So Who Is Watching and Listening To You?

We live in a world of surveillance, moving ever closer to Orwell’s 1984. We are surrounded by CCTV cameras on buildings, streets and inside shops, some would suggest that our internet messages and activity is also being monitored under the guise of national interest and data gathering by software providers on our every click is commonplace. This new business of ‘big data’ appears to be morphing without control and is often hidden deep within the small print that we don’t read.

Last year we reported on Adobe’s collecting of eBook reading information through their service, which ironically was set up to protect copyright and the interests of their clients - the publisher, but apparently not their other clients - the consumer. LG was also discovered to be collecting details via some of their TVs on their owners' viewing habits and on what devices were connected to their TVs and was sending this back to the manufacturer, even if the users have activated a privacy setting.

Have smart devices now become too smart? Does the technology allow others to look in and to gather data and who and how can we control what we often can’t see and have not authorised?

The latest ‘data gathering news’ is about users Samsung Smart TV users who use voice activation to control their Samsung Smart TV. It is now claimed that the TV doesn’t just ‘listen’ to commands but to everything that is said and may share what they hears with Samsung or third parties, which is believed to be Nuance, the voice recognition specialist. It’s like having a ‘Gogglebox’, or worse still Orwell’s vision in every home. The users are unaware they are being monitored and although this story broke via a story in online news magazine the Daily Beast it questions how big this iceberg may be?

The Samsung policy states that the TV set will be listening to people in the same room to try to spot when commands or queries are issued via the remote. It states: ‘If your spoken words include personal or other sensitive information, that information will be among the data captured and transmitted to a third party.’

However, like Adobe, Skype and Viper before them, Samsung then send data to third parties without any encryption!

Samsung in its defence state ‘If a consumer consents and uses the voice recognition feature, voice data is provided to a third party during a requested voice command search. At that time, the voice data is sent to a server, which searches for the requested content then returns the desired content to the TV.’

They also go on to state that, ‘Smart-TV owners would always know if voice activation was turned on because a microphone icon would be visible on the screen.’

Does this same logic apply to other voice recognition services which are increasingly being deployed on devices?

But it is not just about gathering data but also about pushing unwanted data onto the consumer. Recently Lenovo was caught out installing adware onto new consumer computers on initial activation of the PC. The Superfish adware which injects third-party ads on Google searches and websites without the user’s permission has subsequently been removed.

Data gathering is done for a number of purposes; to help hone and target product and services to an individual, to sell behaviour and interest information to third parties and to eavesdrop on individuals. The problem is that the technology can often be the same and the lines between moral and not can often blur.

Who Would You Buy; Readers Digest, B&N, Nook, Whatsapp?

This last week has seen three company potentially changing hands and although they are all very different in the price offered they are also very different in what they offer their new owners. So which would you buy and how much are they really worth?

Barnes & Noble

G Asset Management LLC has offered to acquire 51% of Barnes & Noble at $22 a share, valuing the bookseller at $1.32 billion. They also proposed to acquire 51% of the Nook e-book division at $5 a share.

The big question is whether the business is worth the valuation and also exactly what they will do with it in order to get their return.

Nook is clearly on the ropes, losing executives in a continual game of musical chairs and only this month declared it will shed engineers on Nook as they continue to haemorrhage business and try to dump their hardware development. Competition from Apple's iPad and Amazon's Kindle continue to dominate the market and with Kobo picking up the international new business and aligning with Kobo what does Nook really have to offer? Barnes and Noble made two fatal ebook errors in not expanding its International reach until it was too late and not creating an attractive and easy to use self-publishing and digital content business.

The retail business remains but is like a giant ship that has built on yesterday’s economic model and is increasingly challenged to tack and change course in what are choppy and dangerous waters.

The news of G Asset Management offer has increased the demand and trading in Barnes & Noble shares which closed still short of the $22 offer price, which would indicate that the market may be sceptical that the deal will go through. Analysts are expecting Barnes and Noble to announce a per-share profit of $0.61 on $2.03 billion in revenue, an 8.8% drop from a year ago. So even splitting the book and Nook businesses may not look that attractive and maybe Microsoft may wish to counter the Nook offer.

