Transcript for UCStrategies Experts Discuss Cisco's Microsoft-Skype Challenge
Dave Michels: Hi, this is Dave Michels. I'm with the UCStrategies Experts this week to talk about the news of Cisco challenging the Microsoft-Skype merger in the EU. This is a rich story. This has all the drama and excitement of a great movie, really. We hit everything going on in UC. We've got IM, video, interoperability, the UCIF, mobility, telepresence, all wrapped up in this conversation and it should bring out some interesting points. I put a post up this last week on my blog, TalkingPointz.com, where I kind of hit some of the points. But I wanted to get into some of the more individual perspectives on this call. I'm going to start off with David Yedwab. David, where do you think we're at with video interoperability and where the industry's going?
David Yedwab (:57): Well, I think this is a key touch point of the whole future of UC and UC interoperability, whether it's between vendors, between locations of enterprises, between applications, between capabilities. We have, in this case, Cisco in effect asking for the same thing that they were required to do when they bought Tandberg, i.e., make the video codec available publicly, open if you will, for no royalties. And in effect, that's what they're asking Microsoft/Skype to do with the Skype video codec. And clearly, if video is important to the future of unified communications, as we all think it is, clearly open video, allowing any endpoint to talk to any other endpoint, any other video, any other application to interoperate with any other application, we certainly have things right at the crux of the issue. What the outcome is going to be when the EU looks at this decision, nobody can tell. But it is certainly going to be interesting if Microsoft tries to keep the Skype video codec proprietary. It will be very interesting from the interoperability perspective, since Microsoft was sort of the former/leader of the UC interoperability forum (UCIF). I may have more later in comment, but now turn it back to you, Dave. Thank you.
Dave Michels (2:24): Well, thanks, David. I don't think it's the codec, if I understood it correctly – the codecs are pretty well understood. But Cisco had to open up TIP, Telepresence, what's that stand for, information Protocol or something like that, interoperability protocol. I'm not sure what TIP stands for. But they had to open that up a few years ago. It's interesting because this whole issue of interoperability is so confusing, because Cisco technically is interoperable. They do support most video interoperability formats. But a lot of the whiz-bang features of the Cisco telepresence room systems are not interoperable. Skype is very closed and proprietary. Microsoft Lync is reasonably closed and proprietary. And so in a way, Cisco was already more interoperable to begin with, but they were forced to open up their standard. So they're saying that Microsoft should be forced to open up more of their environment with Skype. What gives that some more credibility is that Cisco had a much smaller user base than Skype does in the video realm. I am curious if Cisco's going to get in a little more trouble now with being hypocritical, because so much of their environment is proprietary, and whether it's fair for them to be calling for more openness when their system has been fairly closed to begin with. Jon, what are your perspectives on this?
Jon Arnold (3:50): Thanks, Dave, and Dave, both Daves here. This is a really fascinating debate. I'm a little more focused on the business level as opposed to the technologies and the standards behind it. But this is really a bit of an arms race thing. That's the way it looks to me. And it's a bit like the way the tel-cos and cable-cos have had to kind of keep one-upping each other to have the fastest throughput, you know. First, we had DSL, and now we've got fibre. And now cable has countered with Docs 3.0, and they each have to kind of outdo each other, because the prize is so big, right? It's whoever gets the biggest, fattest pipe into the home wins and keeps everything. And I think, to me, this is what this is starting to look like, the way Cisco's behaving. They're taking the high road, and there's nothing wrong with that. And like you say, you know, sure it's calling the kettle black. But I think this is signaling a fear factor for them in that if Microsoft is the first owner to figure out how to take advantage of what Skype has, eBay couldn't do it, Avaya couldn't do it. The fit between those two companies could start to make an awful lot of sense to leverage that huge Skype community. And like you say, David, it comes from that small user base Cisco is building from. When they look at those hundreds of millions of potential endpoints that Skype could enable with video, and if they could keep that proprietary, that's going to shut Cisco out of that space. And they see that, geez, this could all of a sudden work. And this is dangerous for them, because they're betting heavily on video being a telepresence driven and high-end system-based solution. Yes, they have MOBI with Tandberg, and so they have a little desktop. But the money in it for them is in the big systems, whereas, with Microsoft, it's the desktop. And if Skype can leverage more momentum back to the desktop to where video is going get the most takeup, that's great news for Microsoft, but it's bad news for Cisco. And I think it makes sense that all of a sudden that mix could go really well.
