The patents in the U.S. suit (CNET located a copy of the court documents) mostly originated from IBM – two cover the reservation of system resources for assuring quality of service, and one deals with assigning connection capacity in a multi-tiered data-processing network. A fourth patent, which was originally obtained by Fujitsu, also covers a “gateway for internet telephone”.

All pretty broad and, according to Google, infringed by BT’s wholesale quality of service products and OneVoice unified communications system. Google is asking the U.S. courts to order BT to stop infringing and to pay Google damages.

The British suit is more mysterious. While some overnight reports suggested that BT had not yet been served with that suit, the company told me this morning that this has indeed happened. Beyond that, it refused to comment on the specifics. It’s worth reminding ourselves here that the British patent system is quite different from that of the U.S. – it is far trickier there to patent “business methods” — so it would be a mistake to assume a direct correlation between the two cases.

However, I did get some interesting information from a source within BT: firstly, that the company sees this as “predictable” retaliation for BT’s lawsuit against Google (filed more than a year ago), but also that that 2011 case is going to mediation this coming July. In my own analysis, this makes it possible that Google’s suit against BT is intended as leverage for that meeting.

Google itself has said in a statement that it “always [sees] litigation as a last resort” and is defending itself against both the 2011 suit and BT’s “arming [of] patent trolls”, which a source said was a reference to a little-reported case last year involving a non-practising entity (NPE) called Suffolk Technologies. Suffolk sued Google and AOL using a BT patent, and BT had apparently sold that patent to Suffolk on the condition that it would get a cut of any proceeds from resulting lawsuits.

This story was clarified at 9:40 a.m. PT after suggesting that Google was referring to Steelhead as the patent troll in its statement. New information suggests the company is referring to Suffolk Technologies. In the Steelhead case, BT has always been adamant that it receives no share of any lawsuit proceeds.

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From the perspective of the proverbial M&A handbook, this is actually what Microsoft expected when it paid $8.5 billion for Skype, the peer-to-peer Internet telephony upstart. Microsoft, paid billions because of its senior executives, Joe Williams, who ran the Microsoft Lync business believed that Skype was going to eat Microsoft’s lunch in the enterprise. And he wasn’t wrong. So they bought the competition.

Skype has been an integral part of my daily life and a key communication tool since it launched. I use it for messaging, voice calls and video calls. It is important enough that I overlook what I think is third rate user experience, that has been slowly but surely declining. However, lately, one of Skype’s key value propositions — our ability to make phone calls has started to suffer.

Andy Abramson, who is a long time Skype user and also a VoIP watcher, puts it best when he writes: “It seems as Skype has revamped its’ architecture to co-exist with Microsoft Messenger, and eventually Microsoft Lync, that a lot of changes have been made, and for those of us who have been using Skype for a very, very, very long time, these changes are not for the better.”

The service has been so busy trying to integrate itself with Microsoft, that its overall experience has started to suffer. Skype has been building out its own super nodes (made up of server clusters) and its own infrastructure. And in theory it is a good idea, but in reality the quality of the calls has started to degrade after you have been on the call for a few minutes. If you have used the service as long as I have, then you notice, the calls are taking longer to set-up.

Skype is just a shell of its former self — it is Microsoft in Skype’s clothing. And the latest news of transitioning Messenger users to Skype only reinforces that.

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Want to pay less than $1 for phone calls? Shell out for an iPod Touch and make sure you’re near a Wi-Fi network. It’s possible with a new app from Gogii, the maker of popular messaging app TextPlus, which is launching a new service called TextPlus Free Calls that enables a host of devices, even Wi-Fi-only devices, to make and receive phone calls for free or very cheaply.

With TextPlus Free Calls, users will be able to make unlimited free phone calls to other TextPlus members. And because TextPlus connects to traditional PSTN phone systems, users can connect directly to regular phone numbers at rates starting at 99 cents for 40 minutes without a contract or plans. Free trial minutes will be available to users who sign up. Devices like the iPod Touch will now be able to serve as phone replacements through Text Plus Free Calls running over Wi-Fi.

There’s some caveats but it’s another sign that Wi-Fi calling is getting bigger and a lot easier for consumers. But it’s not just for Wi-Fi only devices:TextPlus can help cell phone users reduce their voice minutes to the lowest plan while running their calls over Wi-Fi and 3G data.

The iOS app, which is separate from the TextPlus Free messaging app, is available now and will be in the Android Market shortly. Users will be able to use one account across multiple devices and will be able to access their call history and voice mail from any device.

