Melbourne Herald Sun, Friday May 20, 2011
My family is widely scattered. My mum's in Italy, while there's a daughter in Berlin and a son in Shanghai. So I discovered Skype pretty early, soon after they started in 2003.
This wonderful internet phone service allowed me to talk to my kids, computer to computer, for free. At a time when the phone services were charging 50 cents a minute.
These days the service connects with 170 million users and offers teleconferencing, video calls, text messages and much more. All for free or for very low cost compared to the carriers.
But free calls don't mean no value. Last week Skype was sold to Microsoft for eight billion dollars.
This completes a remarkable world circuit. The program was devised in Tallinn, Estonia, of all unlikely places. The developers sold it after two years for $3.6 billion to eBay (not a bad return for two years' work, I remarked at the time).
But they weren't the only sharp boys around. In 2009, after eBay had lost considerable money on the deal, they happily sold two thirds of the company to venture capitalists Silver Lake and the likes of Andreessen Horowitz (remember Netscape?) for a mere $2 billion.
Now, another two years on, lay down the royal flush. Silver Lake clinched the deal for $8 billion. An even better profit for two years' work. Boy, how money flows when you're in the right place.
So what are Microsoft going to do with it? For a start, Skype came with massive losses, it has never made money. That's always a problem when you give your service away for free.
Oh sure, some of their products are paid for, like Skypeout which allows users to connect with actual land lines or mobiles anywhere in the world. But these were never enough to wipe out the huge losses. As it was, it came with $600 million debt.
Of course to Microsoft this is just peanuts when their objective is elephants.
They are aiming primarily at Google, which they see as their biggest threat. Google has been adding services at a dizzying speed. The mobile phone system Android is a direct competitor with the Windows 7 mobile phone. Google Chrome is building against Internet Explorer.
But with Skype, Microsoft can now compete with Google Video and Voice. Both sides will be hard at work building up their capacities.
The most sensible thing eBay did was to leave Skype to its own devices. Under the corporate umbrella, but without the corporate straitjacket, Skype flourished and developed its huge range of services and cloud farms.
Microsoft boss Steve Ballmer says he plans to connect Skype to Microsoft's Outlook e-mail, Xbox game console, Windows mobile phones and corporate-phone software. But will he allow his new Skype division the freedom it needs to flourish, or will it be smothered in the Redmond embrace?
At the press conference announcing Microsoft's biggest ever takeover bite, CEO Steve Ballmer went out of his way to promise that Skype will continue to support non-Microsoft platforms and operate as a separate Microsoft division.
Well will it? We can expect to see a longer-term objective with Microsoft making serious competition with the likes of Cisco, AT&T and locally, Telstra. These are much deeper waters than the Skype team has ever fished in. They are going to need all of their parent's muscle and resources to stay afloat.
Which of course leaves the question, how long can Skype continue to be free? Forever, we hope - but I don't know how much I'd bet on it. Somehow the bean counters will want to see some repayment of that eight billion bucks - and a hefty profit on top.
Blog: themarketeer-raybeatty.blogspot.com
Showing posts with label Telstra. Show all posts
Showing posts with label Telstra. Show all posts
01 May, 2010
You can never beat City Hall - or can you?
Melbourne Herald Sun 1st May, 2010
At the start of my working life, as a cadet reporter, purgatory was weeks and months covering the magistrate’s court. Forget the drama of Law and Order, a petty courtroom is a sleep-inducing atmosphere.
But every few weeks things would liven up when someone would strenuously defend themselves against a speeding charge or parking offence or shoplifting indiscretion. They would roll out well rehearsed arguments, drawings, photographs, medical records sometimes even lawyers to prove their case. And you watched with detached compassion because you knew they didn’t have a snowball in hell’s chance of getting off.
In three years of weekly courts I can count on one hand those who succeeded. It rammed home a lesson to me. As the saying goes, ‘You can’t fight city hall”. Or the magistrates and police, or the tax man. Not unless you’re very persistent and very well heeled.
