That Sound in the Distance Is Skype’s Funeral Dirge

Well, it’s been another exciting week here in the Linux blogosphere, not least because of all the many seismic shifts emanating from the vicinity of Redmond.

There was the end of the Justice Department’s antitrust oversight of Microsoft, of course, marking the end of a historic case and a memorable era in the IT industry.

Then — not coincidentally, given Redmond’s new freedom — there was also its wildly extravagant purchase of Skype, the implications of which still have observers reeling.

It’s been enough to set geeks’ heads spinning, in other words, and that’s just what could be observed throughout the hills and dales of the blogosphere.

‘Bye Skype, It Was a Nice Run’

“As a heavy Skype user I am horrified by this news,” wrote Ted T. in the comments on GigaOm’s report, for example.

Similarly: “Really need to change that title to, ‘Why Microsoft is wasting $8 billion,'” agreed Jeff. “Honestly, sometimes this game of ‘tech keep away’ means that smaller companies end up in the hands of giants which pretty much squander their talent and make the company disappear.”

And again: “Bye Skype, it was a nice run,” wrote Paul TT.

‘What’s a Good Alternative to Skype?’

Over on Slashdot, bloggers spent no time at all pondering motives or likely outcomes. Rather, “So what’s a good alternative to Skype that works cross-platform?” was blogger rlp’s very first question.

Indeed, while Microsoft took great pains to say that it would continue supporting the non-Windows versions of Skype, bloggers didn’t seem to be convinced. Instead, they’ve preferred to focus on Skype alternatives — particularly the open kind.

Bottom line? You guessed it: No shortage of things to chew on down at the Linux blogosphere’s seedy Broken Windows Lounge.

‘I Have High Hopes for Jitsi’

“Three large companies I dislike were bidding on Skype, and the one I dislike the most won the bid!” Thoughts on Technology blogger and Bodhi Linux lead developer Jeff Hoogland lamented. “As many have said, this can only mean bad things for their Linux client, which was already treated like a red-headed step child.”

Such, indeed, “is the problem with closed source software,” Hoogland concluded. “The company behind it today might very well not be there tomorrow.

“Personally, I have high hopes for Jitsi,” he added.

‘I Would Hate to Rely on WINE’

Chris Travers, a Slashdot blogger who works on the LedgerSMB project, expressed similar concerns.

“I worry about Linux support for Skype — and Google Talk and others,” Travers told Linux Girl.

“I currently use it in my business, and I would hate to rely on WINE to be able to answer calls from my customers,” Travers explained. “I don’t know whether Linux support is in the long-term picture anymore.”

‘Not Worth That Kind of Money’

That view, in fact, turned out to be virtually unanimous.

“This just demonstrates that a fool and his money are soon parted,” blogger Robert Pogson asserted. “Skype just is not worth that kind of money. No doubt M$ sees value that others don’t by messing with competition.”

Either way, however, “the possible loss of Skype to GNU/Linux may spur further development of protocols to be used in FLOSS,” Pogson suggested.

‘Already Looking for an Alternative’

“This whole thing smacks of desperation on Ballmer’s part, and he should have learned eBay’s lesson on overpaying for web 2.0 stuff,” consultant and Slashdot blogger Gerhard Mack opined. “I understand that he wants a successful web 2.0 property, but I’m not sure that his investors will be happy with paying so much for an investment that’s been losing money.”

At some point money will have to be made on Skype, “and I’m certain that will mean integration with existing Microsoft products,” Mack said. “Even though they promised to keep working on a Linux version, their own history suggests that at some point we will end up either relegated to second substandard updates or dropped completely.

“Personally, I’m already looking for an alternative,” Mack added.

‘My Hope Is That They Kill It Off’

One more time: “I can only imagine that Microsoft was concerned about not having an answer to Google Voice, and buying Skype is probably the most logical way to get a foot into that market,” Hyperlogos blogger Martin Espinoza told Linux Girl.

“My hope is that they kill it off on non-Microsoft platforms, either deliberately or incompetently, and that what we end up with as a ubiquitous replacement is some kind of genuine SIP softphone,” Espinoza added.

‘A Smart Business Move’

Vertical integration was Slashdot blogger hairyfeet’s prediction for Microsoft’s Skype plans.

“What you’ll see is Skype on your new WinPhone, Skype on your X360, Skype GPO and OUs set up for WinServer to allow Skype to replace your VoIP network at work, and it’ll ALL ‘just work’ all nice and easy together,” hairyfeet said.

Buying Skype, then, was “a smart business move,” hairyfeet opined.

Now, the service’s 170 million users “can potentially be brought into the Windows ecosystem with promises of ‘it all just works,'” he suggested

‘Only 8 Million Were Paying Customers’

Slashdot blogger Barbara Hudson, however, wasn’t so sure.

“$8.5 billion to buy a company that’s managed to lose $686 million over the last eight years?” began Hudson, who goes by “Tom” on Slashdot. “This is a dot-com-boom evaluation. Let’s look at the numbers.

“Cost: $8.5 billion in cash + assuming $686 million in debt comes out to $9.186 billion,” Hudson explained. “170 million users comes out to $54 per user, and that’s before you subtract duplicate accounts.”

Cellphone companies “can eat these types of customer acquisition costs because they get a monthly revenue stream in return,” Hudson noted. “Skype customers? Not so much, especially when, according to Skype’s aborted IPO offering, only 8 million people were actually paying customers, and any attempt to increase that will drive users to Google Talk.”

‘One Possible Silver Lining’

In fact, “the only current justification for making the sort of too-high bid that would be called ‘buying the pot’ in poker is to try to reduce the multi-billion-dollar annual losses from Microsoft’s online advertising operations,” Hudson suggested.

Long term, though, “there is one possible silver lining for Microsoft,” she added. Specifically, “just as landlines have felt the pinch from mobile, with many canceling their POTS (Plain Old Telephone Service), who’s to say that 10 to 15 years from now people won’t be doing the same thing with cell phone contracts, and just use their unlocked smartphone handsets with a wifi connection and Skype or some equivalent?”

1 Comment

  • I can practically smell the paranoia all over the blogosphere. It’s ridiculous.

    How do you know Skype’s doomed? Prove it. Nobody has been able to thus far. 🙂

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