Skype Goes Mobile
Skype's new cell phone will deliver mobile access to its service. The beleaguered carrier hopes to jump-start revenues overseas — Bit by bit, big names in the computing world are barging into the cell-phone business. First came Apple's (AAPL) game-changing iPhone.
Context & Ripple Effects
Skype's handset lands in the middle of a defining week for computing companies pushing into phones. Apple, whose iPhone Business Week cites as the opening move, has just committed to shipping an iPhone SDK to developers in February, agreed to sell unlocked iPhones in France under French law, and expanded iTunes Plus past two million DRM-free tracks at 99 cents — while its U.S. Mac share climbed to 8.1% in Q3 2007.
Against that backdrop, Skype is doing what the software generation does: taking a service built for the PC and wrapping it in dedicated hardware, paired with a carrier described as beleaguered and looking to jump-start revenues overseas. The strategic question is whether a bespoke device beats waiting for platforms like Apple's to open up.
First-order effects
- Skype gains direct distribution of its low-cost calling service on a handset, giving overseas users internet calls without a PC and giving its carrier partner a vehicle to revive revenues.
- Apple's February SDK commitment gives Skype a second route onto mobile — a native iPhone app — meaning the dedicated phone competes with Skype's own future on open smartphones.
Second-order effects
- Carriers whose margins depend on international voice minutes face an over-the-top rival shipping its own hardware, putting pressure on long-distance and roaming pricing.
- Other PC-era software brands must choose between building devices, as Skype and Apple have, or licensing their services onto existing handsets — a fork every internet company with a communications product confronts.
Third-order effects
- If computing firms keep barging into handsets, value migrates from network operators to the software and service layers, reducing voice telephony to an application riding on any carrier's pipe.
- Openness mandates of the kind France applied to force unlocked iPhone sales become structural enablers: regulation that loosens operator control of devices accelerates the shift.
The trend: PC-era internet and software companies are moving onto the handset, converting carrier voice service into an over-the-top application.