Google Voice and the Bigger Picture

I've pretty much gone AWOL from blogging this week, as I'm fully immersed with the Smart Grid Summit, which you'll be hearing more about quite soon.

My last post was way back last Friday, where I commented on the Google Voice/Gizmo5 news. There's more to this development than meets the eye, and I think it has potential to truly disrupt the voice market even further than what's been done already.

I don't have any bandwidth to comment further today, but here's the next best thing. Fellow blogger Andy Abramson weighed in with a lengthy post today that speaks to a lot of what's been on my mind. He's been in this since Day 1, and gives a great history lesson about all the false starts in VoIP to date from the IM players and the cablecos.

Skype is a case unto itself, but otherwise, Google Voice now looks to be the next one to really get it right. Echoing Andy's post, yet again, the most important disruption is coming from outside the voice industry, and with Google's clout, this should be sending shock waves through telecom.

Andy was a thread that ran throughout my post last week, and he's done a great job here with his perspective on Google. He's got a pretty unique vantage point for this space, and I encourage you to give this post a read, let it simmer a bit and think about what it could mean to you or your business. We all use Google to varying degrees, and to pass this off as not being relevant would be a mistake.

One way or another, I'll find a way to add my two cents next week.

Google + Gizmo5 = More Disruption

Voice continues to be a really interesting space, and while I was attending Cisco's Collaboration Summit this week, a couple of notable developments took place. On the topic of disruption, Cisco is doing its best to upset the apple cart and reinvent itself as a software company. During their summit, we got a steady diet of collaboration, video, cloud services and the new world of work, but never a word about routers. Anyhow, you can review my earlier posts this week for more about that.

Back to Google. I'm going to keep things short and steer you to a nice piece that ran in Wired on Wednesday. It sums up the Google/Gizmo5 story quite well, and give appropriate kudos to uberblogger Andy Abramson, who has been on the right side of deals like this for some time. Many of his clients have had successful exits, and he's been writing about Michael Robertson and his Gizmo venture for ages. Great to see Andy get his due in a publication like this.

More importantly, Google is methodically building on their earlier GrandCentral acquisition (another Andy thread here) to create a bona fide service in Google Voice that should be cause for to concern to anyone in the voice business. In some ways, this could be the first serious challenge to Skype, especially since Gizmo5 is totally SIP-based, and can connect to all the mainstream IM platforms, including Skype - and Skype can't do that. So, this has the potential to become a truly global any-to-any service, and if the quality is there, this can be a big deal.

I say so for two simple reasons. First, between GrandCentral and Gizmo5, Google has move to the head of the line without even spending $100 million. They've been accumulating fiber for years - not likely at great expense - and through the wonders of the Internet and an endless expanse of server farms, they can now compete against any carrier in any part of the world, all of whom are struggling to compete under the weight of complex, expensive communications networks.

Not only that - my second reason - but Google doesn't need to make money with voice - at least right away. Skype needs every penny it can get from subscribers since that's their only real revenue source. Google still makes most of its money from advertising, so they can run Google Voice without much regard for making money, which is a luxury no other operator can afford. Pretty interesting set of circumstances to say the least.

Anyhow, I have three posts to steer you to that cover the ground very nicely. First is the Wired piece I referred to earlier; second is Andy's post - which ran before Wired's story, and finally, Andy's post from today, which notes that the deal is now official. I'd say everyone connected to these posts is pretty happy today.

While I have you, Google/Gizmo5 isn't the only deal going on this week of note. These things always seem to happen while I'm away. A step or two away from the world of Google Voice/Google Talk is Jajah, a company I've followed and written about for a while. Sooner or later you know they'll be a target, and you may have picked up on this from TechCrunch. I don't have anything new to add, but this item doesn't surprise me in the least. They are another disruptor like Google, and following Ribbit's acquisition last year by BT, these companies are truly validating Web 2.0 as a platform for creating, hosting and providing all forms of communications services. This is not good news for incumbents.

