Summary:

In recent months I have become downright pessimistic about the future of voice-over-the-internet service providers, mostly because of a looming price war, and lack of killer features. Replication of ideas never bodes well for the industry. We saw that when half-a-dozen pet supply retailers came online […]

In recent months I have become downright pessimistic about the future of voice-over-the-internet service providers, mostly because of a looming price war, and lack of killer features. Replication of ideas never bodes well for the industry. We saw that when half-a-dozen pet supply retailers came online during the dot.con bubble. Similarly, everyone is a phone company now. Not good. However, back in the day, my advice to folks who asked me about how to play the future, was invest in chips. Nothing works without them, and nothing would ever be possible without them. My recommendations (thanks to some prescient tips from Wall Street insiders) were companies like Applied Micro Circuits, Vitesse and PMC Sierra. So in order to skirt the VoIP madness, the best thing to do is look at the chip makers. Texas Instruments is going to make money, whether Vonage does or not. Same is true of Broadcom, which just announced that it has started selling its BCM11xx family of IP Phone chips to Inter-Tel. Centllium has started making some headway in this market as well. WiFi-VoIP combo chips are the next big opportunity, I think. (Could be wrong, and that won’t be the first time.)

By Om Malik

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