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March 06, 2013

If Skype is too Big to Fail, What Bruises Can WebRTC Make?

Our friend Tsahi Levent-Levi and I are having a discussion on Google+ about all the start-ups that are looking for funding.  There are a lot of issues here.  First of all, the reality of WebRTC as the cost of entry is pretty low, so a start-up claiming to be the “Skype Killer” needs to remember their competitive advantage is low.  And as first movers go, Google has that pretty sown-up, or at least the Web developer community. On the wireless and wireline side, the battle of codecs rages on - and for good reason. Software codecs actually make the device work harder, which drains the battery and generates heat. I would expect that a hardware version of VP8 is coming in the next year (hopefully by more than just Motorola).

Now, the problem of paradigm shifting is hard to do. Tsahi is right when he says that anyone claiming to be the “killer app” is then stuck explaining themselves in a bad paradigm. The problem I had with Vonage was that it rapidly became the same thing as POTS over IP and I was stuck in a price war.  Skype dreamed differently, and became the first mover.  It found the blue ocean of telecom and it did not try to be the POTS killer.

WebRTC is an enabler, not an end in itself.  No one should say that WebRTC is the killer app, what they should say is that WebRTC can be the basis of a killer app.  However, it will not look like Skype.  It probably will be more like the work of Daniel Pocock that made DruCall.  Here we have a game changer for content management systems. 

Skype in a lot of ways is too big to fail.  It has Microsoft behind it and it’s now a verb and a noun in common use including in court documents and on TV (Big Bang Theory for one).  So, is there a way to see Skype as vulnerable?   Andy Abramson has some great insight on the topic.  

Another thing to consider is that GoogleTalk or GoogleVoice can easily be added to the WebRTC experience to make it a full platform. 

We should expect that like most things that happen on the Internet, if Skype were to be bruised, it would be by the death of a thousand cuts.  Traffic finding new homes in community sites that support expatriates maybe associated with content sites such as TV or Radio stations or perhaps newspapers.  (The Times of India already supports a romance site). 

In my opinion, if you are a VC looking for play, don’t waste your time on killing Skype; look for things that empower the Web.  

Edited by Brooke Neuman
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