The move pits TextPlus against a growing number of IP-based communications competitors, dubbed NUVO or Network Unaffiliated Virtual Operators by Sybase.  Many of the group text messaging services fall into this category and a smaller number of providers also offer voice services, some that come with their phone number like Google Voice and Pinger’s TextFree and others like Viber that don’t. By connecting to the PSTN, Text Plus Free Calls can send and receive calls to and from phones that don’t use the app.

The rise of these services are forcing traditional carriers to rethink their business models. The messaging apps are helping wean users off SMS text messages by connecting users directly over the Internet. And voice services are increasingly offering direct connections that allow users to forgo highly reliable phone calls and monthly data plans, for pay-as-you-go voice services that can offer free or very cheap calls.

It presages a future where voice is just an app on the data network, something carriers themselves are also slowly learning. Sprint has teamed with Google Voice to let people use their Google Voice number while AT&T recently released an International VoIP calling app. Republic Wireless, a division of Bandwidth.com which connects Pinger and Google Voice to the PSTN, recently launched Republic Wireless, offering users a $19 a month voice and data plan that relies heavily on Wi-Fi calling.

Scott Lahman, CEO of Gogii, said carriers can still compete on delivering 4G and high quality, reliable phone service. But he said there is a growing market for simple voice calls that can connect people. And that will change what consumers need from their carriers: fewer or no voice minutes and lots of data. Carriers such as T-Mobile also appear to be responding, offering a plan with just 100 minutes and data.

“We’re on the cusp of the most interesting time in the brief history of mobile,” said Lahman. “The internet has not done its thing in mobile until recently.”

TextPlus, which launched in 2009 and has hit 20 billion messages sent to date, also provides social elements inside its communications apps. Gogii has raised $28 million to date including a $15 million round earlier this year.

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Just how will Microsoft make money off Skype? Microsoft CFO Peter Klein won’t say, exactly.

Microsoft closed its $8.5 billion cash buyout of Skype last week, and Klein, speaking on the company’s first-quarter earnings call Thursday, wasn’t ready to talk much about plans to capitalize on the popular VoIP phone service just yet.

But, he gave broad-brush indications of where Skype’s technology and features could end up:

Now that the deal is closed, we are starting the integration of Skype’s world-class services and global-networked platform across our portfolio of products and services including Lync, Windows Live Messenger, Windows Phone, and the Xbox platform.

Skype will be part of Microsoft’s Entertainment and Devices (E&D) business unit — home of Xbox — going forward.

Microsoft welcomes “the over 170 million people who rely on Skype for their voice and video calls on a monthly basis,” Klein said.

The 170 million number is interesting. By all accounts, the total Skype user universe is far larger than that.

“Highly engaged” Skype users spend an average 125 minutes on the service each month, he said. That could be an opportunity for Microsoft to bolster its online advertising business or to sell more premium (ad-free) services.

Analysts really wanted Klein to drill down into more detail but he deferred that discussion. Microsoft will start folding Skype numbers into its results in the second quarter. Overall, the company said it expects revenue for the quarter ending Dec. 31 to come in at $28.6 billion to $29.2 billion range.

When Microsoft announced its acquisition plans for Skype last  May, there was consternation among Skype users accustomed to its easy interface and inexpensive (or free) cost. A common question on Twitter was whether Microsoft would “ruin” Skype.  All that has calmed down ,but since the deal has been in the works, the competitive landscape shifted. Google+  and its hangout capability makes cheap video conference calling drop-dead easy and poses a major challenge to Skype.

Last May when the deal was disclosed, GigaOm Pro’s Michael Wolf wrote about how Skype could help Microsoft  make strides in home entertainment as a smart  TV and social networking platform for home entertainment. (Subscription required.)

Microsoft’s first-quarter earnings press release is here. SeekingAlpha posted a transcript of the analyst Q&A here. 

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The business essentially provided a platform for web developers to add phone services into their sites: a suite of APIs that could potentially help them incorporate the likes of Skype, Google Voice and so on simply and easily. This made some sense for BT, which is Britain’s largest telecom operator and was desperate to claw back some ground in internet voice. But even so, there was plenty of skepticism.

On this site, Om called it pretty bluntly. “BT has always been long on promise, but short on execution of its grand vision,” he wrote about the deal. Meanwhile Tom Foremski at ZDNet called it “blackmail innovation”.

Today, those concerns seem to have come full circle, with the news that Ribbit is effectively shutting down most of its public-facing operations in just a couple of months.

