Google Voice, Skype Are on a VOIP Collision Course

When eBay announced Sept. 1 that it was selling off 65 percent of VOIP giant Skype, the New York Times reported that Google was one of the losing bidders bested by Silver Lake Partners and other investors.

What’s interesting about that idea is that Google already has a Web calling application in Google Voice. Why would Google want to acquire Skype when it already has a voice-over-IP application?

Google Voice and Skype may not yet be direct competitors, but Google is enriching the application and could put it on a collision course with Skype, particularly if it integrated Google Voice with other existing Google Web services.

Google Voice is not a VOIP application the way Skype is. When a user installs Skype on his computer, he may use it to call another computer, land line or mobile phone. He can also trigger video calls between computer users and send SMS (Short Message Service) messages. Skype also offers international calls at a lower rate than phone providers, a service that helped attract many of Skype’s 481 million worldwide users.

Google Voice gives users a phone number that can forward calls to any other number they want, including home, office and mobile numbers. Google Voice will route incoming calls through to all of these numbers to find the user. Users can also dial out via Google Voice, designating the phone on which they will take the call along with the number they want to dial.

“The goal of Google Voice is to provide you with a tool that lets you control all of your phones,” a Google spokesperson told eWEEK recently. “We want Google Voice to be endpoint-agnostic … to work with any endpoint but be able to manage and control your voice communications based on the devices you’re already using.”

If the user doesn’t pick up, Google Voice takes a voice message, which can be transcribed into text automatically and sent to the user via SMS or e-mail. Users can also listen to messages by logging into the Google Voice Website or clicking a link in the notification e-mail. Google also just added the ability to receive and reply to SMS messages via e-mail. And, like Skype, Google Voice lets users initiate low-cost international calls.

“Google Voice is not a VOIP client in the traditional sense, unlike Skype or Gizmo,” eWEEK’s Andrew Garcia wrote Aug. 3. “Because Google Voice forwards calls everywhere, the service will use VOIP to route calls around Google’s network, but all calls will hop off to the PSTN [Public Switched Telephone Network] or cell networks to find the callers at the designated endpoints.”

Google Voice and Skype are different, but this isn’t a case of comparing apples with oranges so much as a case of comparing McIntosh apples with Granny Smith apples. Both are calling services and both have tradeoffs. Skype goes the extra mile by calling computers and phone numbers directly. But Skype doesn’t have automatic transcription to voice mail and other features unique to Google Voice.

Building a Complete VOIP Solution

Google itself views the Google Voice and Skype services as complementary. Google Voice supports the Gizmo Project softphone as a forwarding phone, or an endpoint, which means users can have calls forwarded from their Google Voice numbers and pick those calls up at their computers.

If Google acquired Skype it would be able to do the same with that VOIP client, but with a much broader customer base. Yet, as the Times story alluded to, now that Skype has the dark cloud of the Joltid lawsuit hovering over it, it might behoove Google to develop competing VOIP services if it wants to own those endpoints.

IDC analyst Rebecca Swensen told eWEEK that Google Voice could be linked to Google Talk to approximate Skype’s PC calling services. Google also offers video chat via Gmail, which could theoretically be added to any VOIP platform Google was considering. Google would also need to build transport services to carry the calls. For now, Swensen said, Skype and Google Voice users will continue to use both solutions independently.

Swensen added, “Google Voice is really popular with businesspeople, as they really value the advanced telephony management capabilities. That demographic will sometimes have a few different solutions they work with to find the best value for each situation. For instance, they would have Skype and a mobile VOIP provider like Talkster in addition to their wireless provider. Google Voice would be more of a competitor to the Talksters of the world, as it offers the cheap international calling but includes the call management and voice mail-to-e-mail capabilities.”

Enderle Group analyst Rob Enderle told eWEEK the primary driver for VOIP with consumers is cheap long-distance calling, which Skype and Google Voice both offer. He also said swallowing Skype would have been quite a challenge for Google.

“Buying Skype would give Google the infrastructure and customer base of the larger service, but Google hasn’t really done much with billed services,” Enderle said. “They don’t yet seem to get that the long-term economics of ‘free’ generally aren’t sustainable if there is much cost involved. So buying Skype would be a market grab, but sustaining it might be problematic for them.”