SIPphone Gets VC Cash

16 Comments

Michael Robertson’s San Diego, Calif.-based voice-over-IP start-up, SIPphone just raised $6 million in funding from New York-based Dawntreader Ventures. The company behind increasingly popular Gizmo Project soft phone and instant messaging client is going to use the cash to expand into wifi and dual mode phones, Robertson told in a late evening chat yesterday. Dawntreader’s Ed Sim is going to join the board of SIPphone. (He explains why he invested in the company on his blog.) Existing investors in SIPphone participated in this round as well.

SIPphone will use the investment to expand their VOIP platform to portable devices which do not require PCs to make or receive calls and promote adoption of the open standard auto-provisioning system plug-n-dial. The San Diego headquarters is expected to triple in size over the next year with hiring primarily in business development and engineering.

SIPphone currently has about 20 employees. “There is no doubt that the price of voice calls is headed towards near zero, and companies like us need to make money off premium services and features that consumers are willing to pay for,” says Robertson. [ Read: The great VoIP implosion.] SIPphone is going to announce a new “premium offering” later this week. Robertson, who previously had started MP3.com, says he is working on creating a private label business for SIPphone as well, and is already powering a low-cost calling service called iPhox.

SIPphone was rumored to be in talks with News Corp, for adding voice functionality to MySpace.com. There were rumors of a $50 million buyout offer from Rupert Murdoch. While those talks haven’t gone anywhere, this new round of funding will give SIPphone the runway it needs to get market traction.

While it is no Skype, The Gizmo Project has still managed to get 400,000 registered users, of which nearly 29% are Mac users, Robertson says. About 2% of Gizmo Project are Linux desktop users. “In the end our adherence to SIP will pay off because it will allow us to offer many services easily,” says Robertson. One of the benefits is the ability to connect directly to other SIP-based services such as Earthlink’s VoIP service.

Licensing the technology to device makers for a sliver of profits is a model being used by Skype to generate revenues, and I guess SIPphone is going to do the same as well. Google is also rumored to be working on similar strategy and trying to lure hardware partners, but no recent developments. If the Skype experience of feeding-off-the-licensing margins is anything to go by, this will indeed a very tough business.

16 Comments

ram

Has anyone taken a look at the latest version of damaka…they have come a long way in the last 6-7 months with many features…the latest one being IPTV , voice Activation, and Desktop sharing…I am loving this application…

Cheers.
Ramesh

tech_pundit

Gizmo is peer to peer, like every software voip service they are peer to peer when they can be and use relays when it’s not possible to go peer to peer. Damaka is ok…too late to the party with a so-so product if you ask me.

Whocares

Good for Gizmo… They are not Peer to Peer… are they? The only company that is doing PEER-TO-PEER SIP is DAMAKA (http://www.damaka.com). They seem to have a better mouse-trap…

pwb

Is “Gizmo Project” a good name? I usually don’t think names are very relevant but this one seems to be holding the service/product back.

pwb

Permanent, I thought everyone knew that, where possible, you might as well use Other Peoples Money.

rick

Jesse, if the GSM conference was any indication, IMS is going to be huge. However, most studies say it’s a couple years away. I believe the regular dual-mode phone will bridge that gap.

Check out what Nokia has up their sleeve with a company called Telepo. Google “Nokia Telepo” and you’ll find an FT.com article on how revelotionary their technology is. Says it could replace PBX’s entirely. Nokia’s keeping it under wraps.

Permanent4

Didn’t Robertson sell MP3.com for about $300M? Couldn’t he pull $6M out of his personal slush fund? Or did he blow it all on lawyers and Lindows?

Jesse Kopelman

I’ve got to say that what Rick is calling “pure dualmode” is not going to have much of a lifespan. Seamless roaming is just too important and there are so many ways to accomplish it that it will happen sooner rather than later.

N. Godbout

What the heck is iPhox? Looks EXACTLY like Gizmo, except the site is fugly. How is it different?

rick

Wifi and Mobile can mean a couple of things. One could be pure dual-mode with no roaming between the two types of networks. The other is a seamless experience where the user can roam between wifi and cellular networks while on the same call without being dropped. This second scenario is usually associated with IMS and is much more sophisticated. It’s possible with added middleware from a Sipquest, PCTel, or Bridgeport.

I suppose Gizmo will be pure dual-mode. Nokia has stated this week that they will actively pursue mobile phone relationships with the YMAGS/Gizmo ISP’s for use in dual-mode phones.

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