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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

July 6, 2011 at 9:55 AM

Facebook announces Skype video chat, group chat

Facebook today announced a new video calling feature powered by Skype, extending the social networking giant’s deep ties with Microsoft.

Facebook Chief Executive Mark Zuckerberg also unveiled a new design for messaging and a “group chat” feature for starting ad hoc conversation circles, similar to features in Google+, the new social networking platform Google unveiled last week.

Engineers at Facebook’s Seattle office developed the video calling service with Skype, which is being acquired by Microsoft. Annoucement of the Microsoft-Skype deal came while Skype was working with Facebook on the partnership.

“Yeah, we have a really good relationship with Microsoft,” Zuckerberg said. “We work with them on a lot of different stuff. It would have been fine when you [Skype] were an independent company, too, but now that you are owned by Microsoft, that gives us the sense of stability that it’s going to be with a company that we can trust, which is good.”

Skype Chief Executive Tony Bates noted that the Microsoft acquisition hasn’t closed yet.

Finalizing the Facebook partnership was a top priority through the acquisition, he said. Skype came to talk to Zuckerberg the day the Microsoft deal was announced. Bates said he and Microsoft Chief Executive Steve Ballmer considered Facebook to be Skype’s most important partner.

“Steve and I really aligned on this,” he said.

Microsoft declined to comment beyond a comment from a spokesman: “We’re very excited to see the developments from today’s announcement with Facebook and Skype, but as I’m sure you can appreciate, since our Skype deal has not closed, we have no further comment.”

Zuckerberg had teased the news during a visit to the Seattle office last week, promising several big new products built here.

During today’s press conference, he said questions about social networking’s importance have been answered and all sorts of companies are now planning new social applications. To help their planning, Facebook is providing new usage projections that emphasize sharing activity more than the number of registered users.

Zuckerberg compared growth in sharing of information on Facebook to Moore’s Law. Coined by Intel co-founder Gordon Moore, it predicted the number of transistors on a computer chip will double every two years. That helped the computer industry plot future products.

Zuckerberg didn’t offer a Zuck’s Law, but showed a graph predicting steady growth in sharing beyond the 3 billion items now shared daily by Facebook’s current 750 million registered users.

Facebook and Skype aren’t making money directly from the free video calling service, but they may add premium services carrying charges in the future.

Here are screenshots of the new chat and video calling features, which have already drawn millions of users:




Here’s my live blogging from the event’s Webcast.

10:14 – Zuckerberg appeared and said this is the first of many product announcements coming up.

“We’ve been busy building stuff for the past six months or so. Today marks the beginning of what we’ll call launching season 2011,” he said.

10:17 – But first background “trend and narrative.”

“Social networking is at this inflection point now …. The narrative has mostly been around connecting people,” he said. Questions about whether social network would become widely used have been answered.

“Now the world generally believes it is going to be everywhere,” he said.

10:18 – The driving narrative for the next five years will be “what kind of cool stuff can you build” now that you “have this wiring in place, this social infrastructure.”

10:20 – There’s a “pivot” happening similar to desktop computer companies deciding to build Internet apps. Now it’s social apps, and it’s time for new ways to measure things besides “active users.”

10:21 – It sounds like the new metric/measurement tool will be amount of material shared, where there’s been “exponential growth.” Instead of just measuring and disclosing user presence, this will show user activity.

10:23 – Zuckerberg said the exponential increase in sharing activity is more than a Facebook phenomenon, it’s an Internet phenomenon. Facebook hit 750 million users but sharing is growing faster than user growth, which is a more important metric, he said.

10:25 – Zuckerberg is drawing comparisons with Moore’s Law, which drives industry trends and helps companies plan research into future products. Facebook sees sharing on social networks growing at a similar rate, so you can look out three or five years and think about what sort of applications will be needed then.


10:27 – Zuckerberg said 4 billion items are shared a day.

“Today we’re going to talk about private communication channels.” The first is “group chat.” Also, a new design and video calling.

The group chat enables “ad hoc” conversation groups, which is a strong suit of Google’s new Google + social networking service that’s challenging Facebook.

A new design of the contact list will provide more information about the presence of users available for chat.

Video calling will be handled by Skype, which further extends Facebook’s ties to Microsoft, which was an early investor in Facebook. Microsoft bought Skype for $8.5 billion in May. At the time there were rumors that Skype was discussing a partnership with Facebook.

Even if you haven’t installed plug-in to do the video chat and you get an incoming call, you’ll receive a notice of the call and be able to download the application in about 20 seconds. So users don’t have to have pre-installed Skype to use the service.

10:30 – Facebook’s going to work with entrepreneurs building quality applications such as Skype, unlike “other Internet companies that try to do everything themselves,” Zuckerberg said, taking a swipe at Google.

“Entrepreneurs who focus on one type of thing will always do better than a company that’s trying to do a million things,” he said. “That’s what we’re banking on.”

10:36 – Philip Su, a Seattle-based engineer wearing a Facebook Seattle T-shirt with a Space Needle logo, demonstrated the video calling feature.

With one click on “call” button you establish a video call with a friend, he said.

During the demo, Su placed a call between the Palo Alto headquarters and the Seattle office, where engineers reported that the feature already has drawn millions of users.

10:40 – Skype Chief Executive Tony Bates came on stage. He said Skype’s now averaging over 300 million minutes of video a month and at peak times over half of its calling traffic is video.

Bates said Skype has already cracked the desktop and is on mobile devices and working into the living room. Now Facebook’s the centerpiece of Skype’s Web push. In the future Skype paid products could come to the service as well.

10:44 – Q&A begins.

The first question: what do you think of Google+ Hangouts?

Zuckerberg didn’t directly comment on Google. He talked up the video service, saying “I wouldn’t undersell the importance of what we have today,” he said.

“I just think this is super awesome,” he added.

Then he brought it back to the future-looking material that started the press conference, saying that lots of companies will be coming out with new social apps, such as Netflix.

“I view a lot of this as validation that this is the way the next five years is going to play out … every app is going to be social,” he said.

Asked about the initiation of a video call, Zuckerberg said “You will get a ring as if your phone is ringing or your computer is ringing” and then you’ll get to choose whether or not to accept the call. Your computer’s camera won’t be activated until you accept the call.

Asked about the revenue side of the deal, Bates said paid product may come in the future but he didn’t provide more details.

10:51 – How will this affect Facebook’s network?

Zuckerberg said Facebook is going to be building more datacenters but the core functionality of the app is built by Skype. Bates said it’s like a “mini Skype client” on Facebook powered by Skype’s peer-to-peer technology.

What is the current overlap between Facebook and Skype users?

“I don’t even know,” Zuckerberg said.

Are there any financial terms? Is anybody sharing revenue or giving money to one or another, and what role did the Microsoft relationship play?

Zuckerberg said there aren’t financial considerations in the partnership now, but they’ll explore premium Skype services in the future. It’s the same free Skype service, trimmed down and to fit into a social network.

“Yeah, we have a really good relationship with Microsoft,” Zuckerberg said, standing next to Bates. “We work with them on a lot of different stuff. It would have been fine when you were an independent company too but now that you are owned by Microsoft, that gives us the sense of stability that it’s going to be with a company that we can trust, which is good.”

Bates noted that the deal hasn’t closed yet and that Skype and Facebook were in talks before the Microsoft deal.

Finalizing the partnership was a top priority, he said. Skype came to talk to Zuckerberg the day the Microsoft deal was announced. Bates said he and Ballmer considered Facebook to be Skype’s most important partner.

“Steve and I really aligned on this,” he said.

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Watch live streaming video from facebookannouncements at livestream.com

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