A Melbourne food importer, Alfred Abbatangelo, learned this the hard way in the Federal Court last month. The attempt to persuade the tax office that Perfetto Mini Ciabatte are bread and not crackers - and therefore free of GST - will cost him an estimated million bucks, not to mention six years of his life plodding through the courts. “No,” was the verdict, “It’s crisp, it snaps, it’s a cracker."
A friend of mine discovered this six years ago. Andre Scibor-Kaminski is a smart IT man who developed a phone directory on CD called DtMS. The one disk had the every phone and every business in Australia, instantly searchable. Groups could be collected, mail-outs organised, reversed searches from a number to a name. It was far superior to anything on offer from Telstra or Sensis today.
But Telstra sued Andre for breach of copyright. The rebuttal was: how can you copyright a number? It’s not an original work of authorship or art. He lost the case, despite some heavyweight legal opinion in his favour. He appealed and lost again and finally after five years the money ran out and the company went into liquidation.
Yes, size does matter. And so do deep pockets. There again, even city hall can’t fight Spring Street. In recent months we have seen Stonnington and Yarra councils battling the Victorian Government against extended clearways on busy shopping streets.
The money hasn’t extended to the millions yet, but certainly hundreds of thousands have gone in advertising, legal fees and lost parking-fine revenue. And you just know that in the end, might shall prevail. Just as it did when the Victorian Government battled the Australian Government over hospitals.
Now you know I don’t like to despair in this column. So there is a chink of light. It is possible to beat city hall, sometimes. Remember Geelong’s sanga-gate.
Forgotten already? It was only a year ago when Mick Van Beek and Peter Anderson were sacked by Geelong Council because they used some left-over asphalt to fill a couple of pot-holes at the Leopold Sportsmans Club. Their bribe for this “theft” was a steak sandwich in the clubroom.
Well this is where you put the media to good use. The story got out and suddenly hundreds of people stormed the city hall, encouraged by the news crews and, it seemed, half the world’s media. Peter and Mick, with his beard and beanie, gained their fifteen minutes of fame in one night.
The Australian Services Union leaped in, closely followed by lawyers and politicians. And finally the council caved in and reinstated the men, city hall was beat.
But don’t expect that to happen next time you get a parking fine and are positive you did not exceed the permitted time. I can tell you right now, you ain’t got a snowball’s.
ray@ebeatty.com
At the start of my working life, as a cadet reporter, purgatory was weeks and months covering the magistrate’s court. Forget the drama of Law and Order, a petty courtroom is a sleep-inducing atmosphere.
But every few weeks things would liven up when someone would strenuously defend themselves against a speeding charge or parking offence or shoplifting indiscretion. They would roll out well rehearsed arguments, drawings, photographs, medical records sometimes even lawyers to prove their case. And you watched with detached compassion because you knew they didn’t have a snowball in hell’s chance of getting off.
In three years of weekly courts I can count on one hand those who succeeded. It rammed home a lesson to me. As the saying goes, ‘You can’t fight city hall”. Or the magistrates and police, or the tax man. Not unless you’re very persistent and very well heeled.
A Melbourne food importer, Alfred Abbatangelo, learned this the hard way in the Federal Court last month. The attempt to persuade the tax office that Perfetto Mini Ciabatte are bread and not crackers - and therefore free of GST - will cost him an estimated million bucks, not to mention six years of his life plodding through the courts. “No,” was the verdict, “It’s crisp, it snaps, it’s a cracker."
A friend of mine discovered this six years ago. Andre Scibor-Kaminski is a smart IT man who developed a phone directory on CD called DtMS. The one disk had the every phone and every business in Australia, instantly searchable. Groups could be collected, mail-outs organised, reversed searches from a number to a name. It was far superior to anything on offer from Telstra or Sensis today.