Dave Michels (5:56): Do you think that Skype and Cisco are competing in the same businesses? Skype has been historically consumer oriented and Cisco's been more business focused. Is this the same candle burning on both ends, or are these separate businesses? And how do you think the Cisco ūmi version, or the Cisco ūmi product, which was Cisco's version of home video conferencing, how do you think that failure ties into this?
Jon Arnold (6:21): Well, I think, yes, and that's a good point to make. I know we're kind of adding a few branches to the tree here. But I mean, they, Cisco, has tried a few different ways to become a consumer-oriented brand. And, of course, they want to get into that household environment, because they want to compete with Media Room for Microsoft to see who's going to run that digital home. And so they have a big stake there. But I think you're right, I mean, their focus is definitely mostly business. Consumer has been mostly Skype's forte. But we know Skype is working real hard to try to make themselves a valid business play. But I think if they can be tied to Lync, and bundled as part of the Lync solution, that's where I think you could get some really interesting synergies and give Cisco a run for their money in terms of saying the desktop is actually still very valuable. Microsoft still can call this home and run it. And you have these competing sets. As Dave said earlier, about the protocols, it's... who's going to drive it? And I think Microsoft is in position here to start doing bigger things than people thought was going to happen. And I think this speaks loudly to where video is going to have the most impact. And I think that's what is important here. Because not everybody can afford telepresence, everybody knows that. And Microsoft could now be in a position to grab a bigger piece of that video space as it comes. And as we know, and as Cisco lives and breathes and dies it, collaboration is driven by video. So whoever is driving the video piece of the business has got a good shot at driving the rest of the collaboration in UC space. That's where Lync could ultimately come out and be the biggest UC story of them all, which remains to be seen. And so let me leave it at that, because I'm sure we have a few other people who want to jump in here and add to this. Thanks.
Dave Michels (8:04): Thanks, Jon. Russell, what are your thoughts on Skype as a business tool? And is it competing with Cisco? Or are these separate businesses altogether?
Russell Bennett (8:14): Well, first let me say that I woke up on that morning last May to find out that Microsoft had bought Skype, and reading the business news, The Wall Street Journal and so on and so forth, everybody was saying, “8.5 billion dollars, those guys must be crazy.” And I sat down and thought about it for a minute and I thought what is it about this deal they don't understand? And so I ended up writing an article. And it made imminent sense to me, and I think it's starting to make sense to other people now, including Cisco. What is it that they see as a threat, is your question.
In my opinion, the Holy Grail for unified communications is to reach people other than those inside your own company by something that we call federation. And it is one thing for Company A to be able to communicate with Company B. But to be able to communicate with small businesses, you know, sole proprietors, and also consumers, is huge. B-to-C federation is a term I use in an article I posted last week, I think, and so getting access to Skype’s 170 million or whatever the number is now, consumers that use that technology, direct from a Lync installation, is a huge advantage. And furthermore, Skype is now available through Facebook. And so it went up from 170 million. Now we're probably talking about around about billion people, who are available on technology that's owned by Microsoft. And if Cisco has just woken up to that fact, well, you know, they really should have been paying attention.
In terms of the interoperability in the codecs, I think that you questioned whether the codec interop was the main issue. Let me just say that Microsoft's codecs, video and audio, although they are proprietary, are openly available. And they're licensable for basically the lawyering cost of licensing the technology, which was a $50,000 flat fee the last time I checked. And so it's going to be a tough call to say that Microsoft's codecs are, you know, proprietary and closed, whereas with G729, for example, you've not only got to pay a fee every year, but you've also got to pay a royalty for every user that uses the technology. So Cisco, as a user of G729, or a proponent of G729, they're going to have to explain why that codec is not proprietary and closed, because it is. It has a royalty model, you can go look at it on the internet.