Finally, let's not forget Logitech, who have made their second video acquisition of note. Following last year's pickup of SightSpeed, this week they announced their deal for LifeSize, valued at $405 million. This deal pales besides Cisco's dogged attempt for Tandberg, but together, all of this activity points to some serious consolidation coming in the video space. And this brings my post full circle to Cisco. For them, video is every bit as disruptive as voice is for Google, and when players of this size make moves all at the same time, you know big things are coming. It's made for a busy week, and I'm happy to end the week posting about it.

Away to LA Today - IT Expo and Smart Grid Summit

Am flying out this morning to Los Angeles for I expect will be a great week between the IT Expo and the launch of our Smart Grid Summit on Tuesday. As noted earlier, this is the 10th anniversary of TMC's flagship event, and with all the challenges faced by telecom conferences in the past year, the Expo continues to stay fresh and explore new opportunities.

Last year they added a wireless event - 4GWE - which is becoming a conference of its own, and this year they've added a sister event - Machine-2-Machine and ours, the Smart Grid Summit. All of these represent new markets for TMC, and aside from what I'm doing with the Summit, you have to give kudos to Rich Tehrani and his team for evolving the Expo experience and staying on top of the leading trends.

I've done plenty of shout-outs and posts to promote the Smart Grid Summit, and at this point, you'll have to find them on your own - or just go to the Smart Grid portal.

Otherwise, I'd like to steer you to a post from Friday by Andy Abramson, who echoes my comments here, but in more detail and more objectively. If you're still sitting on the fence about coming to LA, I hope Andy's thoughts will get you off it and on your way. You might be thinking I'm attending so I can see Manny and the Dodgers - although it certainly crossed my mind - but the Expo will keep me pretty engaged all week, and I'll have plenty of distractions going on where I'll be. Come on out and see for yourself.

iPod Touch - Bringing SIP to the Masses

Andy Abramson had a notable post yesterday about the new iPod Touch.

I don't post much about consumer gadgets since I don't use them, but I do see how my youngest son uses the iTouch, and it's not hard to see how things can unfold once you become totally dependent on one. As Andy notes, the "rumored" new iTouch will have everything you need to make it a poor man's iPhone - built-in mic, lots of memory and WiFi support. That's great news for mobile WiFi, and validates the touch-screen interface big time. With a touch-screen, pretty much any broadband-enabled/WiFi supported device can become a phone, whether it's mobile, bolted on to a wall, or projected from a really smart gadget on to your kitchen floor.

Scary, huh? I had similar thoughts earlier in the year, when posting about the first wave of VoIP apps on the iTouch from Truphone, and wondered how much this will cannibalize iPhone sales. I agree with Andy, though. For most teens/pre-teens, the iPhone is not affordable, mobile contracts are expensive, and adding voice to their iTouch will tide them over just fine.

I also wanted to echo Andy's thoughts on the bigger picture. Aside from this being good news for mobile VoIP - along with the booming opportunties around mobile video - it's really about bring SIP to the masses, something many people have long been waiting for. With mass-market products like the iTouch and super-cool brands like Apple, we now have the pieces in place to support consumer-friendly, SIP-based multimedia apps and mashups that will make the iTouch even more sticky. When that happens, I'm starting to think this could make the iTouch a bit like a scaled-down Microsoft Surface. When you start thinking of the iTouch like that, then the possibilities with SIP get pretty exciting. Has there ever been a better time for innovation?
By the way, if you don't know about Surface, you should - and you've come to the right place. This is a bit of a sidebar to the iTouch story, but I think it fits. My oldest son and I got one of the very first private demos of Surface in North America about 2 years ago, and it's pretty cool. You're going to hear a lot more about Surface going into 2010, and I think Microsoft knows they have more competition on their hands now that Apple has made the touch-screen mainstream. I'm going to let that thought hang out there a bit, and maybe follow up with another post. It's got me thinking...

Time Magazine's Top 10 Tech Failures - Vonage?

Here's an item that's bound to get a few people going. Top 10 lists are everywhere, and we all know their real purpose is to start a conversation since people rarely agree on these things. On that count, Time Magazine has succeeded. They just came out with a new list - "10 Biggest Tech Failures of the Last Decade". How can that NOT get your attention, right?