But Telstra sued Andre for breach of copyright. The rebuttal was: how can you copyright a number? It’s not an original work of authorship or art. He lost the case, despite some heavyweight legal opinion in his favour. He appealed and lost again and finally after five years the money ran out and the company went into liquidation.
Yes, size does matter. And so do deep pockets. There again, even city hall can’t fight Spring Street. In recent months we have seen Stonnington and Yarra councils battling the Victorian Government against extended clearways on busy shopping streets.
The money hasn’t extended to the millions yet, but certainly hundreds of thousands have gone in advertising, legal fees and lost parking-fine revenue. And you just know that in the end, might shall prevail. Just as it did when the Victorian Government battled the Australian Government over hospitals.
Now you know I don’t like to despair in this column. So there is a chink of light. It is possible to beat city hall, sometimes. Remember Geelong’s sanga-gate.
Forgotten already? It was only a year ago when Mick Van Beek and Peter Anderson were sacked by Geelong Council because they used some left-over asphalt to fill a couple of pot-holes at the Leopold Sportsmans Club. Their bribe for this “theft” was a steak sandwich in the clubroom.
Well this is where you put the media to good use. The story got out and suddenly hundreds of people stormed the city hall, encouraged by the news crews and, it seemed, half the world’s media. Peter and Mick, with his beard and beanie, gained their fifteen minutes of fame in one night.
The Australian Services Union leaped in, closely followed by lawyers and politicians. And finally the council caved in and reinstated the men, city hall was beat.
But don’t expect that to happen next time you get a parking fine and are positive you did not exceed the permitted time. I can tell you right now, you ain’t got a snowball’s.
ray@ebeatty.com
17 October, 2009
Big man in media makes millions
Melbourne Herald Sun 17th October, 2009
It was a long time ago I first met Harold Mitchell, at the advertising agency Masius. Little did I suspect that he would one day be both rich and famous.
While I was a junior copywriter, he was only a few years older than me, still in his 20s. But already he had become national media director of one of this country’s leading agencies.
He was as smart as he was big. In board rooms he’d sit quietly as the creatives and account managers pitched a campaign to the clients. His job was to tell them how their money would be spent - on TV, newspapers, billboards - he’d briskly set out the media he would purchase for them, millions of dollars. And while they had lots to say about the ads, these clients said little about where the money would flow, trusting that Harold would buy the most cost-efficient plan.
In 1976 he picked up a new idea from the US. A consultancy specialising just in advertising media, with highly skilled professionals choosing and negotiating the very best media rates for clients, working with them directly or through their own advertising agency.
Naturally the agencies thought it was a terrible idea - this was their source of income after all - but some key advertisers like Just Jeans and Bob Jane liked the flexibility, speed and cost-savings this gave them.
Before long Mitchells were turning over millions of dollars in media billings. Nowadays it’s $1.3 billion which makes him a pretty big customer to the media. No wonder Kerry and Rupert always picked up the phone when he called.
In his recently published book, Living Large, Harold Mitchell doesn’t exactly tell all - but he tells enough about life amongst the millionaires to make it fascinating reading. I wouldn’t call it an autobiography, more what the French call a carnet. Part reminiscence, part anecdotes, part philosophy and history.
It certainly sounds like him. Short, sharp sentences crisply delivering the facts. Don’t expect to find any poetic interludes or intimate romance here. Always the soul of discretion, he tells you enough to pique your interest - but not so much as to be scandalous.
So while he devotes a chapter to Kerry Packer, it’s from the point of view of a friend he looked up to. He’s not so kind about Christopher Skase or Alan Bond.
His regard for Packer is understandable. In the 1987 stockmarket crash he came close to losing it all. The Big Fella tossed him a couple of million dollars, unasked. It was enough to keep the wheels turning till Mitchell could dig himself out of the hole.