Overall, I think that this initiative by Cisco is just a belated attempt to try and slow this juggernaut down. I don't think they're going to succeed. Having said that, the European Union does have a record of being pretty heavy handed with Microsoft, and they'll impose some fairly onerous requirements on Microsoft, and the last time they did that, which was 2003, Microsoft ultimately complied, produced some very dense and turgid documentation of their protocols, which I know nobody understands. But they complied, and so then, they get off the hook. This is just a slowdown tactic by Cisco. It won't succeed; it'll just cost some engineering hours to document the protocols.
Dave Michels (11:34): Russell, when you talk about the B-to-C notion, we've certainly seen video take off in the enterprise over the past few years. But most of that communication stays within the enterprise. How far away are we from say, calling an airline and making a reservation and that being a video call? Or calling major call centers and that being a video call? Don, I want toyou’re your opinion, too. Russell, what do you think – do you think this is a near-term thing or is this still pie-in-the-sky?
Russell Bennett (12:04): Well, I have to say, I’m obviously an early adopter of this technology and I use it nearly every day. I communicate with a business partner using video and desktop sharing and all of the rest of it. I think other people are going to wake up to it. It doesn't cost me a single cent, a PSTN toll or anything like that. Other people will wake up to it and they’ll start to use it as appropriate. I don't necessarily need a video call to book a ticket, or anything else you can do via a voice conversation. But for sure, if you're having a deeper interaction with somebody, then video will become a default modality. The question is, are the networks going to be up to everybody using HD video to chat away, whether for business or pleasure purposes? That remains to be seen, but if that does happen, then the people who are going to make out big time are Cisco, because they will be shipping truckloads of servers to the service provider networks who are trying to add the bandwidth that the customers are paying for. And so, in that sense, that has always been a win for Cisco. And, you know, maybe they should think twice before they start trying to slow that one down, because it might hurt them more than it hurts Microsoft.
Dave Michels (13:18): Don, do you see video cameras penetrating the call centers for B-to-C type of communications in the near future?
Don Van Doren (13:27): Hi, Dave, thanks. The fundamental answer is no. This has been something that's been tried a lot of times and in a lot of different guises. And there certainly are some very interesting good applications for video: video kiosks to reach, for example, a specialist. There are lots of case studies about how banks, for example, have used it to make a personal connection with a loan officer, for example, who's not resident in the specific branch location, but rather centralized in a call center-like facility. And so there are some specialized examples of this. Certain high net worth individual interactions, for example, I think we've seen some good opportunities for video. But by in large it's, as was just stated, things like making airline reservations, I'm not clear that that needs to be a video call. And frankly, there are some real challenges in doing it within a contact center environment. I think what's more likely is that we're going to broaden the whole customer/consumer interaction experience through a lot of other kinds of UC capabilities. Yes, video will be in the mixt. We'll get more of those, but we're doing an awful lot more with things like mobile applications that bypass call centers directly anyway and just allow people to get information that they need. So I think the short answer to your question is no, we're not going to see any fundamental shift where that's going to become the predominant mode.
Dave Michels (14:57): Great, thank you, Don. Marty, we haven't heard from you yet. What are thoughts on Cisco's actions and do you think it'll have any change to the outcome of the Microsoft acquisition of Skype?
Marty Parker (15:07): Thank you for leading this conversation. I think that David Yedwab, Russell, Jon and Don have all had really interesting conversations here and commentary about this, because I think this topic touches on all of the hot buttons that are in play in the industry right now. Things like mobility, cloud, enterprise communication patterns, collaboration, they're all in there. In mobility, your post on Talking Points and Pin Drop Soup was very clear that Skype has done a really great job on mobility. I've had a Skype client on my Blackberry for some time. I mean, okay, I don't use an iPhone, but you can have a Skype client there, too, if you want. I've got a Skype client on my computer, which is also mobile. I've made Skype client calls from airports around the world. And so they've got the mobility thing pretty well locked up, not locked up and blocking other people, but they've got a lot of users, is what I mean. And other people are jealous of that. And so I think they’re envious, at least. And I think Cisco is certainly seeing that as a major issue, that Skype really has attracted lots of mobility users to their solutions. You know Skype, you'd have to argue, is the most cloud-based communication service out there, more than WebEx, and I use both of them.
