Skype files for an IPO – good news for Mobile VoIP

On Monday last week Skype filed its S1 supporting an IPO application with the SEC.  For many industry observers, this was not entirely unexpected news, many commentators would have prepared their ‘Skype goes public’ blog posts months ago.

http://www.businessinsider.com/skype-files-for-ipo-2010-8

Aside from the bizarre BSkyB litigation related to alleged trademark confusion over Skype’s name, we learned a fair deal about Skype’s strategy from the S1 documentation:

Freemium as a model works – just over 6% of Skype’s 560 million strong user-base pay for service, spending USD 96 per annum each. Skype is a cash machine (just as Morodo would be once we get critical mass).

Mobile, Value-Adds and Enterprise and key growth areas – now that Skype has established relationships with several Mobile Operators, it forecasts stronger revenue from mobile. Premium value-added services and SME (Skype for Business) are named as strategic growth areas.

Securing proprietary technology cost Big Time – Skype paid cash and equity at the value of approximately USD 300 million to the Founders to secure an audio-codec license from JoltID, something that was overlooked in the original eBay acquisition. That, right there, is the value of using Open Source codecs.

A number of people have asked us what this means for Morodo. It’s all good news as far as the team is concerned. Why?

1. Continued competition in the Mobile VoIP space validates our business. If nobody was doing what we do, we’d be worried. We’re pleased to remain a leader in Mobile VoIP app technology.
2. The Mass-Media loves Mobile VoIP. Use of an alternative voice and data carrier from a mobile has yet to reach mass-adoption.  The market is open, the technology is proven (and the benefits obvious), it’s all about growth.
3. The incumbent giants have awoken.  We’ve been saying for some time that the big Mobile Operators would eventually adopt Mobile VoIP strategies and now they are. Interest in your company is growing.

Another big week in VoIP that brings yet more valid reasons that VoIP services and products are big business.

Google Voice for Gmail – not a MO-Call killer

On Wednesday Google finally launched Google Voice for Gmail causing a big splash in the media and huge waves in the blogosphere. We fielded a fair few calls asking for comment so we thought it timely to share our thoughts with you.

Google Voice is a whole lot of unrealised potential. The addition of voice calling and text messaging to Gmail has been a long time coming.  The search giant bought Grand Central in June 2007,  Gizmo5 in November 2009 and GIPS in May of this year. Our initial thought was: it that it? Following the cancellation of Google Wave earlier in the month, it’s a wonder that so few features have been included in this release.  And most notably, why so quiet on the Google Voice mobile app?

Don’t misunderstand us; we’re not playing up the weaknesses to hide the strengths of the offer. We should be very clear and state that we do not feel at all threatened by Google entering our space. It certainly didn’t stop anyone investing in Mobile VoIP companies this week.

Many a blogger led off with talk of Google Voice becoming a Skype-killer, well, that’s as may be, but for Morodo, it’s all good news. Why? Here are some the key points as we see them:

Competition is Validation (and Free Marketing)

MO-Call has been competing against thousands of mobile operators, fixed line incumbents and VoIP companies since it’s own launch.  One more player, however big, will not make a difference. In fact, the larger the alternative VoIP player, and the more marketing money they spend, the better. It’s about time the mass-market woke-up to the alternatives out there.

Profitable Pricing.

A lot of nonsense has been written about VoIP being a zero-sum game, a race to the bottom. It’s not. It may surprise you to learn that offering rates sub USD 2 cents per minute to European destinations is good margin business. Morodo can compete and be profitable.

Calling will not be free-to-all-destinations for a very long time, not whilst so many operators around the world (and let’s face it, governments) continue to earn revenue from call termination.

Mobile Applications.

MO-Call is a mature mobile VoIP application, tried and tested in the market on more than 1,800 different makes and model of phone. It’s simple to use, has a low memory footprint and doesn’t dominate the battery.

The existing Google Voice mobile app is complex by comparison and not friendly on power and processing. Many of our immediate competitors distribute huge, hungry and obtrusive applications, we say: Keep It Simple Stupid.

On the mobile, it’s about talk and text: that’s where the revenue is – that’s where the customer wants to save money.

