There's been a lot of buzz this week over a version of Skype finally being released for the iPhone (though, the fact that it's limited to only WiFi connections, rather than cellular ones is annoying, if expected). However, it turns out that Canadian iPhone users are discovering that their iPhones are blocked from using the new iPhone Skype, apparently due to some sort of "patent-licensing issue" related to the codec that Skype uses. The company isn't revealing much (and the link above includes a workaround for Canadians desperate to use Skype on their iPhones), but that's what you get when you end up using patented technology in your products. It makes it that much more difficult to actually offer your product in a variety of markets.

We wondered a couple of months ago if eBay was warming up the Skype Billion-Dollar Buyout Plan, a hype-driven business model aimed at inflating the perceived value of the unit to would-be buyers. But Skype's emerged with a real business plan to try and boost its business by targeting small- and medium-sized businesses with a version of its service that can connect to their PBX phone systems using the popular SIP standard. Skype is selling one major benefit of the service as the ability for companies to accept inbound Skype calls to their PBX system, but aside from that, it's just trying to undercut other providers' rates for outgoing calls. But perhaps the bigger issue for Skype will be the high level of reliability and support business users will demand. Few will be willing to sacrifice those metrics on something as critical as voice telephony, and Skype's 2007 outage -- and subsequent lame explanation -- may not help in this regard. Also, as a company that thrives on taking away customers from more expensive services, Skype should realize that it, too, can be undercut. If all it's offering is cheaper prices, it won't have a very strong hold on its customers when the next cheaper solution comes along.

Italian police are complaining that criminals there are increasingly turning to Skype to communicate, having discovered that it's essentially impossible for the cops to listen in on their conversations. Italian police aren't the first to notice this: German authorities were caught talking to a vendor that offered some cumbersome Skype-tapping software, while Skype itself didn't deny that the Chinese government had the ability to monitor Skype conversations. Lots of countries have banned Skype, often to protect the revenues of incumbent (or state-owned) telecom operators, but its encryption -- apparently strong enough to frustrate police around the world -- could provide more ammo for future bans, particularly in repressive nations. Italy, though, could be an interesting place for this battle to play out. While police there love their wiretaps, politicians don't: after a number of political figures have been embarrassed by leaked recordings of their conversations, they're trying to change laws to limit the cases for which wiretaps can be used, and to bar the reporting of details from wiretaps until after convictions are delivered in criminal cases. Perhaps instead of trying to change the law, Italian politicians could just start talking on Skype instead.

Back in 2005, we marveled at the success that Skype backers had in talking up the price of the company, eventually suckering convincing eBay to put together a $4 billion deal for it. This was what we dubbed the "Skype Billion-Dollar Buyout Plan" in which companies used press hype to create valuations far above their actual worth (see YouTube and Facebook for a couple of examples). Of course, what eBay was never really clear on was how it planned to make money from Skype, and it later went back and forth on whether it had given up on looking for the mythical "synergies" between Skype and its core auction business. Last week, eBay's CEO conceded that those synergies were "minimal" -- leading to more speculation that eBay might spin Skype off.

And thus the cycle begins again, with a figure of $900 million to $1.2 billion tossed out there as a potential starting point for the second version of the Skype Billion-Dollar Buyout Plan. What's interesting is that just like four years ago, Skype's financials are murky, as Om Malik points out. The company also still faces the same big problem: monetization. As Skype gets bigger, that problem could become even more difficult. After all, if Skype continues to garner more and more users, more and more calls will shift from the paid SkypeOut service to free Skype-to-Skype calls. Skype is said to be profitable (although there's no indication of how profitable), but it seems pretty clear that it hasn't been the runaway success that would have justified its $4 billion price tag. While it's possible that any current sale could carry a more realistic price, somehow we imagine that eBay will try to use the same tactic that drove up its price for Skype to drive up the next buyer's price.

Remember how Skype was supposed to be "untappable" due to end-to-end encryption? Well, we've already seen that's not true, thanks to leaks that showed the German government had figured out ways to tap Skype, and it will probably come as no surprise to many that China has been tapping and storing Skype conversations. Some of the findings of this report are not new. Back in 2005, reports came out that various Chinese telecoms were investing in special "filters" for Skype that would block conversations using certain keywords. But, of course, it seemed rather obvious that if they were blocking those keywords, they would also use them to spy on what people were talking about. Besides, if the telecoms didn't filter or record Skype, the Chinese government made it clear that it would block the use of Skype altogether.