WebEx also has a global network, just like Skype does, but I would say it hasn't gone as far in terms of integrating to the public switch telephone network and out into the existing communication infrastructure. WebEx being more of a meeting place, whereas Skype has become more of a communication platform, with IM, and Presence and Persistence and things like that. And so it is pretty important from a cloud evolution here. Skype's got a great platform. I think from an enterprise communication pattern, several of you have already talked about the need to federate. I think that's really important to connect up to small businesses, consumers and so forth. And I think that may be an instant messaging model as much as it's a visual model, which kind of goes to the topic of collaboration, as well. But most studies show that collaboration is driven by information, documentation and screen sharing, along with either a chat or a voice track, more than video. Of course, Skype already has those things in play. They can allow you to do screen sharing and transfer documents, and so lots of tools are there in that platform.
The real question that's kind of lying behind this is what might Microsoft do that makes Cisco so very nervous? Personally, I think they're going to find a way to make Skype and Office 365, Microsoft's cloud-based office solution, be as seamless as possible. And in that way, those two communities get federated. Office 365 probably would get a big boost in adoption because Office 365 integrates to on-premise office solutions, it takes away one of their vulnerabilities that Microsoft has, or it minimizes one of the vulnerabilities they have versus Google as a cloud-based document solution. And so they really end up with a nice suite of capabilities there, while Cisco is still trying to compete in that way. As you pointed out, they abandoned the e-mail pursuit and some other pieces. But Cisco is trying to build WebEx, along with their Jabber acquisition into the competitor to these tools. And they'll have a long way to go.
And so I think that Cisco probably does see it as a threat. And one of the ways that I would – we talked about interoperability – what if the way to interoperate with Skype was as simple as having a $6 per user per month Office 365 account? You know, that would be certainly the ability to use it. And if you needed APIs into that, perhaps Microsoft would publish them, but you would still need the permission to communicate for $6 a month. And so it'll be interesting to watch. I think it's right at the heart of the industry here, Dave, and I think that Microsoft made a good move and it's a threat to others.
Dave Michels (19:09): I think the most interesting you said in there, Marty, was your revelation that you're a little self-conscious about having a Blackberry phone, which I think is very interesting.
Marty Parker: I know, you tease me about that all the time, Dave. It works, it works!
Dave Michels (19:24): And that's all that really matters. You know, I had the exact same reaction, visual reaction, to Microsoft acquiring Skype for the price that they did, as Russell shared. But the more I've thought about it, as Russell had indicated, it does seem like it was a pretty astute move. I was at CES and I saw Skype was showing off these new, I can't remember the brand, Telly, I think it was, add-on, it was Android-based, actually, add-on for your television set at home. I imagine we'll see Xboxes become Skype-enabled at some point in the future with the Kinect camera. We're already seeing a number of televisions coming equipped with Skype. And so I think that Skype has a huge potential to connect the home to the office in very rich format.
One thing we haven't really touched on yet is the UCIF. Jim, I thought I would ask you a little bit about that. When the UCIF was formed, there was something like 30 plus vendors. One of the key objectives was video interoperability and Cisco didn't think that was worth joining up. Jim, do you think this changes Cisco's perception of the UCIF or, are Cisco's claim and the UCIF separate issues or combined somehow?
