Wednesday, May 18, 2005

When (will?) Google enter VOIP race with Skype Yahoo! and MSN

First of all, I have to disclose that I am the biggest fan of Skype. They are the first true VOIP player that have delivered an awesome customer experience and I continue to be a huge enthusiast.

In fact, I think VOIP has huge implications. I have now benefited from the service for two years and it has saved us thousands of dollars in phone bills. In fact, at our startup we used to just rely on email and instant messaging until Skype came along. What a liberating service. It truly brings the world closer together.

However, Skype's success has not gone unnoticed. MSN beefed up its offering and Yahoo! just announced in a misleading way that they entered VOIP. Sure, they entered VOIP but it is really just VOIM (voice over instant messaging). That is great, good enough for me to use Skype initially but will it be enough to catch up?

Google had a lot of people at the last VOIP conference and I am wondering what they have up their sleave. They already entered email and are the only major player without an IM or VOIP client. However, how will they do? Do people want to create yet another buddy list? Google succeeded with Gmail because both Yahoo! and MSN stopped innovating their email applications. This can hardly be said about Skype.

If (when?) Google enters this space, and I am sure they will given the compelling strategic rationale, who will end up winning?

Can Google compete against a nimble fast moving startup? This is going to be an interesting race to watch. My gut tells me that Skype is going to do pretty well, however, they will need a big war chest and strong partners to survive a battle with Microsoft, Yahoo!, Google, and the telecoms. Talk about a competitive market.

I guess that is what happens when hundreds of billions of dollars are at stake. The US telecom market alone (fixed and wireless) is already $200+B per year.

Mike
Blink It

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