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Opera Acquires Skyfire For Video Optimization Tech; Implications

Opera SkyfireOpera Software, the Norwegian browser software company, has acquired Skyfire Labs, the maker of mobile browser Skyfire, for $155 million. The acquisition price includes a mix of cash and stock, with an upfront consideration of $50 million (which includes $8 million of cash on the Skyfire balance sheet) and performance based earn-out payments over three years.

Based in Silicon Valley, Skyfire Labs is known for their mobile browser Skyfire which provides telecom operators with a Rocket Optimizer technology that allows them to leverage on cloud computing to optimize videos and other multimedia on cell towers, including 3G and 4G LTE networks. The company claims that Rocket Optimizer provides mobile networks a 60% boost in capacity by reducing the size of the video. Apart from that, Skyfire also has an extension platform, Skyfire Horizon, on its mobile browser.

Although Opera did mention that it has acquired Skyfire for its mobile video optimization technology, it’s not clear when they would implement the technology on their Opera Mini browser and whether Skyfire will continue to offer a standalone product. Opera had recently announced that it has crossed 300 million monthly users on its platform, both desktop and mobile.

Presto To Webkit

The company also announced that it will eventually adopt Webkit rendering engine, used by Apple Safari and Chrome browser, instead of its own Presto rendering engine. However, Opera did inform MediaNama that the transition to Webkit from Presto on its mobile browser, Opera Mini, would be rather slow. Opera will also be launching a product at the Mobile World Congress 2013 that will be held in Barcelona, Spain by end of this month.

Implications

Another point to note is that when Opera does implement the video optimization technique to its browser, will the feature be free for its users? Currently, Skyfire charges its users to use its video tool bar feature for video optimization. Considering that Opera works closely with Handset manufacturers and telcos in India, we believe that it would tie up with telcos to provide a subscription free service. Besides, the feature might also benefit mobile internet users in India as it will allow them to consume less data. Recently, telecom operators such as Bharti Airtel, Vodafone and Idea hiked up 2G data tariffs by almost 30 percent to cover costs and improve margins. The 3G data plans are also not in the affordable range for most mobile internet users in India, which makes video streaming on mobile devices an obstacle.

The feature might also boost the mobile video platforms in India, which have typically been unable to monetize their platform partly due to low usage. However, these platform would require to provide domain level access to the browser to take advantage of its video optimization features. For example, the current Skyfire browser does not work on propriety protected flash players for sites such as Netflix, Hulu, among others.

On July 1, 2010, Skyfire shut down operations in a number of countries including India, however, this change applies only to Symbian and Windows Mobile versions. While Symbian might not be popular in the US, the smartphone platform still has a significantly large user base in India. Which begs the question whether Opera would include the video optimization technique on its Symbian browser as well?

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