Jim Burton (20:16): Let me give you a little of background there, which is important. I believe that Microsoft really did not do themselves any favors in how they approached formalizing the UCIF. They gave some of their major competitors, specifically Cisco, Avaya, and IBM a very short period of time to join the UCIF. I mean, quite frankly, too short for them to participate. Also, unfortunately, the original by-laws were written (in a way) that gave Microsoft a very distinct advantage, something that Microsoft actually went back on, changed to accommodate Cisco. But unfortunately, by the time that was all done, Cisco had decided it still wasn't worth it for them. And so getting to the specific question about where does this land now, I think that Cisco has been trying for some time to have another forum that would be started from the ground up to be neutral to address a bunch of these issues. And quite frankly, I think that may be part of the motivation by doing something right now, based on the Skype video initiative.
And so I think at the end of the day, there really is not going to be any change. Microsoft has got a whole group of companies that are supporting what they're doing. They've made it open to allow anyone else to join. Clearly, Cisco, Avaya, and IBM have not found reason to justify them joining, which I think may be to their distinct disadvantage.
One of the things that I find very curious about it are who some of these people are partnering with, in particular Avaya. You know, who is Avaya and who is IBM partnering with and quite frankly, in many cases, some of their partners that are providing components for video are members of the UCIF. And so I think they are getting some traction there.
At the end of the day, I think that we'll see that these big vendors will come together, not because of lawsuits, not because of any particular desire, but because big customers will tell them to, and that's what's happened in the past in other areas of interoperability issues. And so I look for that to happen. I would find it very difficult to believe to believe that the European Union would force Microsoft to do some unnatural acts or even though, I think, it must have been Russell that pointed out they certainly have in the past. But we'll have to wait and see. I think there's just a lot of hoopla going around about this because it is such an important thing to all of the companies. And everybody knowing how important video is in the future, that they try just to get whatever they can out of it. We'll wait and see what happens there.
Dave Michels (23:21): I think wait and see is an interesting point, because one thing that even if the outcome doesn't get changed at all by the EU, which I think is more likely than not, it will certainly delay things a bit. And time could be more valuable than anything. I mean, that may be Cisco's primary objective, just to buy some more time with this. Any thoughts on that from anybody on the room?
Russell Bennett (23:43): Buying time is a valid business strategy, particularly when you think you are at a disadvantage. The question is what will buying any time to do? I think Jim already mentioned that Cisco's been trying to form its own interoperability consortium. And obviously they'll be working on their existing strategy with regard to WebEx and Jabber, and so on and so forth. You know, I don't see another big acquisition out there that they could make, and that is normally their strategy. Another big acquisition they could make that would them to catch up. I think they're just going to have to accept the situation pretty much as it is and figure out how they're going work within that environment. And this initiative with the EU may be part of that, alright? They're saying okay, it's happened...there's not a lot that we can do to respond. Let's try and make sure that we don't get left behind.” At least, you know, the rising tide will pull the boats together.
Dave Michels: Very good.
Marty Parker (24:20): As to my comments on what would Cisco want out of this? In their wildest dreams, the EU would force levels of openness at no additional charge, such that Cisco could basically engage Skype users as effectively as Microsoft engages Skype users. So as to say, “okay, Microsoft, you bought them, but we get to use them just as much as you do.” A Skype user is just as able to join a WebEx session as they are to join an Office 365 session. We're just as able to, you know, federate Presence from Cisco Unified Personal Communicator, and Cisco Unified Presence Server, as you are from Lync 2010. Imagine the barriers were that low. A SIP trunk...all of the carriers offer SIP trunks...SIP trunks are commoditized. And so Cisco's wildest dream, I think, is that it becomes commoditized. But I don't think that the EU will force Microsoft to go that far.
David Yedwab (25:53): I have a comment about back to the UCIF quickly for a moment. What does Polycom think about Skype integration with Lync and whether Polycom's video desktops, video rooms, etc., are going to be able to interoperate with Skype clients being that they've been the biggest supporter of video in the Lync space to date?
