In the next few years, consumers won’t just send messages through traditional SMS or messaging services like WhatsApp, they’ll text and call through their mobile games and dating apps.That’s the vision of Layer, anyway.
The platform run by the man behind Google GOOGL +1.18% Voice makes white-label software that developers can use to put messages and free-calling services into their apps. For now that software is free.
The grand idea is that over time, smartphone users won’t need to jump into separate messaging services like Kik or WhatsApp anymore to chat, but rely on Layer’s sprawling communication system piped under thousands of the most popular apps.
Today Layer is tiny and still in beta, but it claims to have had 5,000 enthusiastic requests from developers to try out their software development kit (SDK) which adds messaging or calling with just a few lines of code. One early adopter is Povio, a Slovenian photo-sharing app that bolted on Layer’s chat service so that its users can message one another.
Layer’s business takes advantage of a recent shift in the way apps are made. Nobody codes an entire app from scratch anymore, but rather take blocks of code from other companies in the same way an automaker ships in different components to create a car. In the end, it’s cheaper. When a developer wants to put a payments service in their app, they’ll go to Stripe or Braintree. If they want a map, they’ll get the SDK from Google Maps. Want a voice recognition service? Try the SDK from Wit.ai.
Messaging hasn’t been as readily on the shelf — though it almost was at one point.
Back in 2010, Skype released a software tool kit that allowed other apps and particularly hardware builders to code Skype’s free-calling technology into their own. But three years later, Microsoft MSFT -0.22% had bought the company and axed that project as it sought more control over its own Windows ecosystem.
Layer now wants to fill that gap and, eventually, become a hidden texting and calling infrastructure that underpins the 1.6 million or so mobile apps that exist today. Apps like AirBNB or eBay EBAY +0.55% could let their users call one another, without revealing their real phone numbers or email addresses, and chat across different apps by cross referencing identities. (Developers can decide whether to give Layer access to their users’ address books.)
The whole undertaking sounds incredibly ambitious. “This stuff [is] really hard to do,” says founder Ron Palmeri. “In the phone system there is 100 years of interconnect agreements and phone numbering plans. A lot of that core stuff needs to be carried forward into the IP (Internet protocol) world.”
Palmeri previously founded Grand Central, a startup which marketed itself as “one phone number for all your phones, for life.” Google bought the company in 2007 and turned into Google Voice. In so doing, it stripped some of the app’s features and didn’t chase its potential as much as Palmeri had hoped. (It’s not inconceivable that Google held back from making Google Voice truly amazing, in order to play nice with the carriers who were distributing Android smartphones.)
Palmeri is still ironing out his business plan, though it appears he’ll charge developers based on how much bandwidth they use for calls and texting. “Our business will not be ad-supported,” he says. But licensing fees could still make a solid return, considering how much the market is growing. Revenue from messaging apps already looks set to outpace that of traditional SMS — messages sent by apps brought in revenues of $55 billion last year, according to Juniper Research. Rebtel, which sells over-the-top texting and calling software to businesses, is one beneficiary: its revenues have grown to $95 million in 2013, from $18 million in 2009.
Palmeri has made some big hires to match his ambitions, including Andrew Vyrros, a engineer who was behind Apple’s iMessage and iOS push notifications. Vyrros said in a blog post Wednesday that he joined Layer to build a platform that could “bring people together on a large scale.”
Layer also isn’t trying to hiring talent from the messaging space, but people who can build large distributing systems. Palmeri’s new chief product officer, for instance is Sarah Wood, who in a former life headed up the web department for the World Health Organization.
Layer clearly wants to be a platform, but not in the traditional sense. Today platforms like iOS and Android have clear gateways delineated by storefronts, or a grid of apps on the screen. Platforms of the future may be more hidden, and propagate themselves by offering back-end tools for developers to connect more apps together — on top of those now-dominant platforms.
That’s what Facebook is trying to do with AppLink, Parse and Anonymous Logins, a series of back-end tools for developers that it announced at f8, earlier this month. Rather than be the gateway to apps, Facebook wants to be the hidden fabric that binds them.
Layer is not the only company to be licensing free-calling software to other apps. There’s at least one other startup preparing to enter the space in the next week or two according to a source at a rival business.
One question is who these back-end services could become a problem for. If Layer becomes the giant squid of messaging, that could hinder WhatsApp’s goal of getting to two billion+ active users over the next few years. It could also amplify a growing headache for carriers, by moving yet more users away from SMS revenues.
That doesn’t seem to weigh too heavily on Palmeri’s mind: “The shift from conventionally paying for SMS and paying for phone calls, that ship has sailed for the carriers.”
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