Thursday, January 17, 2013

A seemingly small change in Facebook functionality will trigger an avalanche of huge disruptive changes

Let us predict the main consequences of yesterday’s move of Facebook into VoIP: they will go far beyond those for Microsoft and Skype. Facebook's move it will mean nothing less than merging the entire VoIP, messaging, and indeed also mobile telephony into social networks.

Facebook's iPhone users in the U.S. can now make calls to each other through the Facebook Messenger app anywhere they have a Wi-Fi or cellular data connection, avoiding carrier charges. Facebook said it was working on adding the feature to its Messenger app for Android and BlackBerry users. Right now, calls can only be made to another user who has Messenger installed on their iPhone. Users can not call a landline number, and they cannot even call a Facebook friend who is using Facebook via web browser.
This move will have much broader consequences than is immediately apparent. Let us mention here the three most important:
Bell's Telephone
  1. Microsoft is out of the Messaging / Telephony game because once messaging merges with social networks, MS will be unable to compete in this field with heavyweights Facebook and Google. This is indeed a bad news namely for Skype and Lync. With its acquisition of Skype in May 2011 for US$8.5 billion, Microsoft bought namely users (because similar technology Microsoft already had, and even in the form of three different applications: Windows Messenger for common users, Xbox Live for Xbox users, and Lync for corporate users). But these expensively bought users will now switch to Facebook (or Google+), which they already use anyway. This step will be only logical from their point of view, as it will allow them to get rid of the need to use two separate applications for similar functionality.
  2. Google will become the biggest competitor of Facebook, thanks to its Gmail, Google+, and related voice and videotelephony services. Let us recall that Google has a head start here: it is offering video calls already since its launch of Google+ in June 2011, and since March 2012 it even offers free calls from Google+ to ordinary telephone numbers in the US and Canada. The battle between Facebook and Google will be very balanced - both competitors have chances for victory. Facebook has more users, while Google has better technology, namely in messaging where Facebook up till now depended on technological partners.
  3. Last but not least: This move is indeed very bad news for telephone operators. VoIP ceases to be a technology used only by enthusiasts and becomes a mainstream commonplace. A typical user will prefer to call his friends directly from his favourite social network, no matter whether he is on computer or mobile phone, as it will be indeed much simpler than manually dialling the number on his phone (in case he is on computer) or leaving the application in order to make a call (in case he is on mobile). Using VoIP instead of carrier voice telephony will thus no more mean any complication for a user. The opposite is true: VoIP calls will be simpler and more convenient, offering additional related services. At this moment, billing based on length of the calls and their distance will become history, and so will become the voice telephony service that was the main cash cow of telcos for more than a century.

A seemingly small change in Facebook functionality will thus likely trigger an avalanche of huge disruptive changes in several important sectors.

Wednesday, January 09, 2013

Facebook launches telephony - Microsoft may write off its $ 8.5 billion investment in Skype