Marty Parker (26:17): My thought on that, Dave, if I could, in answer to David Yedwab's question, is I think that Polycom, that's probably why they're being such a close and effective partner with Microsoft. It seems to me that Polycom's biggest worry is – alright, you could say their biggest worry is that room systems and room video doesn't take off, that everything is desktop. But, you know, they sell desktop appliances, too. I think their biggest worry is that Cisco, who is the dominant player in North America and Europe for networking infrastructure, controls all of the devices and endpoints and locks Polycom. Well, being close to Microsoft and Skype avoids that block. And so I think that they want Microsoft and Skype to thrive as a customer base for Polycom interoperability. I think they like the open partner model of Microsoft more than they like the closed, “we make it ourselves” model, of Cisco.
David Yedwab (27:25): But how does Polycom get access to the Skype codec?
Marty Parker (27:30): Well, they may have to license it, I don't know. That's a good question.
Russell Bennett (27:34): I can probably speak to that. All of the work that's been going in video in the UCIF has been around a scalable H264-based video codec for HD. The work is, it’s hard to put a figure on it, but let's say it's 40 to 50% complete. They've actually produced one specification and they've submitted it to an external body, whose name I'm going to blank on right now. And that has been approved and ratified. And so all of the major video players, apart from Cisco, participated in that work, and it's produced some pretty good results. I think that ultimately that will be the codec that Microsoft uses, although I can't speak for them. And therefore, Cisco may find itself, you know, out of step with the rest of the industry on that.
David Yedwab (28:25): So then the Skype users are going to have to, all 700 million of them, are going to have to change their codecs with a new software download?
Russell Bennett (28:34): Well, yes, is the quick answer. But, you know, they update their software probably on a daily basis, so they're probably not going to notice.
Dave Michels (28:41): I haven't heard Polycom's position on this yet, but LifeSizes is taking a position that it's in favor of the Skype/Microsoft deal because it believes that that will result in more interoperability for the industry, with lower cost hardware than Cisco's vision. And so I have seen LifeSize come out on it. LifeSize, of course, does interoperate today with the Skype system. But the Skype and Room Systems are kind of separate, you can't have one Skype person and one LifeSize Room System on the same call, but their equipment does support both.
Russell Bennett (29:17): Just to speak to that, just to enumerate the names of the participants in the UCIF initiative, it was led by a guy from Radvision, CTO from Radvision. And the major participants were Polycom, LifeSize, Vidyo and Microsoft. And you'll have to pardon me if I left anybody important out. But like I say, it seems like if you're not in that group, then you've missed an opportunity to influence the standard. And then if those standards don't work for you, or you don't necessarily agree with the specifications, that's kind of too bad.
Dave Michels (29:51): Marty, you brought up the notion of the mobile clients and I want to hear from Michael about that. Michael, what do you think of the mobile clients from Skype and how much of that is a factor?
Michael Finneran (30:03): Thanks, Dave. Yeah, this has been an interesting conversation thus far. But first a comment overall, when I had originally heard of the Skype acquisition by Microsoft, what struck me most was it seemed to be in line with sort of a macro strategy from Microsoft, which seems geared towards sucking the value out of other elements of the solution. Netscape had a browser, ha, you don't need that, we'll give you one. IP PBX costs you money; ah, no problem, we'll go back here and build it into OSC. But in this case, I don't think the target is so much Cisco as it is the carriers, both wired and wireless. Video: we're waiting to see really how quickly that takes off in the mobile space. Certainly, Apple started the conversation with Facetime. But I keep looking at the projections for growth in video use in a mobile network, and it's way out of line with what we see the carriers able to deliver, certainly with the 4G technologies. And so there's a good chance that what video we do have in a mobile space is going to be conducted on WiFi rather than 4G. In either case, it's growing away from the carrier revenues in that case, the mobile operators, all of whose 4G plans are not tiered pricing.