The only really surprising part of the new report was the fact that the folks storing the messages did it so poorly that the researchers who discovered it were easily able to go in and read messages from others. It's rather telling to note the responses from the two companies involved. A Skype spokesperson told the Wall Street Journal: "The idea that China's government might be monitoring communications in and out of the country shouldn't surprise anyone." No, it shouldn't surprise anyone, but one might think it's rather troubling that Skype promotes itself as having end-to-end encryption, when that's clearly not true. Even more telling, the only thing about this report that seemed to actually concern representatives from Skype was the fact that the conversations had been readable by outsiders, again, telling the WSJ that the "security issue" had been "remedied" by Skype's partner in China, TOM Group. In other words, Skype isn't so concerned about users being spied on, but it is concerned when people can figure out that users are being spied on.

As for TOM Group, its response is pretty much exactly what you'd expect on this issue: "as a Chinese company, we adhere to rules and regulations in China where we operate our businesses." In other words, the government says they need to spy, so we let them spy. Nothing too surprising, but important for folks to know if they somehow thought that Skype's supposed end-to-end encryption actually kept conversations secret in China.

Tom wrote about the Skype/GPL case yesterday, and it's worth noting (as many in the comments did) that partway through the hearing, Skype gave in and agreed to drop the appeal and abide by the lower court ruling. That's a good thing. However, from the comments on Tom's post, it appears that many seemed to have misunderstood what he wrote, believing he was (a) supporting Skype or (b) disparaging GPL. It appears to be neither. He pretty clearly states that it's a "desperation" play by Skype, and so it's not at all surprising that Skype gave in after the court indicated that Skype's arguments were not convincing. Tom also does not appear to be disparaging the GPL -- he notes how it helped encourage much more openness in software development.

His actual point, which got less attention, was whether the power of the GPL specifically is waning as other licenses gain prominence -- and, specifically, whether it would be so horrible if the GPL somehow went away. He's not suggesting that's a likely or ideal scenario -- just questioning what would happen. And, the point he makes is that while the GPL paved a very important path, we're seeing other options now appearing, and that's a good thing for open source. Developers now have a much bigger choice among licenses they can choose to adopt, and that competition can lead to interesting innovations. It's not an anti-GPL post -- but recognition that the hopes and dreams of open source software development are no longer tied to the success or failure of the GPL. And that's a good thing for both the GPL and open source.

The GNU General Public License heads to court again today, as Skype attempts to defend its distribution of Linux-enabled SMC hardware handsets that appear to be in violation of the operating system's open source license. It's easy to guess why Skype is fighting the suit, which was brought by GPL activists: the company relies on a proprietary protocol, and releasing the code could give competitors an advantage. You can't blame them for trying. Although in the past few years the GPL has made important strides in establishing its legal enforceability, it's still conceivable that a court could find something wrong with its unusual, viral nature.

Few think that this will be the court case that makes or breaks the GPL. Skype's already lost early rounds of this fight, and the claims it's now making seem so broad as to imply desperation. Besides, the case is being tried in the German legal system, which to date has proven friendly to the GPL.

But even if the license was invalidated, either in this case or another, there's an argument to be made that the GPL has already served its purpose. Its impact on the world of open source software is undeniable: by ensuring that an open project would remain open, the license encouraged programmers to contribute to projects without fear of their work being coopted by commercial interests. And by making it difficult, if not impossible, for a project derived from a GPLed project to go closed-source, it encouraged many programmers to license their efforts under open terms when they otherwise might not have.

But today, with open source firmly established as a cultural and commercial force, the GPL's relevance may be waning. The transition to the third version of the license left many in the open source community upset and intent on sticking with its earlier incarnations. And an increasing number of very high profile projects, like Mozilla, Apache and Open Office, have seen fit to create their own licenses or employ the less restrictive LGPL. The raw numbers bear out the idea of a slight decline in the GPL's prominence, too: Wikipedia lists the percentage of GPLed projects on Sourceforge.net and Freshmeat.net, two large open source software repositories, as 68% and 65%, respectively, as of November '03 and January '06. Today, the most recently available numbers show that Sourceforge's share has fallen to 65%, and Freshmeat's share has fallen to to 62%.

This is, of course, a small decline, and the GPL remains the world's most popular open source license by a considerable margin. But it does seem as though there may be a slowly decreasing appetite for the license's militant approach to copyleft ideals. I certainly don't wish Skype well in its probably-quixotic tilt at the GPL, but if they were to somehow get lucky at least they'd be doing so at a point in the open source movement's history when the GPL is decreasingly essential.

A friend just sent me a great blog post by Kevin Kelly where he talks about some online things he was completely wrong about -- including products or companies he thought would flop that succeeded, as well as those he thought would succeed which went nowhere. He starts with the example of The Sims, which he thought would flop, but which just sold its 100 millionth copy. In looking through his list he notes:

Sadly I can detect no pattern to my mis-predictions. In some cases, I did not anticipate improvements and advances that would remake a pathetic first version into a truly cool tool. In others I anticipated advances that never came.

