From a consumer app perspective, the two companies have remarkable similarities. Opera’s browsers are best known for using server-side compression as a way of saving on data costs, and Skyfire uses server-side rendering for video, making it a go-to browser for those who really miss Flash on today’s platforms. This deal is doubtlessly about uniting those two strengths, but that’s not its main thrust.

This is really about mobile carriers: about offering them more control over the quality of their services, and about giving them ways to monetize their subscribers’ mobile web usage. And it may just be a push whose time has come. The key there is the carriers’ current shift to software-defined networking (SDN), which in itself is intended to give operators the ability to fine-tune parts of their networks in ways that were not previously possible.

As it happens, Skyfire offers operators a video optimization technology called Rocket, that is supposed to free up capacity – as much as 60 percent, the company claims — at cell sites that are currently feeling the strain of the mobile video explosion. Skyfire also has a toolbar called Horizon that carriers can preinstall on their phones in order to offer customers context-relevant coupons, for example. Mountain View-based Skyfire has three deals with U.S. carriers for the Rocket Optimizer and Horizon (Verizon was a big investor), and is apparently trialling them with ten other operators around the world.

Opera, meanwhile, has its Turbo compression technology, but it also has a mobile advertising platform called Mediaworks and a carrier service called Web Pass, which allows them to offer pay-per-use mobile web access through the browser. Across these two companies, there’s a lot to play with –- in terms of both technology and geographical reach (Skyfire is strong in North America and Opera in the developing world).

As Opera CEO Lars Boilesen put it in a statement:

“Both companies have evolved far beyond their browser roots. Skyfire adds capabilities to our portfolio around video, app optimization, smartphones and tablets, and strength in North America. With video expected to consume over two-thirds of global mobile bandwidth by 2015, and as time spent on Android and iOS apps explodes, we are excited to extend Opera’s solutions for operators.”

In the same statement, Skyfire CEO Jeffrey Glueck (who will hang onto that title while also becoming Opera’s Operator Business Unit EVP) said:

“Opera practically invented cloud compression to improve mobile user experience, and the team at Skyfire is proud to join forces and advance cloud solutions together. Opera’s over 100 carrier relationships, global sales team, and delivery organization can accelerate the global commercialization of Skyfire’s technology. Opera’s Mediaworks advertising unit with AdMarvel, Mobile Theory and 4th Screen Advertising will strengthen Skyfire Horizon by offering mobile operators a complete turnkey solution including ad optimization, ad sales, and rich analytics. The synergies across all the product lines for both companies are tremendous.”

Glueck also wrote a separate blog post that’s worth a read. In it, he expresses excitement about pushing Skyfire’s technology into the developing world, and also gives a nod to the rise of SDN:

“This is a major milestone for our Skyfire family and validation of our vision for cloud computing and network function virtualization (NFV) to solve huge problems on mobile networks, from handling the explosion of video over cell towers, to finding ways for mobile operators to regain relevance and monetize in an over-the-top world. Back in 2007, when Nitin Bhandari and Erik Swenson started Skyfire, the idea that Tier One mobile network operators would entrust the cloud for core network roles was considered bleeding edge. Now it’s a topic everyone is talking about, and Skyfire is making NVF combined with Software Defined Networking a reality.”

So what’s next for the merged companies? For a start, they will out new products for carriers over the next year that build on Web Pass with new ways of offering mobile web access, such as “toll-free data” and “ad-supported data”.

And by the way, if you love your Flash video and you’re worried about the future of the Skyfire browser, don’t be – Skyfire will continue to develop and support it.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How tomorrow’s mobile-centric data centers will look
• What Amazon’s new Kindle line means for Apple, Netflix and online media
• The future of mobile: a segment analysis by GigaOM Pro

New investor Panorama Capital is leading the round with participation from existing investors Verizon Ventures, Matrix Partners, Trinity Ventures, and Lightspeed Venture Partners.

Skyfire’s Rocket Optimizer provides carriers with a network optimization platform that can produce 60 percent average data savings for videos and 50 percent for images. The company has been deploying Optimizer on the east coast with a Tier 1 carrier, providing video optimization for tens of millions of users. Photo and other multimedia optimization is expected to be added next year, Skyfire CEO Jeff Glueck told me earlier this month.