In an email sent out to customers, Ribbit gave 60 days notice of a service shutdown and said it would be focusing on providing internal technology for BT in the future:

“Thank you for your participation in the Ribbit developer program over the past few years. We recently changed our business objectives to focus our efforts on voice technology for our parent company, BT Group, and have decided to discontinue support and external access to our voice platform, SDKs and APIs.”

As Venturebeat’s report on the news suggests, users are now being directed to switch to Twilio, a rival service that provides similar tools and has done well over the last few years. It’s a great win for Twilio, since even though it’s not obvious exactly how many Ribbit users there were, or how many will switch, it is essentially free customer acquisition for them.

So what happened?

The reality is that this move has been a long time coming.

The acquisition deal was in part architected by BT’s chief scientist at the time, JP Rangaswami, who brought in some of his own team to help Ribbit really try and gain traction. But last year Rangaswami jumped ship to Salesforce and taking some staff — such as former VP of Web Services Kevin Marks — with him.

Without a champion, it seems that pressure was coming to bear on the business. As a result, rumors of some big strategic shifts were afoot last year, with Opus Research reporting that the business was being brought in-house. That is, that Ribbit was being changed from an outward-facing, developer resource into a set of tools used internally at BT to build products that it could sell to customers. When there was an exodus of staff at many levels earlier this year, including co-founders Crick Waters and Ramani Narayan, it became fairly clear this is what was going on.

Bringing Ribbit inside BT means that while it isn’t exactly dead as an idea — it will live on inside the larger company, after all — it is pretty much dead as a product. True, the company still operates in two other sub-categories: Ribbit Mobile, a suite of consumer products for cellphone users that has been in beta for some time, and a service that hooks into Salesforce, and the notice to customers is swift to point out that they aren’t affected by this shutdown (“this notice only refers to Ribbit Developers and does NOT impact Ribbit Mobile or Ribbit for Salesforce users”, it says).

Update: A BT spokeswoman tells us there are no plans to shutter those services.

“Ribbit technology is pivotal to BT’s voice technology strategy, and we have been integrating it into the business since we purchased the company … we are integrating Ribbit into a number of services to provide our customer facing teams in BT Retail, BTGS and BT Wholesale the ability to sell and market services that utilise underlying Ribbit technology.

We can confirm that Ribbit is closing its developer programme to concentrate on future voice technology for BT Group. However, users of existing Ribbit services such as Ribbit for Mobile and Ribbit for Salesforce are not affected in any way and we are in fact hiring in Mountain View.

But the truth is that despite what they say, things aren’t looking too healthy there, either. The last post on the Ribbit Mobile forum is a plaintive cry from late last year of a user who worries that there haven’t been any updates.

And ultimately, whatever happens, the fact is that the business can’t ever really live up to its full potential — or the acquisition price — if it’s only ever operating inside its parent company. But perhaps we shouldn’t be so hard on them: after all, the Ribbit deal was made just as we all teetered on the brink of the full-blown financial crisis: the world is a very different place now than it was then.

Photography used under Creative Commons license courtesy of Flickr user GoingSlo

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“For us, the most important thing — our goal is a billion [users] and this will help us get there, ” Tony Bates, chief executive officer of Skype said at a press event earlier today. He is betting that Facebook will be able to get Skype’s paid products in front of more people. “I did allude to the fact that there’ll be a way to get Skype paid products,” he said.

“Today is the start of a long strategic partnership which will include exposure to free and PAID products for all Facebook users. Makes perfect sense for us,” said Skype spokesperson Brian O’Shaughnessy. He pointed out in an email that CEO Bates wants Skype to equal video calling, and this helps the company get to that point — and will help make ”video is fundamental to the new social construct.”

Skype had added support for Facebook in its Windows client recently, but it is still not clear how that integration has worked out, both in terms of generating revenues and more engagement between the two services. In the fourth quarter of 2010, Skype averaged more than 145 million connected users per month. Facebook has about 750 million members.

Same Skype, Just Thinner

Bates pointed out that Facebook’s video chat was using the same peer-to-peer technology that is used by Skype. “Same free Skype service, but trimmed down to fit within Facebook,” is how he described it. In order to use the service, you need to download a java plugin — if you don’t have it installed you are invited to a video call, and given the opportunity to download the plugin (you don’t need a Skype account to use the service).

Even if we buy into the argument that Facebook can get Skype a lot of new customers, I still think it is a highly risky strategy, and it runs the risk of the company losing a grip on its customers. Let’s remember that at one point even IBM thought Microsoft was only going to help them sell more computers and make more money.