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Since last Thursday, Canadian users of smartphones running iOS and Android can use Facebook for voice calls directly from Facebook. The call is routed through VoIP, so it uses existing data plans, not a voice plan of the user. Facebook thus started to offer - so far only in Canada and so far without video - the same service as Skype. For Microsoft, which bought Skype in May 2011 for $ 8.5 billion, it's a bad news.
Above all, we must say that the voice communication is a logical function of social networks and it was only a matter of time when it becomes their natural part. The primary aim of social networks is to connect people through various forms of communication: short messaging, photo sharing, video sharing, and also the voice and video telephony. This is well understood not only by Facebook, but also by its main competitor, social network Google+. Google+ is in this direction significantly ahead of its competitor offering video calls (via its custom function Hangouts) since its launch in June 2011, and continuously improving its VoIP functionality. Since September 2011 it is possible to use Hangouts directly from the Google+ app for mobile smart phones and tablets, and since March 2012 it is possible to make calls from Google+ on ordinary telephone numbers; moreover, calls to numbers in the U.S. and Canada are even free. While Facebook already offers voice calls as well, from April 2011, it is not via its own service, but via a service called Bobsled provided by a partner company T-Mobile. Since June 2011 Facebook offers also video calling, but again through technological partner, which is in this case just Skype. In both cases, users must however download a separate application and switch to this application to start the call; calls directly from Facebook are not yet possible - unlike calls in Google+. Facebook is thus clearly under pressure of its biggest competitor, and has to react.
Fortunately for Facebook, Facebook has all the potential to succeed, and not only that, it is even probable that it can completely dominate this market. In telephony, like in social networks, the so-called network effect takes place. Telephone service is the more useful, the more users we are able to reach through it. And here comes Facebook with its claimed billion of users on the top, without serious competition. For the user it does not make sense to have a green phone on the table from which he is able to reach a billion users, and next to it still a yellow phone from which he can reach 600 million users, who significantly overlaps with the first group. Users will retain only one service, and it is that one which is most universal.
As a result, there is no bright future for once famous and successful company Skype. The VoIP technology is now so mature that it is itself no  differentiator from the user’s perspective. What matters is number of other users available through this service, and a seamless interconnection with other useful services – namely with other ways to communicate with our friends, such as sharing of photos, videos, and of course contacts. To sum up, at the same time when Facebook launches its global telephony, Microsoft may write off its 8.5 billion dollar investment in Skype, because Facebook users will no more need Skype as a separate application.
Anyway, history is only repeating itself. Microsoft itself could tell - for example, how did browser in the 1996 became an integral part of the functionality of the Windows operating system, which caused current leader in browsers, Netscape, to lose its market. That time the problem was that Netscape users were also users of Windows which brought them the browsing functionality they needed, so they had no reason to buy another product with the same functionality. Today, therefore, this story will play again, albeit with a slightly different cast. Facebook will beat Skype simply by expanding its functionality to the field of its opponent. Unfortunately for Skype, also in this case, its users are also users of Facebook.

Tuesday, January 08, 2013

Self-Driving Cars may launch revolution with larger effects than seen at first glance

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The highlight of this year's Consumer Electronics Show CES 2013 in Las Vegas may become strangely products that we did not up till now include at all into the category of consumer electronics - self-driving cars. Cars of Toyota, and Audi presented at the currently ongoing CES 2013 are of course built on the latest technologies. Their foundation is a GPS location service that can very accurately determine the position of the car, and when combined with today's advanced car navigation services can in fact lead the car to any place of the civilized world. Navigation system is also combined with precise laser distance meter that continuously measures the position of the car from the surrounding objects, radars, position estimator and camera, and thanks to all this equipment the car is able to respond to the current traffic situation.
Toyota self-driving car
Cars at the Consumer Electronics Show are actually just the next logical step in the expansion of the IT industry. Recall that it was not so long ago, when even the major exhibits on today’s fair were not part of the IT. Being it smart phones, music players, or TVs  - all these devices were part of completely different industries.
Like other digital consumer electronics, however, even self-driving cars cannot exist without online (cloud) services - only these services will breathe full functionality into these products. The cornerstone of such services for “smart cars” will be of course navigation. It will of course know the actual road closures and detours, current traffic, but also the state of weather and road conditions. The main difference to existing navigation services will be that this navigation will be two-way, interactive - navigation will not only pass on information about current traffic, but also will be able to actively manage and coordinate the traffic. When the automatic cars spread, it will be possible to prevent most today’s conflict situations in transport, such as congestions, and poor predictability, when in fact we get to our destination. At that moment, the roads will also be able to get rid of traffic lights and traffic signs. Second significant change will be in substantial increase of car sharing services, which will not only cause a revolution in taxis, but will be also essential in optimizing the number of cars that are actually needed. Do we have a parking problem at our house or office? No problem – let us send our car on, let it serve to other people. They will pay us the cost of gasoline and maintenance. Do we need our car only sporadically? Then we can become members of a number of schemes for car sharing. Car will be always available when we need it – and of course, on the spot where we need it.
Audi TTS self-driving car
These services will become highly attractive because they will allow to take advantage of the car at a significantly lower cost than today. No more we will need to cover the entire cost of car ownership, garaging and car maintenance for a car that is most of the day just standing. The automotive industry will then be able to optimize the number of cars with respect to the real transportation needs - scheme to be well known e.g. from aviation. This is of course contrary to the interest of automakers, but so be it. You cannot launch disruptive innovation, such as self-driving cars, and avoid its logical consequences.
So who knows? Maybe one day our cities will be free from cars that now line the edges of all sidewalks and are trying to squeeze in every place of our living space. And right now, we are witnessing the actual moment when this revolution begins.