Facebook is expanding its chat application with video calls powered by Skype. A special Skype plug-in will allow Facebook users to communicate face to face. The Skype integration is a welcome feature for Facebook users, but it’s also an unexpected victory for Microsoft over Google, as it indirectly increases in presence in the social networking world.
Skype is mainly a consumer service for cheap phone calls, but it will likely target a broader market once its takeover by Microsoft is completed. Microsoft is already present in the majority of households as well as being the most-used OS in offices worldwide. With some further development and optimization, Skype could become part of Microsoft’s unified communications offering. An added bonus is that much of Skype’s top management is made up of former executives at Cisco, a specialist in video communication in the business market.
Skype’s cooperation with Facebook is a windfall for Microsoft. Microsoft and Facebook already worked together in advertising and the search engine Bing, and Microsoft also has a small stake of 1.2 percent in Facebook. It’s not unthinkable the company could increase its stake in Facebook before the expected IPO in 2012. All of this contributes to further disruption of arch-rival Google’s plans. Google is currently preparing to open up its own social network, Google+, which also offers video calls (including group calls, something the Facebook service from Skype can’t yet do).There is a lot for Google to gain in this area. Not only would a successful social network give access to potentially millions of users, and as such more advertising income, it also makes up for its past flops of Orkut, Buzz and Wave.
The power balance between Microsoft and Google is taking further shape as a result of Facebook’s choice for Skype. Microsoft now has a few trump cards to make it very difficult for Google: the biggest internet and video telephony service linked to the biggest social network in the world as well as a close partnership with Nokia, the world’s biggest handset maker. Microsoft is also taking big steps in the cloud, an area where Google has ruled to date and Apple is making progress. Google is facing other troubles as well. The European Commission, which for years was after Microsoft about unfair competition, has now turned its sights on Google and its growing role in the fixed and mobile internet. In its own country Google is under fire at both the competition and communication regulators, the FTC and FCC.
In the mobile market, video chat is expected to develop in the not too distant future into a killer app, according to various analysts such as Gartner. The question is how far Facebook, already active in the mobile market, will build out the cooperation with Skype. By the time Skype is fully integrated at Microsoft, Microsoft will be doing everything it can to conquer the smartphone market with Nokia. It’s already possible to make video calls on a mobile phone with Skype, including on Android and iOS devices.
Microsoft also faces in the mobile market Apple, which in 2010 launched the video chat application FaceTime. In contrast to Facebook and Skype, FaceTime is not compatible with non-Apple devices, limiting its reach. FaceTime also only works over a Wi-Fi connection, while Skype for Android supports 3G. The rumour is that iOS 5, which should hit the market later this year, will also offer 3G support. At the same time, Apple can ensure a better quality of service for FaceTime, something with which Skype is continually struggling. Notably Skype said last year that it would like to integrate its service with FaceTime, but nothing has come of this yet.
It’s still a long shot to say Microsoft is near to breaking Google’s hegemony in fixed (search and cloud services) and mobile (Android). It’s questionable as well whether Microsoft can challenge Apple’s super-strong image. What is certain is that Microsoft is slowly but surely pulling the cash cows in this market into its circle, either directly (Bing, cloud) or indirectly (Nokia/Windows Phone, Skype).