Mobile Networks

Google is on the horns of a dilemma. A few weeks ago, in partnership with Verizon, Google provide a proposal on Net Neutrality to the FCC in the USA (the regulatory body for telecoms). If you’re not familiar with this news story, perhaps the best coverage can be found here at Circle ID.

In the light of the Google Voice for Gmail launch it is now somewhat significant that Google made their Net Neutrality play together with Verizon, the only US carrier yet to host a Skype service on it’s mobile network. We’re sure there are plenty of non-compete terms in that Skype co-op agreement.

This highlights a huge problem for Google moving forward, the ability to build a Mobile VoIP business where the carriers feel threatened. OK, you can remind us that we have written many words in the past about carriers embracing Mobile VoIP, and they are, but carriers view Google Voice in a very different and threatening light. It’s going to take a lot more than revenue share on Google Mobile Adsense and promised increased data usage before we see the search giant secure any Verizon-Skype-alike deals.

Mobile Manufacturers

Google’s Android Mobile Operating system is a massive success story. Chances are it’s a Mobile Operating System that most people who read the papers have heard of and that’s probably a first in the history of the cellphone (anyone remember Psion?).

Android’s market penetration has been led by the mobile manufacturers, the HTCs and Samsungs of this world. It’s license free, it’s completely Open Source and thousands of developers work on apps that run on it. What’s nice for Google is that the Operating System embeds some of their key services, like Gmail, on the device. Try using an Android mobile without a Gmail account, it’s a pretty poor experience.

Unfortunately for Google, these embeds and this diversity in production might not be much of a help in the long run, simply because the people that buy the most phones direct from the factory are the Mobile carriers themselves.  If Vodafone are going to buy 500,000 Samsung Galaxies, you can be sure they can ask for Google Voice to be removed.

The on-device playing field for Morodo is a lot leveler than it might first appear.

Google needs to pull something special out of the bag, it’s facing increased competition in it’s core search business, it’s been battered over privacy all over the western world, it’s struggling to compete with Facebook and it’s coming off the back of a string of failed public betas.

Twelve months ago it would have been inconceivable for John Gruber to write his recent piece on CEO Eric Schmidt, now it’s par for the course that any announcement from the company will attract a round of Google-Bashing.

This time next week, a hundred blog posts and news articles will be warning you of the danger of Google data-mining your call records so it can better target ads at you.

5 reasons why WiFi and WLAN are the Alternative Mobile Networks

In a recent survey, MarketTools states that seventy eight percent of people in the USA who own smartphones with Wi-Fi capabilities would be interested in an application that would use Wi-Fi to deliver ‘five bars’ of coverage at home or in the office. Though the sample group was not exactly huge, the received wisdom underlines several key trends in the mobile industry:

1. Every smart device has WiFi. According to research from InStat, the next four years will see an increase in the number of Wi-Fi-enabled devices to nearly 2 billion by 2014. This includes mobile phones, laptops, Blu-ray players/recorders, e-readers, and digital televisions. The Internet of Things will be WiFi enabled.

2. Mobile Operators are already using WiFi to alleviate data bottlenecks on the network. In the USA, AT&T handled 68.1 million Wi-Fi connections on its network in the second quarter of 2010, compared to just 15 million in the same quarter last year. The AT&T WiFi hotzone pilot project has been building out trial municipal WiFi in North Carolina and will go live in Chicago on a few months time.

In the UK, a YouGov survey found that 50% of UK smartphone owners use WiFi every day – 40% of them because its faster for mobile internet access, and 50% because it is easier than using 3G. Most notably for Morodo, 80% would be interested in a mobile operator service that offers cheap calls through WiFi.

3. 4G is a long time coming. Wimax and LTE are much talked about high speed mobile technologies but they will be a long time coming to the mass market. As the Intelligence Centre points out, GSM provides better overall coverage globally. Mobile Network operators should leverage existing low-cost technologies, such as WiFi, to provide better data services in metropolitan usage hotspots.

