Monday, October 29, 2007

Skype, Google to Push Phones to Free

Skype and U.K. telco's announcement of the Skype Phone is bad news for the telecommunications industry -- if it can succeed. Being able to make free mobile to mobile calls is intriguing to customers, but generating sufficient revenue from VOIP wireless won't be easy.

The Skype Phone is free for Skype to Skype calls in an effort to boost users who also use the phone for pay calls. The telcos get the benefit of any pay-for calls, but that may not be enough to subsidize the free calls. eBay/Skype hopefully has some interesting ad-based services in its back pocket. Once the phone is introduced in the U.S. eBay could make buying or bidding for goods online free.

According to Ovum analyst John Delaney:

We think 3 might have something of a hit with the Skype Phone – albeit within a niche, unless (1) it expands the range of handsets available and (2) it makes Skype In/Out available – at present only Skype-to-Skype is supported. The package is attractive, and the cost of acquiring it is low."

The Google Phone is likely to find a good advertising/search mix to finance free or low cost mobile phone services. (Hello CallSense?)

There will likely be a very chaotic time ahead in the next few years as the wireless applecart gets upset by these new services. Revenues will take a hit as new players will endure losses as they try out new models.

Posted By John Gartner at 08:47 AM
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