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Posted by Tom Cheesewright on

Switch: What If?

Time for another Wired-magazine inspired entry. This month’s issue looks at the possibility of a breakthrough in cracking ethanol from cellulose. Current biofuel technologies are inefficient and don’t present a real alternative to oil. But if this breakthrough comes — and billions of dollars of venture capital investment suggests it will — the world is going to be a radically different place…

Imagine if the US no longer relied on oil for fuel, but instead could grow its own ethanol without a dramatic impact on food production. The effect would be far reaching. For a start us Europeans could stop being so uppity about their 83-litre V8 SUVs spitting out tons of carbon dioxide. Without the demand for oil, US interest in the Middle East would likely fall sharply. Would having so many troops stationed in Iraq, Saudi Arabia and Kuwait seem like such a good investment (political, financial, and most of all human)?

With the demand for fuel oil slashed, surely the economics of other oil products would change. The price of plastics and other by-products might rise to make currently disposable products rather more expensive. Clothes, white goods, cars, gadgets, Swedish furniture, CDs and DVDs — many of the trappings of consumerist life might become economically unviable.

Combined with the current trend towards ecological thinking and organic food, there might be a wider trend towards quality. A return to objects designed to last a lifetime. Obviously the price would be higher, but it is a much more sustainable model. It could trigger a switch to materials that are currently considered too expensive for everyday objects — lightweight ceramics and composites for example. Traditional industries like tailors and carpenters might see business boom….

Of course this is all a bit utopian, but there’s no harm in being optimistic when all the world seems to think only in terms of doom and gloom.

Posted by Tom Cheesewright on

Sk(h)ype

There I am, struggling for inspiration, when along comes the story I’ve been waiting for. My favourite type of story. The one that proves that I (and a lot of other people) were right all along: $2.6bn was rather too much to pay for a company that gives its product away free. eBay has taken a $900m hit to write down the value Skype, the VoIP company it acquired just two years ago.

I have been wrong about these things in the past: MySpace was very much worth the $580m that News International paid for it, if only for the $900m advertising deal that it scored with Google soon after. (Disposing of what will be a dead asset in a year or two might knock some of the gloss off that deal though).

But with Sk(h)ype (thanks to whichever wag first came up with that) it seems that all of us who looked incredulous at our screens on September 12th 2005 were more on the money than the management of eBay and the no-doubt numerous advisers they employed.

It’s not that I don’t like Skype. Though the appeal of the product has tarnished somewhat since its debut, I still use it on a daily basis. But for all the noise around it, and its success in penetrating the consciousness of the general public, it has not had the expected impact on the telecoms market. While it may have killed the prospects for a thousand small VoIP carrier startups (hello Vonage), the major telcos are still charging largely what they were beforehand. WiFi hotspots are not a morass of users skyping each other from mobile devices.

My biggest question over Skype was always its future. When the world’s largest telcos are already investing in a total VoIP infrastructure (with BT in the vanguard) that should decimate their cost base and enable them to roll out some very funky services, what is the need for a proprietary, software-based VoIP client with iffy quality and reliability? It had a very small window for success, and a very lofty target — to become a standard for voice communication to compete with GSM or SIP before the incumbent telcos completed their own VoIP infrastructure. Though I doubt it was ever put like this to the CEO of eBay, if it wasn’t portrayed as a potential world-beater, how on earth did they come up with such an enormous valuation?

Even with phenomenal marketing this was only ever a ‘good’ product. It was an incremental, rather than radical, change. And even with some of the most impressive marketing in recent times, that isn’t enough to change the face of a market.

Tom Cheesewright