Google Voice Now a Viable Skype Rival with Gizmo5 Buy

Google Nov. 12 confirmed that it had acquired Gizmo5 for an undisclosed sum, giving the search engine technology that could help Google contend with PC-to-PC calling giant Skype. 

Gizmo5 makes Web-based calling software for mobile phones and computers. Specifically, it provides a Web-based VoIP client that lets users make phone calls over the Internet, similar to programs like Skype.

However, while Skype's software is a proprietary technology, Gizmo5 is based on the open SIP (Session Initiation Protocol) standard, though it leverages proprietary codecs.

The deal is the second purchase Google made this week, following the Nov. 9 acquisition of mobile ad giant AdMob for $750 million. While Google officials were explicit in explaining how AdMob provides mobile ad technology that Google lacks, the search engine was far less forthcoming in describing how Gizmo5 would fit into its portfolio.

Google said Gizmo5's engineers will be joining the Google Voice team "to continue improving the Google Voice and Gizmo5 experience."

Google Voice is a phone management application that assigns users a special Google number and rings work, home or mobile phones for its 1.4 million users. However, Google Voice can't directly connect calls made from one computer to another, or one computer to a phone the way Skype can.

Google has said Google Voice users can use the Gizmo5 client softphone as an endpoint, which means users can have calls forwarded from their Google Voice numbers and pick those calls up at their computers.

EWEEK asked Google how exactly Gizmo5 would be used with Google Voice, but a Google spokesperson merely referred us to this blog post and said: "this announcement does not change how Google Voice works today."

VOIP Watch editor Andy Abramson wrote that Gizmo5 will provide both software and PSTN termination, billing, etc. to Google Voice.

Some speculate Gizmo5 will evolve into a new version of the Google Talk voice and video chat application, supporting Google Voice and its many voicemail management features, including automatic voicemail transcription. 

For now, while current Gizmo5 users will still be able to use the service, Google is suspending new signups and existing users will no longer be able to sign up for a call-in number.

Still, many industry watchers agree this deal puts Google Voice and Skype, which Google reportedly tried to acquire earlier this year, on a collision course.

Search Engine Land's Greg Sterling noted that he uses Skype on an iPod Touch as a phone and spends $2.95 per month to make unlimited calls in the U.S. and Canada. He added:

"Expect a similar suite of calling plans and services to roll out from Google Voice, making the traditional telcos quite grumpy. Arguably Google has the capacity to popularize VoIP calling across networks in ways that even Skype cannot. Previously the Google Voice service required an underlying account and telephone  number from a traditional telco. Now it doesn't need one. When Google Voice originally launched, we asked whether Google Voice was going to become a "Next-Generation Telco?" The answer now is definitively 'yes.'"

Still, Google has a long, long way to go to catch Skype, which has 500 million users and is as much a sweetheart application for users as Google’s Gmail, Windows Live Messenger, AIM and other applications. Trying to dethrone that giant, which just got clear of some nasty litigation, will be an incredible challenge.