Glueck didn’t say which US carrier is using Skyfire but it’s a good bet that it’s Verizon. He did say that the US carrier will be rolling out Optimizer across its network early next year.

The big opportunity now is to take the product that’s been tested in the US to carriers in Europe and Asia. The company plans on using its new funding to build up its presence in Eastern Europe, Japan, Southeast Asia and Australia and add to its London and Silicon Valley offices. Glueck told me recently that Skyfire works for both 3G and LTE networks and is in trials with six or seven carriers. And in a statement, he said the issue is even more pressing for European carriers, who are seeing 85 percent of their LTE network bandwidth being used up by video.

“Data deluge is crushing mobile operators, straining the user experience, and squeezing operating margins,” said Glueck in a statement. “Our new funding lets Skyfiretake our proven technology in North America to new regions on a global scale.”

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• CES 2012: a recap and analysis
• Dissecting the data: 5 issues for our digital future
• Connected world: the consumer technology revolution

Horizon is somewhat interesting from a technical standpoint since browser extensions are something we don’t see in mobile. And it provides some usefulness in the browsing experience. But the way it’s implemented can come off as bloatware.

Horizon will come pre-installed in the stock browser but can be turned off by users. It will sit along the bottom of the browser offering up third-party services, such as sharing buttons for Twitter and Facebook and tools for calling up content from Amazon, IMDb, Yelp and other services.

The toolbar is meant to be intelligent, so it can respond to what a user is viewing at that moment. For example, a person shopping on a site can a receive an alert from Blue Kangaroo about a relevant deal, offer or coupon about the brand they’re visiting. An extension from Quixey allows users to get recommendations on apps based on what they’re browsing at the moment. IMDb’s extension can tell you more information about a movie you’re reading about. Skyfire is trying to recruit more developers to build out extensions for Horizon.

Jeff Glueck, CEO of Skyfire said Horizon gives carriers a chance to engage consumers by giving them a great experience that is customizable and adds value. And he said that carrier can use the tool bar to advertise and message their users.

“We’re giving them the ability to add value and earn back some valuable beach front real estate,” he said.

That’s great for the carriers, but for consumers, I’m not sure they are going to see it as a plus. People aren’t clamoring for the old carrier portals and walled gardens of the carriers. They’re happy to pick and choose what apps they want and what websites they visit. I’m not saying that operators shouldn’t create apps, but pre-installing a tool bar in my browser comes off as a bid for relevance. And if it starts to get loaded up with ads, something AT&T has yet to do so far, it will be even more of a turnoff. We have enough ads in our browsing experience without inviting our carrier to pile on more.

I wish Horizon was somehow offered to users instead of being pushed on them. If it’s a great piece of software, consumers will embrace it. The browser is one of those great apps that reminds users of the power of their smartphone because it connects to the all the content on the web. I can see why carriers would want to be part of that experience but trying to take over a piece of real estate in my browser is more of a sad attempt to turn back the clock.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Carrier IQ and the continued erosion of operator trust
• 2012: the year of confusion for NFC payments
• NFC will be driven by marketing and loyalty, not payments

Skyfire cloud service Rocket Optimizer 2.0 launched in October, boasting the ability to handle LTE support and instant optimization for almost any video format. With the ability to apply granular controls for video optimization based on cell tower congestion, device type, subscriber profile and service plan, the company said it can effectively add 25-percent capacity to any cell tower with its technology. Skyfire is now looking to take its new funding and expand overseas, particularly in Europe and Asia, where it’s building out its footprint.

Skyfire is expanding its role serving mobile operators with the launch of its Rocket Toolbar for carriers, which will be able to create a customizable web-based portal embedded in the default browser on mobile devices. Rocket Toolbar builds off Skyfire’s earlier inclusion of sharing and social features in its popular web browser, giving operators a “beachfront property” on the browser users turn to most often. Carriers that use Rocket Toolbar will be able to customize a user interface with toolbar extensions that offer contextual recommendations, advertisements, app discovery, social sharing and friends’ news feeds.

Skyfire said it has two “tier one” North American carriers that will deploy Rocket Optimizer and Rocket Toolbar by this spring. Skyfire isn’t naming them, but Verizon has to be one, though it’s unclear which product they’re going to use. The company is breaking even in North America and is working on trials with European carriers.