It got me thinking about which predictions or trends I totally missed on, and thought it might be fun to post some of them here. In Silicon Valley, people are so focused on the future, they don't look back often enough. Besides, it's healthy (and a bit cathartic) to review your mistakes every once in a while. I'll admit that on some of these it took some serious thinking to remember my initial feelings about them, as my opinions have changed. Anyway, feel free to think through some of your own in the comments.

• Google. Now, to be fair, I always thought that Google was a great offering, and I was one of the early adopters and users of the search engine. What I didn't understand was how the company would make money -- and why Kleiner Perkins and Sequoia would put $25 million into a company that had no revenue and no clear path to revenue. Given the founders rather vehement claims that advertising on a search engine was bad (and, yes, they were vehement about this early on), I thought the company would struggle to find a business model. In fact, it did struggle for a little while... but once the company figured it out....
• RSS. While we at Techdirt were a somewhat early adopter in providing an RSS feed, I wasn't much of a believer in the technology for a while. I had been using various "multibrowser" systems that would load up a bunch of websites in a huge long list -- and that seemed like a perfectly efficient system for me to use. I was on the record saying I thought RSS was too confusing for most people -- and I still think it suffers from some of those problems, but it's become tremendously successful -- due, in large part, to the user-friendliness of various RSS readers, starting with Bloglines and moving on to Google Reader and the various customizable home page solutions.
• Skype: It launched to a ton of hype and I wasn't buying any of it. There were already a bunch of voicechat products on the market, and there had been for years. I just didn't see what was all that different about Skype. To be honest, I'm still not sure what was so different about it -- but it got users, and for the most part "it just worked." Never underestimate the power of those two things.
• The web itself: I first heard about "the world wide web" in early 1994. I had been using email, usenet and gopher for a while before that. While I knew that the web was something special, as soon as I first tried out Mosaic in 1994, I didn't think it would become this big of a deal. In fact, I just assumed that the world would move on to something else after a few years. After all, after the web came along, gopher pretty much died out, and I assumed that some new offering would come along and make the web obsolete, just as the web did to gopher.
• The original Napster: While I actually only played around with Napster briefly (at the time I had no broadband connection), I thought that it would revolutionize the music industry. In a way, it did, but not the way I expected it to. I honestly thought that (1) Napster would be found legal and that (2) the recording industry would quickly realize what a useful tool it would be for distribution and promotion of music. Boy, was I wrong on that one.... Though, to be fair, at the time, there were plenty of others who felt the same way. It's only in retrospect that people now say that Napster was obviously illegal.
• Intelligent Agents. I had done a research project in college about some of the work being done on intelligent computer agents, and I really thought the technology had a lot of promise. I figured that well before now, there would be virtual assistants everywhere, doing things and making people's lives more efficient. Turns out the technology never really worked all that well, and at best, most of the early efforts in the space moved on to things like collaborative filtering.

Well, that's the quick list I came up with. Like Kelly, I'm not sure there's a real pattern there, but it doesn't mean I can't learn from my mistakes.

Just a month ago, the guy in charge of Skype finally admitted that eBay had given up trying to find the mythical "synergies" between eBay and Skype as the few they had suggested turned out not to exist. Apparently, Skype's GM isn't on the same page as his boss, eBay CEO John Donahoe. He was just quoted saying that eBay will spend this year trying to find synergies with Skype and if it still can't find any, it may sell off or spinoff the unit. Given the lack of synergies so far and the massive write down on the purchase price, you have to figure they're going to be digging pretty deep to turn up any kind of synergy between Skype and eBay.

A little over a year ago, Skype filed a petition with the FCC asking to extend the Carterfone decision to mobile networks. The Carterfone ruling was what allowed people the opportunity to connect non-AT&T telephones to the phone network, and kicked off an awful lot of innovation in the telephone arena (getting everyone past the black rotary phones). The Skype petition was a bit misguided, because the situation in the mobile world was quite different than the AT&T telephone monopoly of the 1960s. In fact, there is a lot more competition and openness in the mobile world -- and that competition has pushed many of the players to continue to open up at a greater rate, knowing they need to in order to compete.

So, it probably doesn't come as much surprise to find out that telco buddy Kevin Martin is dismissing the Skype petition outright. He announced this at the CTIA conference, where it was greeted by applause -- suggesting that it was mostly employees from mobile operators in the room. Martin pointed out that there was a lot of competition in the mobile space and also noted Verizon Wireless' move towards openness. Of course, it may be a bit early to declare Verizon Wireless truly open, and it seems a bit odd to dismiss the Skype petition out of hand without any public discussion. While it's probably true that the Skype petition was asking for unnecessary regulations, you would think that at least a discussion could have been held around questions of openness on mobile networks before the petition was totally dismissed.