Facebook could learn a lot more about Skype’s customers through this partnership, and then try and woo them into Facebook and obviate the need for Skype all together –theoretically speaking, Facebook could replace Skype with its own video-chat backend and no one would notice. In fact even today, if you don’t look hard enough you will miss that Skype logo when the chat window opens up. It is there, and yet it is not there.

Good for Facebook isn’t Great for Skype

Furthermore, even if Facebook plays clean and straight, how much does Skype get from this deal. My skepticism stems from the fact that Facebook is skewed almost entirely towards average folks, while Skype’s premium video services are largely used by professionals — whether they belong to a startup or work for a big company. More importantly, if Google’s Hangout becomes popular like I predicted, Facebook won’t have an option — it will need to roll out group video chatting. Guess what is Skype’s premium service? Group video chatting & conferencing. And let’s not forget, Skype has some challenges around monetization, without Facebook.

Some of my fellow Skype watchers feel that it is not such a bad deal. Alec Saunders, a veteran of internet telephony argued that since Skype is too quirky for his wife and too weird for his mother, Facebook’s version actually might be a good thing for Skype usage and will get them to a billion people.

The questions is to what end? Andy Abramson who blogs about internet telephony believes that in the end it will be about Facebook vs Google. To that extent I agree. Ironically Skype, which at one point wanted to turn carriers into dumb pipes is being turned into a dumb pipe itself.

Don’t get me wrong — I am glad Skype and Facebook friended each other. For the record, I had suggested last year and again earlier this year that Facebook buy Skype. Why?

In one swoop, Facebook would dominate what I’ve maintained is both the new age and classic social networking. They will have people’s credit cards; they have their real-world phone information; and in the end, they have a better, more useful, social graph than Facebook itself…..A simple search box inside the Skype client, and the two companies are starting to take attention away from arch-nemesis, Google.

Obviously that didn’t come to pass. Instead, the next best thing happened. Facebook’s rich grandpa – Microsoft decided to spend $8.5 billion on Skype. And somehow I feel that Zuckerberg just got a sweetheart of a deal.

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Those who were let go included  David Gurlé, Christopher Dean, Russ Shaw, Don Albert, Doug Bewsher and Anne Gillespie. Later, Bloomberg News reported that Ramu Sunkara and Allyson Campa, who joined Skype via its Qik acquisition, were cut too.

The company, according to Brian O’Shaughnessy, Skype’s PR chief, is rationalizing its operations and is focusing its resources on engineering and product. Reports in other media outlets have indicated that it is the private equity investors who might be behind the cuts. “It is Tony’s decision,” said O’Shaughnessy.

Bloomberg report indicated that the firings would reduce the value of the payouts to those executives, though investors in Skype dismiss that talk. Skype investors say that most of these executives are getting about 75 percent of the payouts due to them.

That said, Skype as a company isn’t known to be generous with its employees when it comes to doling out options. That was true in both the pre- and post-eBay days. Nevertheless, I don’t think we have heard the last of this development, so stay tuned.

Our buddy Andy Abramson notes that Christopher Dean was unfairly treated.

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In less than a year ,the company has doubled its registered users, adding about 100,000 every day. Nimbuzz got into a tiff with Skype  last year when the bigger company stopped giving the upstart access to its service. But that hasn’t had any impact on the company’s growth.

Nimbuzz was smart to latch onto the smartphone trend faster than most of its competitors. It launched an iPhone app quite early. Even though I was a skeptic, the availability of an iPhone app made me a convert. I use it few times a week to call my far-flung family members and friends. Nimbuzz claims its users “talk more than 3.7 billion voice minutes per year and spend on average two and a half hours per day communicating via the mobile app.” Many of these folks are in emerging markets such as India and Indonesia, where there’s a preponderance of feature phones.

Below is an infographic the company shared with us:

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Microsoft confirmed it has agreed to buy Skype for $8.5 billion and plans to integrate it into a wide array of products, from Kinect and Windows Phone 7 to Lync, Outlook and Xbox Live. The deal caps a sudden turn of events for Skype, which had previously been the target of interest from Google and Facebook, but then attracted attention from Microsoft. Om first broke the news about Microsoft’s interest in Skype, and last night nailed the purchase price. With the deal, Microsoft is taking a product eBay couldn’t integrate well  and will try to use it to compete against Google, Apple, Cisco and others in the collaboration and communications space.

