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Telco 2.0 News Review: ‘Micro-Skype’ Round-Up; Google Music & more

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To badly mis-quote Monty Python “No-one expects the acquisition”, and after the rumours about either Google or Facebook, it turned out to be Microsoft that bought Skype, for $8.5bn. It sounds like a lot of money, especially when you think that this is the second time the founders have had a payout, but as Telco 2.0 ally Dean Bubley pointed out at our event last week (next events here), it’s the same price-earnings ratio as Cisco’s acquisition of WebEx was and nobody thinks that was a waste of money.

Skype will become a Microsoft division in its own right, rather than being folded into the vastly loss-making Online Services division or Windows Live or somewhere else, and CEO Tony Jacobs will report directly to none other than Steve Ballmer. So it looks like it’s quite a priority for Microsoft.

This is the biggest ever deal for Microsoft and must be considered to be a major strategic move into - you can’t get around it - telecoms.

Skype Journal covered the press conference - note some very Telco 2.0-ish slides regarding the future of voice and messaging. Phil Wolff has more reaction. Computing points out that, excluding some exceptional items that will probably become irrelevant within Microsoft, Skype could have been significantly profitable in 2010 - the work we did for the forthcoming Skype Executive Briefing agrees with this, showing that the company’s gross profitability is surprisingly strong although it has been spending heavily.

Dan York remarks on the end of Skype’s rebel phase. Om Malik looks back on its history and his relationship with it. It’s probably worth noting here that Telco 2.0 itself is a start-up that started-up on Skype - back in 2006-2007, it would have been true to say that this company existed as a network of Skype identities constantly messaging each other.

Skype’s now former owner Ben Horowitz points out that Google launched video for Google Talk and Apple launched FaceTime, but Skype just kept growing as if nothing had happened. He can afford to be optimistic, having more than quadrupled his money in 18 months. (So, it would seem, can Canadian pensioners, as their investment fund had a piece of the deal.)

Is the acquisition of PowerPoint, back in 1987, a model? Perhaps - especially if Microsoft is gambling that Skype is the future of meetings and will be as ubiquitous in business as PowerPoint presentations, and perhaps even as annoying…

For contrarian analysis, the Guardian’s Charles Arthur plays Eeyore the sad donkey - Microsoft is bound to ruin Skype, they won’t be able to sort out integration of Xbox Live or MSN Messenger, the Office division barons will reject integrating it into Office Communications Server or Lync or Outlook. And the P2P technology is “inherently unreliable” - although two major outages in its history compares well to many other services.

Elsewhere this week, it was Google I/O time. Google made very sure to keep the delegates happy, by slipping a Samsung Galaxy Tab in every bag. Beyond the shiny, Google announced the cloud-based music locker hackers had discovered a few months back. They were complaining about some rights holders being “unreasonable” - i.e. they wouldn’t licence them songs - but the related movie rental app that goes into the Android Market this week has got Sony Pictures, Universal Studios, and Warner Brothers on board.

In generic tech announcements, Google said that a version of Android was coming that would bridge the divide between the phone and tablet versions, and also showed off some home automation projects based on the operating system.

Last year’s biggest flash in the pan was surely Google TV (you may remember Google asked the vendors nicely not to bring their new gadgets to CTIA for fear of embarrassment), and unsurprisingly there’s a new version coming with a new user interface.

Meanwhile, the lawsuit between Skyhook and Google has caused the release of embarrassing e-mails, in which Google executives as good as admit that the Android Market is their way of keeping some control over the OS and therefore influencing the telcos’ behaviour. An enormous amount of detail is in this instant-classic blog post.

That said, I/O saw some enhancements to discovery within the Market. Google also boasted of performance enhancements in Chrome, but as this piece points out, they’re highly nonstandard. No wonder some people think Google’s turning into Microsoft - right down to the enterprise focus.

Google’s latest enterprise product is the Chromebook, a Chrome OS netbook with a full house of cloud-based applications. It’s provided as a service - $28/seat/month - including all the upgrades and maintenance you can eat. However, as ZDNet’s Ed Bott points out, there are plenty of flaws in this plan.

It’s an Intel Atom netbook, for a start, which rules out any applications that involve serious power - especially as they’ve got to run in the web browser. Can you do video-editing, serious graphics, software development in a compiled language, engineering CAD, etc in a browser? And it’s pricey - for the cost of one IT accounting period’s worth of Chromebook, you could just (as they say) get a Mac and not worry about what happens if the network goes down, you can’t find a decent WLAN hotspot on the road, or the cloud infrastructure suddenly has kittens like Amazon Web Services did the other week.

This point should be quite embarrassing for Google - this is the company where you need approval from the CTO to run Windows and where a large percentage of their PC fleet is made up of Apple hardware. Why? Because they save on cleaning up broken Windows boxes, administering Patch Tuesday, policing malware outbreaks etc. It reminds us of our mother’s advice about kitchenware. “Get a big, sharp knife. Whatever else you have, you’ll use a big, sharp knife every time you cook. So get a good one.”

Failure seems to stalk the clouds at the moment. Last week it was Google’s turn. Blogger experienced a 20.5 hour outage last week during which nothing new could be published, and some users’ data was corrupted, after a maintenance software release went wrong. For a while, there were fears that some of the content was gone for good, but as far as we know it was eventually restored from backups.

More worryingly for anyone considering moving their business’s IT to those Chromebooks, the problems also affected Google Docs. And, for a while on Friday, YouTube was returning a lot of 502: Temporarily Unavailable errors. It certainly looks like there was some sort of disturbance in the force, as if a million cute kittens cried out and were silenced. Mind you, Google’s presentation on energy efficiency in the data centre is pretty cool.

The CloudFail kept coming: Twitter reported it was struggling with “stability issues”, although it’s never had Google’s rock solid track record.