Readers Digest

Next comes a relative little publicised sale of Readers Digest for just £1 by Better Capital to a venture capitalist. Readers Digest was once a force to be reckoned with and dominated its marketplace. Better Capital bought the business out of administration for £14m in 2010 adding a further £9m of investment, but despite the title’s administration freeing a £125m black hole in Readers Digest’s pension fund they failed to stave off its collapse into a company voluntary arrangement last January. Now Mike Luckwell who made millions from the TV company behind Bob the Builder has snapped up Reader's Digest UK for £1.

Mr Luckwell wants to take on Saga and focus on the over-50s market and exploiting financial services opportunities who he states are increasingly active and under-served by other media groups.

“Over-50s have a very different life than they did 20 years ago,” Mr Luckwell said. “People over 65 are jumping out of aeroplanes now, it’s a younger type of audience with a ridiculously high proportion of the wealth and only 10pc of advertising.”

He plans to restart the Reader’s Digest product sales business and invest in its online services, even potentially charging for access to its website and couple this with an expansion into financial services. So is the brand recoverable and importantly is the mailing list that is key to its reestablishment sufficiently active to support it? The mail list may be huge but like all lists it ages quickly and becomes harder to mine effectively when the vast majority is postal and you wish to convert them to a digital business. However, managing the list and renting it could be attractive and the brand alone is a steal for £1.

The purchase raises the question why no publisher who had any intentions to offer a direct to consumer offer did not stump up the cash to buy Readers Digest for a £1?

Whatsapp

Facebook announced last Thursday that it would pay $4bn (£2.4bn) in cash and $15bn (£9bn) in Facebook shares as part of the deal to buy the Whatsapp real-time messaging service. The app's founders and employees will get $3bn (£1.8bn) of the shares as four year restricted stock. Facebook previously bought Instagram for $1bn and has a strategy of extending its community offer buy acquistion.

Since the likes of Skype first showed that connecting people for free over the internet could build and deliver huge communities others have taken up the mantle. So does being able to offer even further growth as well as extending the offer make Watsapp a perfect Facebook fit?

It is not that the service is ad free, or has stringent privacy rules, or that it has relatively small in overheads in only having some 50 staff, as all these could change with the wind. What is important is that it has the community, the quality of the service and is easy and free to use. When you plug this into Facebook you have a rich community with multiple ways to effectively communicate and this starts to protect Facebook from others who merely copy and refine their current offer. The younger Facebook generation who may be becoming disillusioned with the site that is now being used by their parents and even grandparents, may be retained by the lure of comprehensive connection by any means under one roof and advertisers just value more connections and a larger community.

We may question the price paid but it is relatively chump change for Facebook to stump up and offers them a quick growth and increased valuation options. There are few who have the cash or the benefits case to compete with such a purchase but it is worth noting that Skype has gone somewhat corporate and dry since it was itself acquired by Microsoft and this has fuelled the likes of Whatsapp. However Facebook doesn’t yet have the same corporate treacle of Microsoft so can probably ingest Whatsapp a lot better.

So which is the best buy and which buyer offers the best investment strategy? All three are very different but all 

Digital Platforms Are Strategically Changing

This last week we have seen three pieces of news which were all worthy of note but when taken together offer us an interesting insight into the strategies players need to adopt moving forward. Today is no longer a case of simply having one compelling offer or thinking that you own a slice of the market. Tomorrow will be won by those with broad appeal and that add real value.

First there is the launch of BT’s digital sports television service. We already have a saturated market in the UK with players such as Sky dominating. Taking on Sky with a straight head to head offer would have been yesterday’s approach, would have probably resulted in a bloody price war and could have been an expensive failure. So BT bid a won some significant rights to live sports including some 30 Premier soccer matches but how would they use these to build their consumer base?

The answer is now out, they will effectively give it away on the back of their broadband service. Those that subscribe to their broadband now get free access to live soccer over the internet. This not only captures the heart and minds of soccer fans who up to now have to buy it as a secondary added service but introduces that magic consumer word ‘free’. Consumers can pay an extra subscription to BT and get it delivered onto their TV through a set top box in HD but many will happily watch on their tablets, laptops and even smartphones.

BT has not only slapped Sky across the face but it has put pressure on those broadband providers that have been eating away at their business. The move reinforces BT broadband services and is a smart move.