Of course, the one other area that I always find interesting about Skype that none of the UC vendors seems to have caught onto, is the importance of text messaging. You can text message out of Skype. Now, the vast majority of the IM solutions that we see today can't interact with SMS. Of course, we only send a few hundred million SMS texts a day. That obviously can't be a very important means of text communications. And so I think really one of the elements that Skype could really bring into the Lync product is that capability to interact with mobile text messaging, the traditional SMS service. Of course, it does make the overall strategy a little more challenging for Microsoft. They're going to have to tread a fine line. Basically at the end of the day, they want the customer to be buying an enterprise grade unified communication solution which they call Lync. Increasingly what we're seeing is a greater amount of value and a greater amount of interest in consumer-oriented UC services like Skype, particularly when used in conjunction with mobile devices. And so it will be interesting to see how Microsoft, or if Microsoft is able to steer their client base toward the enterprise version of this, rather than well – we've seen the first step already in bring-your-own-device. The next phase we're looking at, and that is bring-your-own-application. Back to you, Dave.
Dave Michels (32:22): I'm glad you brought up SMS, because it seems to be the Achilles heel of so many of the UC solutions on the market. It's one of the areas where Google Voice application has got a little bit of a leg up; they've incorporated the SMS into the solution. The problem with SMS is if you use it, which as you pointed out, most people do, it completely destroys the one number illusion, which is usually a different number that all of the UC vendors are trying to create.
Michael Finneran (32:49): Yes – I'm waiting to see if they'll be able to work the technical bugs out of that. But certainly, in terms of an integrated solution, it's much more integrated than jumping into a completely separate client that does your UC stuff and then for that form of text messaging, and then back to the regular, you know, the basic need of interface of the phone for your traditional SMS.
Dave Michels: Very good. Thank you, Michael.
Art Rosenberg (33:10): I just wanted to add on a comment about SMS, because I think that's still going to be key for applications, CEBP kind of things, where you get notifications. And they're not going to be by video, and they're not going to be necessarily by voice, but definitely with smartphones and so on, it could be very easily SMS all the time.
Dave Michels: Very good. Kevin Kieller, do you have some insights to share on this topic?
Kevin Kieller (33:40): I just wanted to chime in on a few points and perhaps emphasize some of the points that my colleagues have made. The first thing is that Microsoft paid $8.5B for Skype and certainly shelling out that much cash in my opinion, should buy them some special treatment. I think when they did that people were undecided on whether it was a good deal, I think now to Microsoft’s credit, and potentially to Cisco’s consternation, it looks like Microsoft does have some plans to seek out all the value from that investment.
The way I see it, there is between a billion and two billion people that Microsoft can bring together. Russell said federation is the Holy Grail and I one hundred percent agree with that. I think that this has nothing to do with video interoperability. Cisco in the blog post from Marthin De Beer suggested that they wanted to ensure that making a video call was easy. I think it may be just inside the Microsoft community.
When I talk about that two billion, if we do some math we have seven hundred million Skype users or so, maybe a hundred and seventy million of those are active. There are 360 million Windows Live Messenger users and I believe those are active user. And each of those Windows Live users can do IM, but they are also able to do voice, as well. Twenty-three million Xbox Live users who can do -- and Microsoft has shown some integration already between the connect service and some of their other services. And then there is somewhere between two and three million Office 365 users. And certainly Marty was bang-on when he – I think this is the fear of many vendors – he mentioned that Microsoft could just take Office 365 and integrate it into Skype. From my perspective, I see Microsoft taking those properties (all of those communities), integrating them, and using them together. We have now between one billion and two billion people that represents users on Lync, consumer users on the Skype side, and as was mentioned some great mobile clients through the Skype acquisition.
And the other thing that Skype brings is the integration to PSTN, so today with Skype you can call your Skype computer or your client into 170 countries. That is the way of Microsoft buying the last kind of mile into the conductivity of the PSTN. I think what we are seeing through all of this is just like Microsoft demonstrated it's great capacity to bundle the Office and dominate. I think we are seeing a huge bundling play for communication. I wrote on a No Jitter piece that market dominance is the path to interoperability and I certainly think that right now each of Microsoft and Cisco are trying to be the market dominator and therefore, force people to integrate with them. I think what we’re seeing through Cisco’s objection is a little bit of concern that maybe with all these pieces Microsoft has indeed a shot at this market dominance perspective. Back to you, Dave.
Dave Michels: With that, I think we'll wrap up this podcast. Thanks; we will be back next week with some new contemporary topic.