Microsoft said Skype will become a new business division, with Skype CEO Tony Bates assuming the title of president of the Microsoft Skype Division. The company said the acquisition will enhance its work in real-time communications, which includes Lync, Outlook, Messenger, Hotmail and Xbox Live. And it expects it to bring in new revenue and provide more benefits to both consumers and enterprise customers.

“Skype is a phenomenal service that is loved by millions of people around the world,” said Microsoft CEO Steve Ballmer in a statement. “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

For Skype, the deal allows it to extend its reach and introduce new ways to communicate, said Bates. Microsoft said Skype currently has 170 million connected users and logged more than 207 billion minutes of voice and video conversations in 2010. For all its popularity, however, Skype has had trouble making money and posted a $7 million net loss in 2010.

Microsoft will have a big job on its hands in trying to make Skype work — in part because at $8.5 billion, it is Redmond’s biggest acquisition ever. As Om points out, Skype could give Microsoft a boost in the collaboration market and improve its Windows Phone 7 offering. It could also be an intriguing video-calling combination for Kinect, the gesture-based system for the Xbox. But big acquisitions also have a history of failure, so it remains to be seen whether Microsoft has the ability to turn Skype into a money-maker — especially considering its other online efforts haven’t seen much success.

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The company has leased 90,000 square feet of office space in the Stanford Research Park at 3210 Porter Drive in Palo Alto, with Jonathan Christensen, Skype’s media platform chief, heading company’s operations in Silicon Valley. A Skype spokeswoman recently told me:

We’ve gone from just a few engineers here this time last year to nearly 80 engineers, and they are coming from all over, including from the big name Valley companies too.  Times are tough with the talent wars, but we’re determined, and we’re only just at the beginning with plans to significantly scale up our engineer workforce in Silicon Valley. And, while the perk of a 10 percent raise or spot bonus sounds good, it’s also about getting a great opportunity on the ground floor, working on really cool stuff that can make a huge impact.

The hiring binge is mostly because of two distinct reasons:

Skype for Business. Skype is trying to compete with Microsoft’s Lync: a set of technologies that allow you to communicate, collaborate and socialize with others, especially in business environments.

Skype hasn’t been shy about its own business ambitions, and in previous interviews, had indicated it’s going down this line, where it would become the hub for such collaboration.

Skype understands today’s work goes beyond just desktops, which is why it needs to support browsers along with mobile platforms. Andy Abramson, a well-known VoIP blogger, points out he has gotten similar indications from Dr. Jonathan Rosenberg (Father of SIP) and Skype’s GM for Skype for Business David Gurle (ex-Microsoft), two respected names in the voice-over-Internet community.

Skype for Business has the potential to transform the enterprise telephony landscape, especially if Skype doesn’t fall prey to old thinking. It would need to think beyond PBX to have a lasting impact. Sure, some of the traditional companies are going to ignore Skype – they will any way – but it would be a good way for Skype to grow-up with the customer base which has made them so successful: little businesses of today.

Thousands of startups that use them for communication will be more open to Skype’s presence and IM services, video services, its collaboration platform and possible scheduling features. Folks at Facebook recently showed us how to re-invent the email inbox by transforming the tool (the email inbox) to fit the user behavior. I hope Skype does precisely that.

Skype as a Platform for growth. Taking a page from Netflix platform strategy, Skype is looking to transform itself into a platform. In a conversation before he left the company, former CEO Josh Silverman told me the main reason why Skype was expanding in Silicon Valley: It saw an opportunity to expand its footprint, in other devices and consumer electronics, for example. “There is a huge demand for us to build Skype into other people’s experiences,” Silverman said.

Just like Netflix, Skype needs to embed itself in many places for people to start using its dialtone to make calls to non-Skype numbers and thus bring in the dollars. This is an area where the company is looking at an uphill climb.

Graphic by Phil Wolff via Flickr.

Phil Wolff, in a recent blog post over on Skype Journal raised some potential questions about Skype’s growth when Skype announced that 25 million users connected to the Skype network on a recent Monday. Wolff pointed out it took seven months for the service to show 9.1 percent gain in daily online users.

In other words, it’s likely Skype is hitting a ceiling of usage of sorts, mostly because it’s now competing with many different communication-centric Internet services like Facebook and Twitter. Perhaps in order to overcome these issues, Skype needs to go partner up with different web players – like LinkedIn and Facebook (already in place) — to find new growth opportunities.

So perhaps now you know why Skype is on a hiring binge.