VOIP: Alive, well and full of potential

Om Malik asks on his blog whether VOIP is dead or alive. It’s an interesting question and the answer is very different depending on how you define VOIP.

Many people associate VOIP with cheap voice calls using the Internet. This is what many early VOIP pioneers (Vonage being the biggest name) gravitated toward. They did this for one big reason: that’s where the money was. You could deliver services comparable to what PSTN providers were charging $40-$60 a month for at a much lower cost. The arbitrage opportunity provided a clear value proposition and revenue stream.

Unfortunately for Vonage and the others, that’s also where the sleeping giants were, with billions in revenue they needed to protect. Incumbent telcos have largely marginalized the standalone cheap call providers through more aggressive pricing, bundling, regulatory hundles and IP claims. At the same time, incumbents and cable operators have used VOIP technologies to lower their own operating costs.

But that’s also the least interesting, transformative aspect of VOIP. If you expand the definition to include voice paired with other aspects of communication such as presence and video, things get a lot more interesting — and we’re just beginning to see how transformative that cane be.

Skype has been a key innovator in this space. Over New Year’s, we introduced my parents to Skype. My mom could see our family in India, whom she hadn’t seen in months. My parents are very much laggards when it comes to technology; they don’t know how to text. But the clear value of Skype’s voice and video service had my dad pulling out his camera to buy a Webcam.

For work, I use Microsoft Office Communicator 2007 to interact with colleagues. No matter where I or my colleagues are in the world, I can see what they’re up to and communicate with them using text, voice or video. Or all of the above.

Communicator integrates with Outlook so I can see when they’re in meetings and don’t interrupt them. There’s also integrated conference calling. My office “phone” rings on my laptop. (It also rings on a dusty hunk of plastic on my desk, which I haven’t touched in months.) It’s the most powerful communications tool I’ve used.

There are two big challenges for this definition of VOIP: getting the technology in front of nongeek users and migration of more and more communications to wireless, where the carriers rule with an iron fist.

I’ll talk about each of these in future blog posts.


About Rakesh Agrawal

Rakesh Agrawal is Senior Director of product at Amazon (Audible). Previously, he launched local and mobile products for Microsoft and AOL. He tweets at @rakeshlobster.
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