBX and telephony of big companies. Which are the main source of PAYED VoIP services.
  • Skype is smaller in amount of users and revenue, if compared to all SIP Providers together.
  • Google acquires Gizmo5 a medium VoIP provider fully operated over SIP. Yes it has direct relation.
Consequences to Skype:
  • Skype ubiquity is restricted by their Desktop Client or their very limited IPhone client.
  • Skype still growing the amount of Desktop users. But the amount of paying users is still and tends to get lower.
  • Skype interoperability is null, as it is based on proprietary system and specifications.
  • Competition makes more money and the migration from old Skype users to new VoIP alternatives is big. As educated users knows now how to change and why to change to cheaper and flexible services.
  • We have more SIP enabled equipment and computers than Desktops with Skype client installed.
Skype Strategy Turn:
  • OpenSource their SILK codec as already mentioned in this blog.
  • Open SIP Gateway for Business Users. In order to start competing in a very profitable market slice.
  • Bought the patent of their VoIP routing solutions. In order to prepare for an interoperability round.
  • Aim for alternative and relatively "virgin" markets like mobile, Linux, netbooks etc:
  • Release more usable mobile clients.
  • OpenSource as much as possible for Linux as current client is really crap and also Linux users in general don't use closed source applications.
The Reason in Resume:
Skype wants its ubiquity and revenue back, and for that they are investing huge resources in Openness and Standardization, as it is what their market needs and demands nowadays.

In a mash-able hyper-connected world, who is closed and not interoperable will fade.

11 comments:

  1. You are missing the fact that in a time where open source alternatives were just starting to pop up Skype was about the only voip product that could succesfully navigate firewalls and difficult NAT situations...

    Also, the secrecy of the protocol comes partly from the fact that Skype licensed the P2P cloud from a different company (same guys as Kazaa). Even though I agree that they will only open source anything when it is in their interest, not in the community's interest..

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  2. Well the secrecy is not explicitly mentioned, but implicit on "faster and cheaper". Completely agreed.

    But I would have to disagree in relation of firewalls and NAT traversal. As this was not an unsolved problem at all. The only issue was that it wasn't meant for mass market.
    IMHO, The fact of the reliable Desktop client and realtime billing systems were more innovative than their NAT techniques.

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  3. While I do agree with most of your analysis, I think the last sentence is somewhat misleading:
    Closed and interoperable are two separate concepts.
    The iPhone is not really an interoperable platform while it is open.
    Twitter is not based on standards, yet it is open and it is the essence of a meshable service.

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  4. @smork: "Skype licensed the P2P cloud from a different company (same guys as Kazaa)."

    the creators of Skype and Kazaa are one and the same. eBay didn't purchase Skype (sans proprietary codec technology) until several years later.

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  5. Student writing master thesis on this topicJanuary 8, 2010 at 7:33 AM

    Hi,

    "Skype still growing the amount of Desktop users. But the amount of paying users is still and tends to get lower."
    according to this ( SkypeOut minutes
    (in billions) http://en.wikipedia.org/wiki/Skype#Usage_and_traffic) amount of paying users is rising a little bit.

    Of course growth race is not overwhelming ;)
    kind regards

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  6. Its not only with the Skype, but every time you deploy a software, you have to face the lot of consequences. The same Skype is facing. Its new for me that when Skype came into the market, there was no competitor for it.

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  7. Skype uses a proprietary protocol for their VoIP.

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  8. Skype is very useful, and I think they want to take much more user and developer with UI opensource.

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