With Rocket Toolbar, Skyfire is trying to help put carriers back into the heart of a user’s mobile experience. They used to be front and center with portals on their device decks, but with modern operating systems, they have been relegated more and more to data providers. Their attempts to include preloaded apps are criticized as bloatware. Now, with Rocket Toolbar, they can get much closer to consumers again on an almost daily basis.

But it’s unclear how consumers will take to this new UI over their browser. Some may find a lot more utility in Rocket Toolbar, which brings a lot of context and social discovery to browsing. But the carriers could overplay their hand by being too pushy with ads or recommendations that don’t provide clear value or by directing people to their own app stores.

Jeff Glueck, CEO of Skyfire, told me the toolbar is customizable and can be turned off by users if they don’t like it. But he said Skyfire has learned a lot of lessons with its browsers, which have been downloaded by 12 million users. Users are able to see what their friends have liked and shared on different websites, and they can get recommendations on what to read, making the browsing experience more engaging. He thinks carriers can benefit by providing these services, making some money and getting an opportunity to be in front of users.

“There is little real estate to let carriers offer new services. They have no touch points with users to offer value added services or sell advertising,” said Glueck. “That’s what Skyfire is all about: leveraging the cloud and letting carriers thrive in an over the top world.”

Skyfire’s approach, becoming the best friend of carriers, makes sense to me. The mobile data boom is real, and offering a smart compression solution should make it attractive to carriers. Getting Verizon as a backer should also provide a big shot of legitimacy as Skyfire takes its technology worldwide. I’m curious how consumers will receive the Toolbar, a lot of which will depend on how carriers implement it. But it’s another way in which Skyfire is capitalizing on the needs of operators.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• U.S. Wireless Data Market: Q4 and Year-End 2008
• Survey: How apps can solve photo management
• Forecast: Global mobile subscribers and handsets, 2012-2017

Skyfire said with Rocket 2.0, it can deliver bandwidth savings of 75 percent on smartphone video, and an average of 60 percent across all devices. New carrier customers can take advantage of 2.0 upgrades that include LTE support, instant optimization for almost any video format and the ability to apply granular controls for video optimization based on cell tower congestion, device type, subscriber profile and service plan. The company said it can effectively add 25 percent capacity to any cell tower with its technology.

The first iteration of Rocket provided similar savings for videos that could be compressed, but it only covered about 30 to 40 percent of video streams, because it didn’t handle MP4 instant optimization. Now, with MP4 support, Rocket can optimize more than 90 percent of videos, which make up a large percentage of mobile data. Cisco has said video will hit 53 percent of mobile data by the end of this year and will represent two-thirds of mobile data by 2015.

“Rocket 2.0 is the world’s most scalable video optimization solution for mobile operators struggling to deal with the explosion of mobile video and multimedia,” said Skyfire CEO Jeffrey Glueck. “The technology will deliver game-changing cost savings for beleaguered wireless operators, as well as better user experience on the network.”

By helping carriers compress those streams, Skyfire said it can help a tier one carrier save $100 million annually in deferred capital expenditure and operating costs, making the investment pay off within months. Skyfire said a U.S. tier one carrier is going to use Rocket 2.0, but it couldn’t say which operator. It could be Sprint, which mentioned last week at its strategy update that it was going to start using video optimization along with Wi-Fi offload to help it achieve 20 percent reduction in data. Skyfire said it’s in trials with a number of other carriers in Europe and the U.S.

I imagine Skyfire will have more takers of its video optimization technology. Carriers are going to have to get more creative with how they manage their bandwidth, and compression makes more and more sense. Opera is using it for its mobile browsers, and Amazon is also introducing the idea with its Silk browser. Apps like Onavo are also trying to help tame exploding data usage.

If a carrier can ensure that all video over its network is optimized for each particular device and network conditions, it makes it easier to provide better service for all users. And it can help the operators defray the growing costs of upgrading their networks. This is a problem that isn’t going away, and it makes sense for Skyfire to gear up for this opportunity.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Controversy, courtrooms and the cloud in Q1
• Where the next-generation console fits in today’s video game market
• How consumer media will change in 2013

Skyfire uses a cloud-based delivery service to stream video on mobile devices. The architecture has proven popular with iOS and other mobile users, who are able to use the Skyfire browser to view Flash video content. The company last year tallied 3 million downloads of its browser, including a free Android version as well as $4.99 iPad and $2.99 iPhone versions. But the secret sauce of Skyfire isn’t in delivering Flash video, it’s in optimizing video on the fly for each mobile device so that the stream caters to the device and network conditions. Essentially, it sends no more data than is necessary at that moment.

