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Summary:

Yahoo was the first one to launch a salvo at Skype by offering a penny-a-minute calling, betting that its low price offering would help it gain market share and lure users away from Skype. (Service will be available next year… but the press release is already […]

Yahoo was the first one to launch a salvo at Skype by offering a penny-a-minute calling, betting that its low price offering would help it gain market share and lure users away from Skype. (Service will be available next year… but the press release is already out!) Well, now there is word that SIPphone will be announcing a 1 cent per minute calls anywhere in the US tomorrow. (Mac users can simply use the Gizmo Project client to make outbound calls!) Trying to outdo Yahoo (which is offering penny-a-minute calls as a promotion), SIPphone is going to make 1 cent/minute calls a standard rate for PC-to-PSTN calls.

Ironically, Microsoft will start allowing PC-to-PSTN calls tomorrow using MCI network. (I had reported this earlier.) Their price: 2.3 cents per minute. This is turning into a brutal price war, and sooner or later others such as Skype, Vonage, Sun Rocket etc will have to respond. I do wonder what Jeff Pulver thinks about this? On further thought, Skype predicted sales of around $200 million for 2006, and a nice chunk of it was supposed to come from licensing revenues. I wonder how big is this PC-to-PSTN market? Not very, I assume!

PS: Andy Abramson, beat me to the punch and blogged the news before even i could turn on my Powerbook. What’s worse, he was sitting right next to me, and sipping his expresso. Also, why does Microsoft come-up with product names only a sadist can love. “MCI Web Calling for Windows Live Call” ….

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  1. Yeah well. Gee shucks. Guess I’m learning from the master.

  2. Cool, I just ditched Skype for Gizmo the other day.

  3. What I would do is I allow any interconnect provider to offer thier services, just like dial aroundservices in PSTN. Except there is no need for extra digits or two staged dialing because they could be handled by UI. But then it is just me.

  4. i almost moove to Gizmo,
    BUT have you seen pprices out of the US.
    it is easy to say i offer 1 cent per minute within US and 4.9 cent pper minute to call European countries…
    i prefer skype or Glootix.com

  5. just use voipbuster, US landline and mobile calls are FREE!! and th equality is great, better than skype.

  6. Om you’re hilarious….I like your comment on the “MCI Web Calling for Windows Live Callâ€? …I am LMAO!..Keep rockin…I think MS lacks the creative ability…they just go with whatver comes to there mind i guess!..which is pretty lame…I wouldnt even remember it the next time…

  7. Tech News Plus » We Get It: Calling Phones From Our Computers Will Be Damn Cheap Tuesday, December 13, 2005

    [...] Uncategorized Last week the story spread pretty quickly that Yahoo was launching integrated PC-to-phone calls (and vice versa) through their instant messenger program. The official press release should be popping out of Santa Clara in a few hours, but to make the story more interesting, Microsoft has timed it to announce their own version, based on their Teleo acquisition and a deal with MCI. At first glance, the Microsoft announcement falls short in almost every way to Yahoo’s. Yahoo’s prices are going to be less than half of Microsoft’s (and Skype’s) and rather than working with just one provider (MCI), it appears Yahoo is leveraging relationships with a number of different telco providers, giving them more flexibility. [...]

  8. How many users does SIPPhone have?

  9. about 250,000 or so

  10. from VOIP Watch:
    “Already SipPhone has embedded SIP servers in the University of California campuses across the state. That means students can make free direct dial calls to one another and home using Gizmo and Gizmo out. They can add a Gizmo In number as well.”

    wow! that is big news, isnt it? what does this mean for skype and others?

  11. Microsoft should have let MCI (read Verizon) name the service. Would have been “fooniqy” or something equally profound . . .

  12. Om, this VOIP battle is going to become the battle of attrition. Almost all well funded players are going to be be in this arena. Calls are really cheap at a penny a min. Where do the major players go from here? Where does the question of breaking come in? Any thoughts?

  13. Price War are Heating Up – PC to Phone: 1 Cent per Minute · 3G. IP-Communication Solutions Tuesday, December 13, 2005

    [...] Also Om Malik and Jeff Pulver have the insight on the issue. Technorati Tags: Broadband IP Communication SIP Skype voip [...]

  14. price: land lines are 24/7/365. for 1 cent/minute, i will pay $5256/year with SIPhone, if i talk and talk.

  15. Michael Robertson is a smart guy, but it beats me how he can make money on a penny a minute…
    termination costs aren’t much less. and that is before operating expenses etc.
    Are they rounding the minutes, or do they have some kind of trick that no one else has figured out??

  16. Bonfire of the Portals! Yahoo fires the first shot in the VoIM price wars. — Alec Saunders .LOG Wednesday, December 14, 2005

    [...] The much predicted voice price wars are finally under way, thanks to Yahoo!, and SipPhone.  Not a moment too soon!  When the giants are done duking it out over commodity minutes, real value can emerge in the form of new services, and new applications for communications networks. [...]

  17. moshe

    i agree.. and its not just him. everyone want’s to do this and basically loose money. get the subscribers and flip the sucker like skype mentality?

  18. I think that these players are all going to use the loss leader play. Then come back to the user base with an ala carte menu of add in’s that will add incremental costs per transaction. Also, about the flip, remember that every good plan includes an exit strategy.

  19. Asterisk India Thursday, April 20, 2006

    This is kind turning like a hot war.

    Any ways I dont see any innovative product that has come after Windows 3.1 from Microsoft :)
    Microsoft Earth comes in as latest copy.
    I think its big time Microsoft should look at innovating rather then copying other great ideas.

  20. I’m trying Magic-jack and so far it is great.After the purch of the plug in unit in the usb port,it was easy to do to make it work.The cost for the next year is only 19.95 a year.. I think it will go over big compared to the others i looked at.

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