Nokia CEO confirms – Microsoft in discussions with carriers how to turn Skype into revenue generator

Now we know one of the reasons why Microsoft decided to buy Skype a year ago. There was a lot of speculation back then of what its plans for Skype are. While Microsoft didn’t go beyond some general phrases.

Well, we still have not heard much from Redmond, but Nokia’s CEO has confirmed that Skype is becoming a major play in the next generation Windows Phone phone roll-out.

Last week, during Annual General Meeting, Stephen Elop answered a shareholder question about how Microsoft’s Skype purchase is affecting Windows Phone and Nokia. With parts of the answer taken out of context and available in Finnish press, one pretty biased analyst saw that as a proof that Nokia CEO just confirmed his long advocated theory – carriers are boycotting Windows Phone because they hate Skype, this is the main reason WP failed to make an impact yet, and will never amount to much. An opinion and supposed confirmation, that was later picked up by the media and got a pretty wide circulation last week.

The problem is – it was a boneheadedly wrong conclusion, based on very incomplete and probably cherry picked set of facts. We reached out to Nokia and received a full transcript of Nokia CEO’s take on Skype situation, which paints a completely different picture. Where Skype is now a major competitive Windows Phone advantage. Here it is in Elop’s words:

So, thank you for your question about Skype. Indeed, Microsoft did buy the Skype company as part of the ecosystem that comes with Windows Phone and Windows and so forth, so that’s quite correct. The feedback from operators is they don’t like Skype, of course, because for those operators who have a traditional wire-line business, traditional telephone business, it could take away from revenues.

And, so what MSFT has done – and we’ve been part of these conversations as well with operators – is as you correctly say, if operator doesn’t want Skype installed on a Windows Phone from Nokia or any other company, then the operator can make that decision.

Now, you’re right: it can be circumvented. But of course it’s on all Android devices, it’s on iPhone devices, it’s on iPad, it’s on all of those devices. So in fact what we’re doing with the operators is turning it around into an advantage. Instead of them just complaining about Skype on Android or Skype on iPhone, with Microsoft and Nokia, we can have a conversation that says “ok there, is this Skype thing, is there a different type of partnership we can do that recognizes that voice over IP like Skype is coming no matter what, but maybe we can do something creative that generates incremental revenue for you.” Some operators are looking at bundling Lumia, Skype and their own services with higher-bandwidth allotments to actually charge the consumer more and generate more revenue for them. So by actually controlling the Skype asset, we can begin a conversation about how we can have a better Skype-based relationship, which was impossible for operators to do before. So it’s actually quite a bit more advanced than whether operators like or don’t like Skype; they actually want to engage in a conversation about what does this mean and how could we do something that we couldn’t do before. Thank you.

Due to limited availability of spectrum, carrier policies and government regulations – mobile Internet is a very different environment then the fixed line Internet. With mobile operators wielding an enormous power on what gets on and goes through their networks. With the rise of the smartphone and mobile data, carriers are starting to lose some of that power to the outside apps and “over the top” services like What’s App, iMessage, Skype, etc; But, except for Apple and iPhone, mobile operators still have a lot of influence over which phones and platforms will sell. Especially in those parts of the world, where smartphone subsidies are the norm. If carriers collectively decide to kill Windows Phone – Microsoft’s platform doesn’t have a chance. But why would they do that? Simply because Microsoft bought Skype, and carriers hate Skype after seeing what the app did to their fixed landline telecom cousins? Sounds kinda stupid, especially when Apple already has Facetime and iMessage, Google ships Google Voice and Google Talk – integrated into their platforms.

And when Microsoft comes to carriers with the offer they cant’ refuse, which goes something like this:

“Look guys, now we own Skype and we are integrating it into Windows Phone. But if you don’t want it on your network – fine. Here’s a way to disable Skype for cellular networks. We are also building a charging solution into our Skype mobile app, that will integrate with your billing systems. So you can offer new Skype audio and video plans for your customers. And if you work with us on Windows Phone – we can do the same for Skype Android and iOS apps.”

Which is only my speculation at this point.

But Nokia CEO more or less confirmed that Microsoft is very flexible with Skype on Mobile. And that both Nokia and Microsoft are in active discussions with carriers of how to transform Skype from the killer of voice revenues on fixed networks, into a revenue generating service on mobile. Unexpectedly strong Windows Phone endorsements from AT&T and Verizon recently, indicate that this new strategy might be working.

Author: Stasys Bielinis

While I like to play with the latest gadgets, I am even more interested in broad technology trends. With mobile now taking over the world - following the latest technology news, looking for insights, sharing and discussing them with passionate audience - it's hard to imagine a better place for me to be. You can find me on Twitter as @UVStaska'

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  • ejvictor

    So in essence the whole Skype debate boils down to this;
    Elop – We are weak and have no leverage with carriers.
    Elop – Unlike Apple and Samsung devices customers do not see the value of Lumia devices.
    Elop – Carriers do not support WP 7.5 as a third ecosystem.
    Elop – We will knuckle under to carrier demands and cripple our phones and add carrier bloatware to make the carrier happy at the users expense.
    Did I miss anything?

  • Staska

    Ha. You didn’t. 🙂 You were kinda right all along 🙂

    Still kinda miss your point. I mean – it might be cool in Tomi’s Church, with all the acolytes submitting to your priest. I mean – that real Skype/Elop quote was around for days.

    With you Tomi’s acolytes shitting your pants “he might have been wrong” – afraid to respond to a simple copy/paste, that Tomi himslef did. Until your high priest Tomi came along and showed you a way, twisting the whole thing around for you brainless followers to follow…

    MMM. so pathetic

  • Staska

    There may be a few points to discuss there. Sort off.

    But Looking at big picture , as things stand mid May, 2012 – you are more or less correct, Except for Skype thing. It has nothing do do with points you try to make