That’s what is catching the interest of operators. CEO Jeff Glueck told me SkyFire’s first U.S. carrier trial should be announced by the end of the first quarter. Glueck said SkyFire is also in talks with another major carrier in the U.S., as well as a European operator. He said carriers are interested in Skyfire’s delivery system because it can reduce mobile traffic by 75 to 80 percent by transcoding the video for mobile use. While some mobile video providers — like Netflix — adapt their streaming video for mobile devices, Glueck said most do not, sending way more data than is necessary for a small screen. By installing Skyfire’s technology into its own data centers, big carriers can reduce the traffic and ensure more bandwidth for all users.

“This is where we want to be, embedding our technology in carrier networks and devices,” said Glueck. “If we can get deployed in the network, we can optimize all video, all apps and almost any format.”

This is could be a key tool for operators facing a data tsunami. Cisco recently reported that worldwide mobile data traffic is set to increase 26-fold between 2010 and 2015, reaching 6.3 exabytes per month, fueled in large part by mobile video. Last year, Cisco said global mobile data traffic grew by 2.6 times for the third year in a row, even with a slow economy, increased traffic offload and the advent of tiered pricing. Video traffic is expected to eclipse 50 percent of all traffic this year and is forecast to reach 66 percent by 2015, Cisco said. With that in mind, it makes sense for carriers to look at Skyfire and other providers like Bytemobile, which has also been active optimizing web traffic for carriers.

Glueck said operators will still likely turn to tiered-data packages and network management techniques to get the most out of their networks and manage usage. But he said Skyfire can play an important role in helping carriers make the most out of their limited resources. Even with the launch of 4G, Glueck said it’s only a matter of time before those networks also experience massive video traffic. Optimizing mobile video will allow carriers to treat all video traffic equally instead of singling out a provider, which is also in line with the net neutrality rules passed by the FCC.

Skyfire can host the traffic themselves for smaller carriers. But in many cases, it makes sense for an operator to license Skyfire’s software and run the software from their own data center. It will better ensure that there are no capacity issues, something that Skyfire encountered briefly when it launched its iPhone browser. Glueck said Skyfire’s approach is likely to be popular with carriers because it can work off of commodity servers and doesn’t require a special hardware.

There isn’t going to be any one solution to head off the coming mobilpocalypse. As my colleague Kevin wrote last year, carriers are also looking to handle increasing data usage through Wi-Fi offload, better idle features for devices, metered payment plans and in-home femtocells. If Skyfire’s trial goes well, add video optimization to the list.

Related GigaOM Pro content:

• Mobile Broadband: Pricing for Profits
• Metered Mobile Data Is Coming and Here’s How
• Everybody Hertz: The Looming Spectrum Crisis

Why Netflix Has Content and Google TV Doesn’t; not only does Netflix possess more content but the company is far ahead in building out a distribution infrastructure. (CNET)

Pay-TV Market Study Reveals Segmentation Upside; in an on-demand, personalized world some service providers are already voicing their intent to offer more flexibility in their pay-TV service options and associated pricing. (Cisco blog)

iPad App Released for Sky+; Sky has issued an upgrade to its iPhone application, taking full advantage of the features available on the Apple tablet and allowing Sky+ or Sky+ HD subscribers to search for and record their favorite programs. (Broadband TV News)

Starz’s 2-Year Results Defy Warnings of ‘Cord-Shaving’; a look at the premium channels Starz and Encore — whose content is fully available for streaming on Netflix — suggests no cord-shaving is yet occurring. (VideoNuze)

Discovery: Dish Does Not Have Right To ‘Sling’ Its Content To Web; Discovery Counsel Tara Corvo has told the FCC that Dish does not have that company’s permission to deliver Discovery’s channels using its new Slingbox-based TV Everywhere app. (Broadcasting & Cable)

SkyFire for iPad Launching Tonight For $4.99; the company announced that the iPad port of their browser has been approved by Apple, after just 7 days in the approval queue. (MobileCrunch)

Introducing Tunerfish for Android; the Tunerfish Android app brings all Tunerfish functionality to the palm of your hand. (Tunerfish Blog)

Skyfire cost users $2.99 to download on the iPhone, even though the browser is available for free on other platforms. When it was initially made available in the App Store, it was downloaded more than 300,000 times by users anxious to get Flash access on their devices. I was one of them, and I wasn’t all that impressed with the experience Skyfire provided.

