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SEPTEMBER 16, 2004
By Alex Salkever Why Jobs Should Heed VoIP's Call [Page 2 of 2] SMALL TECH CHALLENGE. About 500,000 Mac users fork over around $130 per year to subscribe to the .Mac service, which includes an e-mail address and online mail storage, 100 megabytes of online file backup, antivirus software, and tools for building and posting Web pages. Millions of Mac users buy songs on Apple's iTunes music store. The upshot? Apple has lots of potential phone-service customers. From a technical standpoint, it wouldn't be all that tough to pull off. Apple's iChat software already works through firewalls and is very easy to set up. Hooking the new Macphone service up with a regular phone company so that Macphone users could call out wouldn't be too hard. Level3, Colt (COLT ), and others have already done so in providing public phone service for SkypeOut. Very good software packages are already available that provide features such as Internet voice mail. Apple could use these software systems on the back end. It would need to provide a good graphical user interface, which it could probably do easily by layering these features atop iChat and adding some menus. HOW TO CHARGE? The trickiest question is whether Apple should follow Skype's peer-to-peer model for telephony, in which the bandwidth provided by those logged on to the network actually carries all the calls and routes them to other Skype users. A peer-to-peer network offers incredible efficiencies. Skype pays almost nothing to add a user to its network since its cost of distributing another copy of software is next to nothing. Apple could also use such a network to distribute software fixes or even to make it easier for iTunes customers to share songs. If the record labels don't like that, no sweat. Apple could control the network and set the rules. Peer-to-peer works well for many, many things in this age of widespread broadband connectivity. And Skype has shown that you only need a few hundred thousand simultaneous users to make such a network viable. Now, how could Apple make money on its new Macphone network? It has many ways, and some aren't necessarily obvious. The easiest is to mimic Skype and charge on a per-minute basis for calls to the public phone network. Skype charges 2 cents a minute for calls within and between 22 countries. Those include most of the developed world. While that may seem low, Skype insiders have told me that the outfit expects to make a handy profit. Down the road, Skype also plans to charge for added features. Apple could do the same: Offer the basic service for free and charge for things like voice mail and portable buddy lists. YOUR MAC IS RINGING. Or maybe Apple could explore adding a phone service as part of its .Mac service. Perhaps it should award .Mac subscribers a bundle of voice services and a few hundred minutes per month of calls from a Macphone account to the regular phone network. Most ambitious would be to use the Macphone service to launch a new line of Apple-branded mobile phones, which the company has talked about for some time. It makes sense. Apple likes to package devices with services. Witness the twinning of the iPod and iTunes. A new line of Macphones that could easily talk to other Macphones over any Internet connection using iChat software would be amazingly cool. This is not a pipe dream. In many big cities, Wi-Fi coverage is almost omnipresent, and handset companies are already building phones that can handle standard cell communications and VoIP using Wi-Fi. What I'm proposing isn't really such a big leap for Apple, which has slowly but surely morphed into a service company: Look at iTunes and .Mac. And OS X requires regular upgrades, so it's also something of a service business. Apple already has 90% of the expertise and the infrastructure in place to make this work. Steve Jobs, phone home.
 Salkever is Technology editor for BusinessWeek Online. Follow his Byte of the Apple column, only on BW Online Edited by Patricia O'Connell
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