He passes these favours on, too. One time a large client of mine suddenly crashed leaving me holding a substantial media debt. It’s the sort of thing that happens in advertising. I told Harold I couldn’t pay him. “So what can you pay?” We worked out a percentage and did the deal on a handshake. Not many blokes like that in today’s business.
It’s indicative of Harold’s political skills that the back of the book has tributes from both Steve Bracks and Jeff Kennett. They both learned that when a job needs to deliver results, he’s the man to call.
He has proved this repeatedly over the past 20 years as Chairman of the National Gallery of Australia, Victorian Museum, and the Melbourne Symphony Orchestra. Just this week I have been missing that entrepreneurial spark that so energised the Melbourne Festival when he was its president.
Masius in the early seventies was a cauldron of talent - author Peter Carey; creators of The Campaign Palace Lionel Hunt and Gordon Trembath; food writer Terry Durack. But none bigger, then as now, than Harold Mitchell.
ray@ebeatty.com
It was a long time ago I first met Harold Mitchell, at the advertising agency Masius. Little did I suspect that he would one day be both rich and famous.
While I was a junior copywriter, he was only a few years older than me, still in his 20s. But already he had become national media director of one of this country’s leading agencies.
He was as smart as he was big. In board rooms he’d sit quietly as the creatives and account managers pitched a campaign to the clients. His job was to tell them how their money would be spent - on TV, newspapers, billboards - he’d briskly set out the media he would purchase for them, millions of dollars. And while they had lots to say about the ads, these clients said little about where the money would flow, trusting that Harold would buy the most cost-efficient plan.
In 1976 he picked up a new idea from the US. A consultancy specialising just in advertising media, with highly skilled professionals choosing and negotiating the very best media rates for clients, working with them directly or through their own advertising agency.
Naturally the agencies thought it was a terrible idea - this was their source of income after all - but some key advertisers like Just Jeans and Bob Jane liked the flexibility, speed and cost-savings this gave them.
Before long Mitchells were turning over millions of dollars in media billings. Nowadays it’s $1.3 billion which makes him a pretty big customer to the media. No wonder Kerry and Rupert always picked up the phone when he called.
In his recently published book, Living Large, Harold Mitchell doesn’t exactly tell all - but he tells enough about life amongst the millionaires to make it fascinating reading. I wouldn’t call it an autobiography, more what the French call a carnet. Part reminiscence, part anecdotes, part philosophy and history.
It certainly sounds like him. Short, sharp sentences crisply delivering the facts. Don’t expect to find any poetic interludes or intimate romance here. Always the soul of discretion, he tells you enough to pique your interest - but not so much as to be scandalous.
So while he devotes a chapter to Kerry Packer, it’s from the point of view of a friend he looked up to. He’s not so kind about Christopher Skase or Alan Bond.
His regard for Packer is understandable. In the 1987 stockmarket crash he came close to losing it all. The Big Fella tossed him a couple of million dollars, unasked. It was enough to keep the wheels turning till Mitchell could dig himself out of the hole.
He passes these favours on, too. One time a large client of mine suddenly crashed leaving me holding a substantial media debt. It’s the sort of thing that happens in advertising. I told Harold I couldn’t pay him. “So what can you pay?” We worked out a percentage and did the deal on a handshake. Not many blokes like that in today’s business.
It’s indicative of Harold’s political skills that the back of the book has tributes from both Steve Bracks and Jeff Kennett. They both learned that when a job needs to deliver results, he’s the man to call.
He has proved this repeatedly over the past 20 years as Chairman of the National Gallery of Australia, Victorian Museum, and the Melbourne Symphony Orchestra. Just this week I have been missing that entrepreneurial spark that so energised the Melbourne Festival when he was its president.
Masius in the early seventies was a cauldron of talent - author Peter Carey; creators of The Campaign Palace Lionel Hunt and Gordon Trembath; food writer Terry Durack. But none bigger, then as now, than Harold Mitchell.
ray@ebeatty.com
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