Second we have the news / rumours that Microsoft (MS) are about to splash out $1billion to fully acquire Barnes and Noble’s Nook digital world. The hardware is already being phased out and discounted and the partnership / joint venture that offered so much is now being taken over by the Seattle giant.

This would bring MS into the media battles again. Remember Zune that music competitor to the iPod, or their latest damp squib Surface, the tablet that choose the wrong operating system – again. Microsoft has a track record of getting things wrong and playing catch-up. However when they do acquire a readymade solution such as SKYPE they can screw up over engineering something that didn’t need the attention. Try accessing Skype today on Windows 8, through a browser or on an Android smartphone and you would think you were connecting with three different applications.

So what will Microsoft do with Nook? Maybe they will focus on education, but exactly what will it give them? Perhaps they believe that they can take on Amazon but do they really understand media or just bits and bytes? It’s a great financial exit for Barnes and Noble but what’s in it for the consumer?

Thirdly we have the rumours that Amazon is planning to launch its own smartphone.

We often ask what is amazon. Is it a media retailer, a publisher, a one stop shop, a marketplace, a technology company? The answer is probably all the above but primarily it’s a community hub that attracts many through not one but many offers and its quality service.

So why a smartphone? Well it’s an obvious extension of its hardware offer and remember when Apple went into the phone business we asked the same of that move. Unlike Apple it doesn’t need to plough its own furrow and can piggy back on a wealth of technology already out there. Maybe like BT it sees a way of being able to offer primary services with added value additional service that effectively lock in consumers.

Tomorrow is not about the best device, the best product offer, the cheapest price, the widest range, the fastest connection. It is about the best holistic offer that adds real value and is built around a primary driver.

It's Good To Talk Socially

So is it cut and dry that Facebook rules and the rest remain ‘also rans’? It’s true that the more we invest our time and capture our information the harder it is to wean us off our favourite social network drug.

Social networks now matter to business not just to spread the word and promote their service offers but in building communities. Therefore all businesses must view these as essential communication channels and invest accordingly. The business that fails in the future may well be the one without network communication.

As consumers, we have often demonstrated as liking for joined up thinking and tightly integrated applications. Amazon, Microsoft and many others have proved that the best product doesn’t always win over that which is user friendly. Amazon’s ‘one click’ is a perfect example of something small and simple that is both attractive and compelling to many. We have also seen earlier social network service leaders stumble as users demand more joined up services and as the boundaries of the network and service functions expand.

As we master one new service we soon want it neatly joined to the rest. One of Amazon’s smartest moves was their affiliate programme which built their brand through others. The ‘one stop shop’ will continue to be attractive to many.
So what is so attractive with the social network of Google+?

Some things such as the contact ‘circles’ would appear neater but much off it looks and feels very similar to others.

However there are differences.

Conference calls have long been a essential business tools and the "mobile hangout" feature, allows Google+ users to also now enjoy video chats with groups of friends. Whilst "Hangouts on Air" would allow anyone with a video podcast to broadcast it to the widest audience. Google has not only developed the hangout service but are set to demonstrate it through the rapper star to promote his very own hangout and new medium.

So is Google+ now developing social networks and starting to compete not only Facebook, but also the likes of Skype. It certainly has the potential to adopt a holistic approach and recognise that users use search, maps, youtube, etc and wrapping them in their own social world may be more effective than presented them disparately in others.

However the 64 dollar remains- will users move their community service to others or remain with their current investment and also is any technology lead sustainable in today’s highly integrated world?

Skype Today, MSSkype Tomorrow?

Luxembourg-based Skype and its 663 million global users has been bought by Microsoft for a rumoured $8.5bn. Some would suggest that’s a high ticket for an eight-year-old company and a very high ticket for one that has yet to make substantial money.
eBay bought Skype in 2006 for what was then a lot of money $2.6bn and then sold it in 2009 for just $2bn. So what has changed and why is Microsoft allegedly paying over 4 times what Skype was sold for only two years ago?

Does Microsoft see Skype as a means of getting into the living room and marrying Xbox Kinect and HD television. Are they thinking about home education, remote learning, remote patient home care? Are they buying it to take on the teleconferencing business market? Do they see it as a way back into the mobile world with an alignment Windows Phone 7?