Telcos talk a good game about high availability, but the FAIL struck there, as well. Fans of hardcore 3GPP core networking will love this crash inquiry on Verizon Wireless’s LTE outage two weeks back. Was it the Nokia Siemens Networks HSS, the Cisco Systems PDN, or someone else’s customer information system? A little more here.

After weeks on end, Sony began to bring back the PlayStation Network this week. To begin with, the voice and messaging is coming online, but the credit-card functionality in the app store won’t be back for a while longer. Check out this interview with an admittedly cranky Bruce Schneier:

“Everyone is probably equally sucky,” he said of network security in general. “Some may be better than others.

“Unfortunately, the moral here is that you give your information to a third-party, blindly trusting them, a bank, a credit card company, a phone company, Amazon, J. Crew, or Sony. You are blindingly trusting that they will use the information wisely and secure it. And you have no say how they do that and you have no recourse if they f*** up.” But, the famously cynical Schneier adds, “Even with all of that, most people are really safe all of the time.”

There’s an interesting timeline of the whole fiasco here, although it doesn’t really say much more than “this could have happened, or something else could”. Meanwhile, it is speculated that the attack was launched from Amazon’s cloud computing service, EC2.

And the FAIL struck Microsoft, too: Microsoft apologised this week after its Business Productivity Online Service cloud failed, taking out customers’ cloud-based MS Exchange servers after weeks of slowly degrading performance. As one user pointed out, it may only be e-mail but the CEO only uses e-mail.

Fortunately, through all this, the FAILBlog stayed up. How did they do it? High Scalability has a great post on their video serving partner, Viddler, and how they serve bulk online video. They also have a post on HOWTO build a genuinely geographically diverse database system in Amazon Web Services. Don’t have nightmares.

Computer Weekly reports that Hewlett-Packard’s cloud and data centre products are almost entirely based on the technologies it acquired when it bought 3Com - $2.7bn well spent. And Intel announces OpenCL, a standard language for parallel computing.

Microsoft has been trying to make friends with Android and iOS developers, most recently by launching an SDK for people who want to build applications for those platforms based in the MS Azure cloud. Also, when hackers got fed up of waiting for WinPhone 7 updates and came up with an unofficial version, they refrained from using the Redmond death star on them and instead announced that they would “work with them” to sort out the official update because they’re “a clever bunch”.

Asymco Horace remains the web’s leading purveyor of smartphone-market line charts. This time, the take-home is that the crisis at Nokia is as bad as you feared. Something seems to have happened in Q1 2011 causing their shipments to dive as steeply as they did as the world went into recession in 2008. What can it mean?

Perhaps that they still think painting a phone pink and sticking Elle magazine branding on it will sell it to women.

Meanwhile, meet Apple, RIM, and HTC, the smartphone market’s growth stars, while literally everyone else is fighting for stagnation at best. He also has a crack at analysing his readership. Informa T&M goes to BlackBerry World. Apple organisation: only the CFO is responsible for costs, and every project has one and only one Directly Responsible Individual.

They also have some interesting LBS/advertising ideas.

It’s probably time for some packet pushing. In Hong Kong, they’re selling 1Gbps fibre in the street, but did you know you can get it in Turkey? The Senate hearings on AT&T-T-Mobile. Randall Stephenson claims prices will go down, but if that’s true, why is his company pointedly not promising to maintain the existing T-Mobile rate card? If the deal does break down, AT&T will have to fork out a $6bn break clause.

Meanwhile, you’ve heard of mobile operators buying subscriber growth with shiny gadgets. It’s less common that they just hand out raw cash, but Sprint is doing just that. Churn to Sprint, and you get a $175 golden hello if you’re a business customer. Intel, meanwhile, is quietly selling its Clearwire shares.

We’ve said this before, but here it is again: it’s not spectrum that gets you capacity, it’s cell subdivision.

And everyone’s favourite blogging ISP exec has a new product - an XML interface to BT’s provisioning system that lets him turn around service requests involving the incumbent faster than the incumbent can.

It’s always amazing how the content world manages to make things more difficult. The EFF reports on the legalities of music-locker services. Apparently, in order to keep the music industry happy, it is strictly forbidden to de-duplicate the stuff people upload - so every user has to have an identical copy of Bad Romance. Somewhere, another ton of coal is being shovelled into a power station furnace for this.

The LimeWire lawsuit has been resolved peacefully. The RIAA had demanded some $75bn in damages from the P2P filesharing company, which earned them a certain amount of scorn from the judge in the case. Eventually they agreed to accept $105 million in full and final settlement, 0.14% of their initial demand. Perhaps LimeWire should have held out on them a while longer, as at that rate the RIAA would have been paying them if the case had gone on another week.

Technicolor has pulled out of YouView, while former YouView boss Anthony Rose has launched a startup manned by YouView software engineers to bring “social recommendation” to the TV. He gave a fascinating presentation at last week’s event, too.

Jamie Zawinski is not entirely satisfied with YouTube’s privacy policy and believes it could be improved.

Integrics, builders of really big Voice 2.0 systems, have launched version 3.5 of Enswitch, their Asterisk-based telephony platform. Meanwhile, if you have Cisco desktop phones, watch out - there is a critical bug in Asterisk 1.8.4 that could let hackers activate the phone on the hook and listen to your conversations. Improving Google Voice.

Facebook has been caught using PR giant Burston-Marseller to smear Google as being a privacy menace. The PR firm has now terminated the relationship and says it regrets ever being involved. Follow the mess here. Mind you, they were let off a privacy case this week.

More trouble for NBN Co chief Mike Quigley in the Alcatel bribery case. What Symbian knows about your location. Regulator…to industry executive, in a bound! Are personal data regulators doing more harm than good?

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