I don't normally read Time, but two paths led me here. First was Andy Abramson's post from today. He and I basically agree, and I'll amplify his thought a bit in a moment. The second is my son Max, who for some reason has recently started reading Time. Great to see him following the news of the world, since - like most teenagers - he doesn't read the local paper and hardly watches TV. Your guess is as good as mine as to why he'll pick one form of mainstream media over another, but at least he's reading. That's definitely another topic --- but not now.

Anyhow, their top 10 list is an attention-grabber, and includes some expected flops like Vista, Iridium, satellite radio, and yes, YouTube. Hard to argue with these, but seeing Vonage on that list certainly caught my eye.

I totally agree with Andy that Vonage was a disaster as an investment story, but we would both strongly disagree it was a tech failure. This is how these top 10 lists suck you in - we can't resist when winners and losers are identified in the media. Tech has been a dirty word on Wall Street lately, so we love reading about "failures". Reading over the criteria that define's Time's list, there's a disconnect to me between a company or a product failing and the technology itself failing.

Would Vista be considered a failure? As a product, probably - but Microsoft is doing just fine as a company(arguably), and no one would dispute how successful their desktop OS has been. Sirius XM - no argument there. The company is not a success and satellite radio has not taken over the world. The underlying technology isn't really the story here - it's really about a new business model to monetize radio. On and on we go - it would fun analyzing each one of these, but that's not why I'm doing this.

Let's just move on to Vonage. Has the company been a failure? I'd have to say yes, and you don't have to look far for supporting evidence on a financial basis. Sure, they're still operating, and they just shifted their marketing strategy to voice quality instead of price. It's probably too little too late, but at least they're trying. Has the product been a failure? I would say no. Today, Vonage is a solid, mainstream residential VoIP service. It's not the best, it's not the cheapest, and it's not the most cutting-edge.

However, it's got great brand recognition, a track record, a critical mass of customers, and for consumers, it works pretty well. That's not a failure in my books. As far as pure-play VoIP offerings go, they're pretty much the last one standing in the U.S. While they've probably peaked in terms of subscribers, they wouldn't still have 2.6 million customers - in spite of all the nasty litigation and value-priced Triple Play bundles out there - if the product was not fundamentally sound.

This brings me to the third aspect that defines "failure" - technology. Here's where I would object the loudest and longest. I've followed Vonage longer than almost anybody (and am on record as one of their staunchest supporters). This is where I think Time has got it wrong. When Vonage went public, they owned the residential VoIP market, and had over 50% share for a long while. There is absolutely no doubt they did more than anyone to build the foundation for VoIP in the U.S. I've long called Vonage the Kleenex of VoIP - the two words are synonymous. Without Vonage, we wouldn't have a consumer VoIP market, and guess what, they've outlasted CallVantage.

When Vonage started making noise in 2004, the RBOCs - as they were called then - got very nervous as the media was trumpeting the likes of Vonage as the successors to dinosaur telcos that would make them obsolete. This led AT&T to engage in an aggressive marketing campaign to compete head-to-head with their CallVantage service. A price war ensued, with the incumbents hoping this would drive Vonage out. It failed, and ultimately, AT&T was acquired by one of its offspring - SBC - for an embarrasingly low amount of money. It's a much different story today, but at the time, it sure looked like Vonage was going to kill the telcos. Fast forward to today, and you could argue that VoIP has failed as a technology because for all its effort, Vonage, barely has 3% of the market.

Sure, that's laughable, but if you don't think VoIP is the future of telephony - not just residential - then you probably think Iridium, Vista, HD DVD, and the rest of Time's top 10 list still have a chance. Vonage may have topped out as a market player, but they've long conceded that the cablecos now own the consumer VoIP space. While most of the growth in consumer telephony is wireless, there are still around 90 million landlines out there in the U.S., and there's no doubt that VoIP is going to become dominant there. And guess what - once we get LTE, WiMax, 4G etc. up and running, VoIP will do to mobility what's it's done to landline. I could go on, but I'm sure you get the idea. So, thanks Time for getting my attention, and next time, please be more careful - or consistent - in making these choices.