Whichever is the driving motive it’s a lot of investment that will need to deliver real return. Microsoft investors are certainly going to want answers and will ask how an open platform such as Skype is going to deliver exclusive revenues.

Businesses such as ours depend heavily on Skype today to perform global business communication. If Microsoft were to install a toll both and wrench up the payment side, people will just go elsewhere. So the difficulty maybe, will be the integration of Skype into paid services that can then build the revenue.

The big question is whether you need to spend $8.5bn to achieve that?

Sykpe and Facebook to Join Forces?

Imagine the largest social network site joining forces with the largest VOIP provider and the boost that both will get in connecting peoplei every way!

The dots will soon be joined if the partnership, according to All Things Digital, between Facebook and Skype happens. It is claimed that the companies will integrate functions enabling users to call and SMS Facebook friends from Skype, Skype will integrate Facebook Connect and users will be able to video chat with Facebook friends.

Skype claims some 124 million active users and 560 million registered users, while Facebook claims over 500 million users. The geographical strengths of each service will also create further growth for both. It also enables Facebook to gain better leverage in the mobile market. It certainly looks both a logical and win win relationship.

The user will gain free Skype basic services and free Facebook with revenue being created from click-through ad revenue and in licensing.

India: Control versus Commerce, Terror versus Traffic

It makes us wonder if India really wants to be a digital powerhouse. First the bring back tax on IT which could add a hefty 25% on all that is digital, then it turned its focus on Blackberry and now is demanding "access to everything". They want "any company with a telecoms network should be accessible". It could be Google or Skype next and you can’t rule out government access to any virtual private networks.

Increased fears of terrorism is one thing, but chopping the legs from under the industry that make its growth today, is another.

Blackberry has been given 60 days to come up with a way to open up its data to Indian law enforcement authorities and is reported to be setting up a server in India as part of the solution. Some cynics would suggest the 60 delay is so not to upset the Commonwealth Games in Delhi in October in a country that has 1.1 million customers.

Its goingto be interesting to see who follows the Indian lead and whether the new measures and tax issues simply move the business further offshore.

Skype On Th Block?

Where would many of us who make lots of international calls be without Skype. Since its launch it has changed the way many communicate. The change could be even greater if more mobile operators were brave enough to follow the lead by 3 and allow VOIP. The iphone app is their but the carrier will to switch it on today isn’t.

Now after 4 years Skype’s owners EBay are claimed to be about to sell Skype to a group of private investors, which include Netscape co-founder Marc Andreessen.

EBay bought Skype for $2.6bn in October 2005 and now appear to be offloading it for $2bn. When they bought it Skype had 53 million users it now has 405 million, but although this growth is significant the service is still understandably dominated by free user to user calls. So the challenge to any new owner is to find the money whilst continuing to expand the service.

Mobile UK News

From 1st May anyone with a Skype friendly handset on the 3 network can make as many Skype calls and speak as long as they want. We already have used the service for the last two years and talk every day to India, the US and Australia for free. 3’s attitude towards VOIP and Skype is a breath of fresh air and even if you aren’t a 3 customer you can buy a 3 sim card for a £1.99 for a compatible unlocked handset, download the Skype client and you are connect to everyone on Skype around the world!
These moves are important as they turn the VOIP pressure on others and act as clear differentiator to anyone who makes lots of international calls or whose friends use Skype.

Another UK operator, Orange, has unveiled the UK's cheapest touchscreen smartphone for unbelievable price tag. The Vegas is sold as a pay as you go handset and available either in black or in pink, is one of the lightest and smallest smartphones weighing only 84g and looks very, similar to the HTC Touch, which interestingly costs a lot more. It has a 2.4-inch touchscreen with a 1.3-megapixel camera, MP3, integrated FM radio, a built-in browser and compatibility with microSD cards up to 4GB to complement the 64MB onboard memory. Yes and all for £49!

The downside is that the Vegas doesn't support 3G but at £49 does that really matter?

After its big launch, MusicAlly claims that Nokia’s ‘Comes With Music’ has only attracted 23,000 subscribers for the free music download service. So what is the issue after all Nokia is the biggest mobile manufacturer, the music is free and all you need is a 5310 and N95 8GB handset. Nokia is having a hard time and maybe Comes With Music isn’t a the issue. Maybe its Nokia and the old units chosen to use the service. If they widen the units who can use the service it may pick up but it can hardly be breaking even on the money that Nokia thas to pay for the licences and to run the service.