According to MobileCrunch, Skyfire’s take was between $600,000 and $700,000, after Apple’s 30 percent cut. That’s pretty good for an app that was only available for a few hours before it was pulled due to strain on Skyfire’s servers, which handle the conversion of Flash elements to HTML5, then beam that back to user devices. The browser is now being released in batches, so that Skyfire can better scale its back end to keep up with demand.

Steve Jobs has famously insisted that Flash will never appear natively on iOS devices. The reasons include resource management and power demands, among others, and while Jobs may be right that Flash isn’t all that great, or even necessary, it looks like the average user has yet to come around to his way of thinking. Skyfire’s success shows there’s still strong demand for Flash access on the iPhone, and no doubt if an iPad version arrives, we’ll see similar results.

But what’s driving demand? Skyfire doesn’t allow users to play Flash games, so that’s out, but it does offer access to lots of U.S. streaming TV video content, including The Daily Show and South Park. I think that’s where the real interest is coming from. Despite the fact that many sites are now offering video in both HTML5 and Flash format to ensure a uniform experience across devices, some of the last to act have been television networks, which provide content the average user wants to be able to watch.

Flash may be on its way out in the grand scheme of things, but for the time being, it still has the support of the average user. That’ll likely remain the case, too, at least until networks and network partners like Hulu opt to use something else instead.

Related content from GigaOM Pro (sub req’d):

• The Future of TV Can Bet on “Apps Everywhere”
• Why Apple Hasn’t Sewn Up the Tablet Market — Yet
• Bunker Sesssions: Is App TV Coming Next?

UPDATE: Skyfire has been pulled from the App Store by Skyfire, not Apple, due to high demand. Skyfire’s current server capacity can’t handle the load, but the company is planning to retool and reintroduce the app.

You can now get the much-hyped Skyfire browser for your iPhone, which brings the ability to watch Flash content. You won’t get that for free, though, as the price is $2.99 at launch, which is described as an “early adopter price.” So is it worth it?

Skyfire works by sending Flash content to its servers, transcoding it using a proxy and sending it back to your device as HTML5. However, it has its limitations. If you were planning on watching Hulu on your device through its website, for instance, you’re out of luck, since it isn’t supported. It also won’t work with Flash games.

It does, however, play Flash video without issue on many sites, and provides audio, too. In my experience, it worked often, but when it didn’t, I was very disappointed. For example, streaming video from network sites here in Canada didn’t work at all. Other sites, like Current TV worked fine, albeit with some slowdowns likely caused by strain on Skyfire’s servers.

Is it worth $2.99? Well, it also offers a private browsing mode, related search terms automatically combed from every site you visit, the ability to select whether pages load mobile or standard versions by default and a Facebook quick view feature that makes posting to and viewing your account while browsing easy. So as a Safari alternative, it isn’t without merit.

Even with all these features, though, and with Flash capabilities, I’m not sure the app is a good buy. It seems to run slowly, and video conversion quality can vary greatly depending on the quality of your connection. Finally, it seems most are warming up to HTML5, so iOS incompatibility with Flash may not even be an issue for much longer.

If this app had been around two years ago, it might have been worthwhile. Then again, the only reason Apple approved it now is probably because it knows it pretty much won the HTML5/Flash video war at this point, anyway.

Related content from GigaOM Pro (sub req’d):

• Can Anyone Really Compete With the iPad?
• Author to Audience: Disintermediation in Publishinge
• HTML5’s a Game-Changer for Web Apps

Also this week, Skyfire released the second major version of its web browser, and the first for the Android platform. Skyfire 2.0 is aimed at bringing full Flash video support through its server-side rendering of web pages. It also includes what’s known as the SkyBar, a toolbar that aids in video playback, makes it easy to discover new web content and to share discoveries with social network friends. The browser is free and available in the Android Market.

And finally, the Droid Incredible by HTC was officially released on the Verizon network this week. Boasting a 1 GHz Snapdragon processor, 8 MP camera and the latest HTC Sense interface, the phone is aptly named — and may just be the best Android phone on the market. Check out my photo tour of the new device here.