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http://www.smh.com.au/technology/biz-te ... -e3qe.html Skype users please read this as contains some really interesting developments about the future your current service provider.

Good evening, macman4hire.

macman4hire wrote:http://www.smh.com.au/technology/biz-te ... -e3qe.html Skype users please read this as contains some really interesting developments about the future your current service provider.

Bad, make that very bad, news. Having a healthy skepticism about the journalistic account of the facts, I decided to read eBay's 10-Q quarterly filing with the Securities and Exchange Commission (SEC) for myself. Here is an exact quote of the relevant issue from page 15 of eBay's 10-Q filing:

eBay's Lawyers wrote:Skype licenses peer-to-peer communication technology from Joltid Limited pursuant to a license agreement between the parties. The parties had been discussing a dispute over the license. In March 2009, Skype Technologies S.A. filed a claim in the English High Court of Justice (No. HC09C00756) against Joltid Limited. Following the filing of the claim, Joltid purported to terminate the license agreement between the parties. In particular, Joltid has alleged that Skype should not possess, use or modify certain software source code and that, by doing so, and by disclosing such code in certain U.S. patent cases pursuant to orders from U.S. courts, Skype has breached the license agreement. Joltid has brought a counterclaim alleging that Skype has repudiated the license agreement, infringed Joltid’s copyright and misused confidential information. On the basis of, among other things, the parties’ mutual dealings since the execution of the license agreement, Skype asked the English High Court for declaratory relief, including findings that Skype is not in breach of the license agreement, that Joltid’s notice of breach and subsequent notice of termination are invalid, and that Joltid has certain indemnity obligations in relation to the U.S. patent proceedings. Trial is currently scheduled for June 2010. Although Skype is confident of its legal position, as with any litigation, there is the possibility of an adverse result if the matter is not resolved through negotiation. Skype has begun to develop alternative software to that licensed through Joltid. However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive. If Skype was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible.

This is, unfortunately, no joke. My idea about using the Google Voice (GV) <—> Gizmo5 (G5) interface for inbound call traffic and my T-Mobile wireless for outbound call traffic may turn out to be more timely than I had originally imagined.

Nice find, macman4hire. I'm surprised that I didn't catch this in the technology news that I follow closely and daily.

CNN story about Skype and its licensing core technology licensing issues.
http://www.cnn.com/2009/TECH/biztech/07 ... topstories

lcompton,

I would not call this a nice find but thank for your kind words anyway! This is rather a disappointing development in the VoIP technology arena. If a ruling goes against Skye and for what I have read it probably should, this will drastically reduce competition in VoIP market which is not good for consumers. I did not feel sorry for the executives at eBay nor its shareholders as I perceive this as clear demonstration that eBay's previous senior management team did not have a clear understanding the VoIP markets or the technology it was investing in. Who in their minds would invest in company that uses proprietary platform that included a licensed proprietary technology at its core. This could end being one of the biggest blunders in recent corporate history

Good evening, macman4hire.

macman4hire wrote:I would not call this a nice find but thank for your kind words anyway! This is rather a disappointing development in the VoIP technology arena. If a ruling goes against Skye and for what I have read it probably should, this will drastically reduce competition in VoIP market which is not good for consumers. I did not feel sorry for the executives at eBay nor its shareholders as I perceive this as clear demonstration that eBay's previous senior management team did not have a clear understanding the VoIP markets or the technology it was investing in. Who in their minds would invest in company that uses proprietary platform that included a licensed proprietary technology at its core. This could end being one of the biggest blunders in recent corporate history

Please do calm down. No one is suggesting that Skype's current legal woes are a good thing. I had hoped that it would be obvious that my kudos to you was based on your finding and sharing the news account of Skype's legal woes, which provides useful intelligence to those of us using Skype.

It's difficult to speculate on the terms of the deal between Skype's founders and eBay without access to the sales agreement. As I'm sure you're aware, it is always easy to play pundit with 20/20 hindsight. However, most experts agree that eBay overpaid for Skype when they purchased it for USD2.6B in 2005. eBay's present estimate of Skype's value stands at about USD1.7B. At the time, many market analysts questioned eBay's wisdom regarding the Skype purchase since the Skype product didn't seem to integrate with eBay's business model. eBay's response to these criticisms was along the lines of justifying their purchase of PayPal and how the service augmented the eBay customer experience by easing the payment process. eBay asserted that Skype would similarly integrate with eBay to enable real-time customer-seller contact during the auction process. Obviously, this integration never materialized.

As an aside, it is not uncommon for companies to purchase core technologies with licensed software components from other parties. For many years, Microsoft's Internet Explorer used licensed components from the University of Illinois at Urbana-Champagne's National Center for Supercomputing Applications (NCSA) Mosaic.

Something else to consider is that the current legal wrangling and saber rattling between eBay management and Niklas Zennstrom and Janus Friis (Skype's founders) could be posturing to reach an out-of-court settlement. Skype presently has about 443MM user accounts. That's a serious global subscriber base. The likelihood that Skype will go away is slim to none. In reality, Skype is a cash cow that can generate a lot of revenue on an ongoing basis. My best estimate is that the case will be settled before it goes to trial in June 2010. That's nearly a year, which is a lifetime in the world of technology.

The on-going challenge for Skype will be to find ways to continue to generate revenue while remaining competitive in the insanely volatile world of VoIP. This is definitely a story to watch (even if one is not a Skype user.)