The LG GD900 Crystal will be available from July. It has a new design - a see-through tempered glass keypad design with 'cool glow' and the keypad also transforms itself into a laptop style mouse pad that offers easy web browsing and navigation and tops this with a handwriting recognition feature! LG is also offering its 3D-style interface and is hoping it can create a new design buzz.

Zennstrom and Friis to Buy Back Skype?

News is breaking that Niklas Zennstrom and Janus Friis, the founders of Skype, have made approaches to several private equity firms in order to make a bid to but it back from eBay. Skype was sold to eBay in for $2.6 billion in 2995 and the pair later received bonus payouts increasing the price to $3.1 billion. Skype now has over 405 million registered users and its 2008 4th quarter revenues were $145 million. It is estimated by Telegeography that the service n0w accounts for 8% of the world’s international calling minutes.

The NY Times reports that it is expected that eBay would sell Skype for a faction of what it paid amd that would be a significant coup for the founders. Some would say that the service is not performing as eBay envisaged and is not generating the paid for revenues thay expected but is being used as a free service. Obviously something that eBay are not familiar with exploiting. The service is poised to go even bigger and freer with iPhone and Blackberry traffic.

Another potential reason to sell is the intellectual property dispute between eBay and the Skype founders. Joltid, a company founded by Mr. Zennstrom and Mr. Friis, terminated eBay’s license to Joltid’s peer-to-peer technologies on April 1st. These services appear to be at the center of Skype’s service. The dispute is likely to dissuade any other suitors and although Google bid for the service in 2005 they now have Google Voice.

We have always admired Zennstrom and Friis form their Kazza days, through Skype and Joost they seem to have their finger on the pulse. We now wait to see how their buy back develops.

Skype Broadens Its Reach

Skype has already established itself as the popular consumer VoIP service offering an Internet calling service that has more than 400 million users around the world. The service is now reportedly moving into both the corporate and mobile world and potentially covering all the bases.

Earlier this month they announced a beta version of its business-user-oriented Skype for SIP (session initiation protocol), which will run on an enterprise PBX (private branch exchange) systems. Imagine picking up the office phone and using Skype on your office system? It now potentially offers organizations new ways to use the VoIP service and manage calls.

The beta version of Skype for SIP will connect the company's Web site to the PBX system through a click-to-call feature and let users receive and manage inbound calls from Skype users worldwide on SIP-enabled PBX systems. Organisations will also be able to manage Skype calls using their existing hardware and system applications such as call routing, conferencing, phone menus and voice mail.

How Skype will compete against VoIP offerings from more traditional and experienced service providers is the question but lowered telephony costs could be a major incentive.

On the mobile front we were one of many in the UK who were drawn to service provider ‘3’ on the offer of free Skype service and for the last two years have enjoyed Skype on the move over our Nokia N95.

Earlier this year, Skype announced more versions of its software for more mobiles and mobile operating systems such as Android and Windows and today they have announce support from May for the iPhone, iTouch and a number of Blackberry phones. Apple will limit Skype’s use on the iPhone not allowing calls over the data networks of its carrier partners.

So we are starting to see a marriage of VoIP and mobile and Skype and the office PXB. It will now be interesting to watch the obvious take up and how the service will change how we all pay for services in the future.

Skype moves ever closer

Some may argue that we write a lot about VOIP services such as Skype and that this is not relivant to publishing. Maybe they are right and maybe …

Sykpe 3.5 now allows users to add videos from Social networking sites embedding them into both voice and text chats and intimate the caller’s ‘mood’ and express this in the form of an entertaining video. The new software also users to capture a still image from a Skype video chat and several ‘phone’ features such as auto redail and line transfer of inbound calls to a user, group, landline or mobile phone.

The point is the VIOP is staing to become functionally rich and an effective way to talk, chat and now exchange video and stills. We need to think about this in terms of viral marketing and promotions and recognise this community is not outside the phone system but increasingly inside it. It is also increasingly moving from a PC tool to becoming platform independent and moving to the mobile platform.