4. The future is data – Western mobile markets are reaching 100% population penetration. New data services are the new revenue streams and cash-cows for Mobile Network Operators. VoIP is a data service. Browsing is a data service. Streaming and downloading are data services. Navigation is a data service. Pretty much everything the customer wants to do with their powerful mobile phone relies on a data service.

5. Wireless Local Area Networks are a growth business. Market researchers Dell’Oro Group say that overall Wireless LAN (WLAN) market revenues are expected to surpass $7 billion by 2014. The enterprise segment and the small office, home office segments will account for a majority of that growth, with enterprise revenues expected to expand more than 100 percent over 2009.

In summary, the Morodo Team predicts that WiFi enabled devices will drive data service usage for some time to come. This is great for us: WiFi is cheap to deploy, proven technology that works with Morodo’s voice and data services today. It’s also great for you:  WiFi knows no borders and unlike roaming with your mobile, is cheap to use when you travel, often free. The vast majority of VoIP MO-Calls originate over a WiFi network and we believe this will continue to be the case in the future. You can rest assured that we will be leveraging the abundance of WiFi for some years yet.

The Wholesale Mobile Network is Not Dumb

Earlier last week, Connected Planet reported a new Mobile Network planned to launch in the US later this year.  Backed by Harbinger Capital Partners, the new network, named Light Squared, will be 100% open, allowing VoIP, streaming video, peer-to-peer applications and any other conceivable service over both satellite and 4G.

Such is the power, potential and at present, poor capacity of Mobile Wireless that Light Squared can raise US$ 4.6 billion to build-out a high-speed 4G mobile data network.

So, who are Light Squared customers? According to CMO Frank Boulben, the new operator will target a mix of:

“National and regional wireless, wireline and cable operators; retailers;  device-makers; and Web-content providers…. We’ll have no gatekeeping rules on our network.”

It’s extremely significant that Light Squared will be open to all comers. For the Morodo Team, this is the next logical step in network evolution, bringing true competitiveness and a level playing field to the wireless world. There is no need for the network operator to ‘own’ the end-user in order to run a profitable business. We expect to see this business model become more popular as struggling networks consolidate to survive.

Elsewhere in the news, Juniper Research released a widely published report predicting sharp growth in Mobile App downloads. If you missed the headline, Juniper state that we can expect 25 billion downloads in 2015. That might seem like a big number but given the current global subscriber base in 2010, it only accounts for 5 downloads per mobile.  We think they might be rather cautious in their forecast.

The report noted that “freemium” is becoming the prevalent business model in mobile app distribution. That is, you give the app away and monetise it through service usage. That’s the model that Morodo has been expounding for some years.

Without a doubt, the consumer’s understanding of a downloadable mobile app is far more sophisticated today than it has ever been.

Mobile Operators Giving Up Voice?

We were interested to read Scandinavian Analyst Company, Northstream, had to say about the future of voice for traditional Mobile Network Operators.

I’m sure you’ve all heard, or read, of the coming 4G networks, the next generation of data connectivity from mobile devices. Northstream has tested the world’s first true 4G network offering from TeliaSonera and not found it wanting.

For customers in Stockholm, Sweden, TeliaSonera provide access to the kind of high-speed network that puts your fixed broadband to shame, for the kind of price that your Mobile Operator sells a few hundred minutes of national calls.

Why is this important?

As Northstream has it, this is put up or shut up time for the Mobile Network Operators. The technology used in TeliaSonera’s 4G network is known as Long Term Evolution (LTE), a perfect bearer for standard SIP VoIP; as of yet, the Operator’s own plans for Voice Over LTE have yet to reach consensus on standard or implementation. As Northstream state:

“..operators do not possess the working culture and skills required to be service innovators or even full-service providers of digital services and content: The level and speed of innovation originating from online service providers is too massive for operators to offer serious competition on the service level, even in markets where operators continue to dominate mobile service delivery.”

There we have it, in short the Mobile Network really is a bitpipe. We’re not ones to crow, but we could point out that we told you so back in 2006. This is the most exciting time to be offering alternative voice and messaging services, not only is the hype-cycle climbing the curve of mass adoption, the technology is also shifting in our favour.