Monday, February 14, 2005

Skype Moto

Well, the Valentine's Day yacht-party accompanying the Skype/i-mate announcement hasn't even left the dock, but Motorola has today also answered Niklas Zennstrom's love-call. The press release isn't on either site yet, but the alliance focuses on "co-marketing of new optimized Motorola 'Skype Ready' companion products, such as Bluetooth headsets, dongles, and speakerphones, as well as delivery of the Skype Internet Telephony experience on select Motorola mobile devices." The latter is presented as though it's an afterthought, though I guess the carrier politics around this are highly complex, to say the least.

Despite the tiptoeing, it would seem all too clear that Motorola has cast a vote about where it sees the market going long-term, and wants to be in sooner rather than later. I imagine the carriers are hopping mad. You can also hear the back-of-envelope scribbling of investors and analysts, bringing forward their "death of voice" time horizon. As someone whose livelihood depends to great extent on the continued existence of incumbents, I should be more positive at all the buybacks, dividends and cash flow improvements we are witnessing. However, on anything more than a 12-month view, I find it increasingly difficult to justify putting money in the sector.

Let's be straight, we all knew this day was going to come, but my honest expectation before the i-mate deal of last week was that it might take another year to break down the major handset makers. What's surprising about this is not that it is happening, but that it's happening when Skype is not even 18-months old. In practice, until data tariffs around Europe fall, this is probably only another marginal source of anxiety for the incumbent mobile players. God help them when we find ourselves in a flat-rate data environment like Japan, or if a truly disruptive MVNO enters the picture, along the lines of Earthlink/SK. Sing along with me...

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