VOIP takes to the Skies?

eMarketer reports figures from the Yankee Group which estimates that 9% of all US households subscribed to VoIP (voice over internet) services in 2006, up from 4% in 2005. The number of VoIP subscribers in the US grew 125% in 2006 and now is around 9m. The report forecasts that the VoIP market will continue to grow significantly over the next few years.

This in turn leads us to question the roll of the mobile phone and the carrier services. Today I use Skype over my mobile phone and although there are limitations over the PC application phoning and receiving calls to international numbers has never been cheaper.

Its no longer a case of why we should be on Skype by why anyone shouldn’t be on it?

Now comes news that American Airlines Inc. will test in-flight Wi-Fi services across the U.S. starting next year. Other airlines including Deutsche Lufthansa AG, Southwest Airlines and Qantas are all reported to be planning to test similar in-flight technology. Passengers on American flights would soon be able to e-mail and surf the Web from laptops and handheld devices while primarily on transcontinental routes.

Two questions remain unanswered - the cost, we all know that airlines are not good at costing such services to their captive customers and whether they would allow VOIP services as voice calls in-flight may ‘disturb other passengers nearby’.

It appears we will be connected whereever we are.

Kazza, Skype and now Joost

There are two people who more than most helped shape the Internet ‘free’ world we live in today. It was definitely not Jobs and Gates or those Google guys Page and Brin nor Napster’s Parker and Fanning but Niklas Zennstrom (pictured)and Janus Friis. This Scandinavian team not only gave us Kazza and arguably the second generation of P2P music but went on to create Skype and redefine how we all communicated. Now they have appeared again with their latest venture ‘Joost’.

But this time they are not pushing the legal boundaries but doing everything by the book. Revenue-sharing agreements have been signed and licenses have been granted.

Today Friis and Zennstrom work out of Skype’s offices in London. Although they sold Skype for $2.6billion to eBay in 2005, they remain active in the company.
Joost has struck a major deal with Viacom which gives Viacom a degree of control over its programming that it has not enjoyed from the likes of YouTube and also a platform they claim is piracy-proof. Only this month , Viacom demanded that YouTube, remove more than 100,000 clips of its programming due to the lack of licensing and revenue sharing agreements.

Joost replicates channel swapping television, streaming full-length programs in full-screen format and allowing users to flip through channels that offer everything from documentary news programs to videos.

Technology convergence between the various video, TV and visual platforms is certainly coming fast but because is built with this in mind it could present the ‘tipping point’ that changes how consumers watch TV and videos on the Web in the same way the Skype redefined voice over internet.

Certainly one to watch!

So why isn't everyone on Skype?

When eBay bought Skype for $2.6 billion in 2005, many thought it a wise move. But how would they make money from free VOIP (voice over Internet protocol) services?

Today we read two pieces of news which start to join the dots. First a new service to link Sykpe to landlines for free in the UK and several other EU countries, including France, Italy, Germany and Spain. Skype Pro offers anyone who signs up discounts on Skype-certified phones and free Skype Voicemail, as well as free calls to landlines. Skype Pro users will also be able to make video calls to other Skype users.

A five month package will cost about £7 and you will receive about £3 free credit from Skype. When the five months is up, customers will be charged around £1.20 a month for the service. With over 170 million registered users, the world is certainly changing. Personally I now have an ‘X Series’ phone from 3, which gives me free skype calls and access on the move 24 x 7. I obviously also have the service on my PC for when iam in the office. With daily confernce calls to India, Australia and the US, my collegues and I in Value Chain use VOIP and Skype all the time.

So who needsa land line?

The second news is from the San Jose headquarters of eBay. The comapny is not only changing how their employees communiicate, but also how they work in this new world. Their latest move, ‘the cubicle swap’, is intended to bring together the engineers and the businesspeople who work on specific projects, while migrating employees off their landline telephones and getting them to use their Internet calling service Skype.Why is it taking so long for business to grasp this opportunity?

One issue with mobiles has always been finding other people on services where there are no directories. Skype enables users to synchromies their contact database with the service and select matches. It is easy to see the day when we pay one service charge and get as much as we can eat for free. This is in turn will change how we use the network and confirm the mobile as the key device to technology convergence.