Skype Buys Qik to Further Its Video Ambitions

Skype recently announced it would buy mobile video start-up Qik for an undisclosed sum. The acquisition is expected to close during January 2011.

Our surveys suggest that mobile video is one of the most popular features on smartphones. We expect it to be one of the big trends in mobile in the next few years, and I’ve described video as a “wrecking ball” that’ll hit mobile network operators hard as smartphones become mass-market products.

Skype has revealed that 40 percent of Skype-to-Skype calls already use video, and the company used this year’s CES to unveil developments in its video services, including:

• A premium group video calling service that supports up to 10 people simultaneously for $8.99 per month
• Partnerships with Sony and Panasonic to create Skype-ready Blu-ray players

Panasonic already includes Skype in its Viera Cast online service for TVs. Sony will be preloading Skype as a feature of some of its TVs later this year.

Skype has also announced a two-way video calling feature for its iPhone app, to counter the threat from Apple’s FaceTime.

However, Skype’s weak when it comes to offering video calling on other mobile platforms; its Android app has experienced problems and there’s no video calling at all on its latest Symbian^3 client.

Qik was formed in 2007 and has offered a live service since August 2008. Its service originally allowed people to upload a live stream from their phone — almost a video version of Twitter. It has recently added video sharing across a range of social networks, as well as video chat and mail. In addition, it has video-sharing applications for Windows, Mac and Linux PCs. During 2010 the number of Qik users grew rapidly from 650,000 to 5 million. The company had been tipped as a Web start-up to watch.

For Skype, Qik’s strengths are that it has apps for a large number of phones, that it has integrated with several social networks and that it is well set up for video storage and management.

In my view, Skype’s less interested in Qik for its online streaming service than for its technology. This will help Skype expand its own role as a telecom provider for businesses and consumers.

Skype’s strategy seems to focus on being everywhere more quickly than its rivals. Apple has offered FaceTime technology to the world, so that others can adopt it, but it remains a pure Apple play at present. Other Skype competitors, such as ooVoo and Fring, have lesser reach across different communications channels, especially the living room, and crucially they don’t have the same brand strength as Skype.

To make its strategy work, Skype needs to cover different mobile platforms much better and more quickly. And that applies not just to the typical high-profile platforms like Apple, Android and Blackberry, but also to Symbian. Symbian’s still the leading choice in emerging markets, which are likely to be major markets for Internet video calling, partly because of the high level of migrant workers from those countries.

Facebook has yet to show its hand in this area, and everyone in the Internet telephony and video calling market should be mindful of the opportunities and threats arising from the possibility that the social network giant could introduce its own video calling service in future. Skype already has a partnership with Facebook, which allows Facebook updates to be linked to contacts in Skype.

In our predictions for this year, we suggested Facebook will buy Skype. Given Skype’s huge ambitions, Facebook may need to act soon.