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For Skype, One More Headache Called Yahoo

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The ink on the $4.1 billion eBay-Skype deal is almost dry and already competitors are lining up to rain on Skype’s parade. If the regulatory/incumbent problems were not enough, here comes news that Yahoo will soon upgrade its Messenger’s dialout/dial in features to compete with SkypeIn/SkypeOut.

Essentially what this means is that Yahoo users could use their IM client to dial-in/out to old fashioned phone networks or cellular networks, along with new SIP-based VoIP services. (By the way, Yahoo’s hasn’t announced this service officially, and a few news publications jumped the gun!) Yahoo is not “launching a brand new VoIP service, instead it is offering an upgrade to what was available and will aggressive market the service. PC Magazine has some pricing information.

Users can receive unlimited domestic calls for $2.99 a month or $29.90 a year, and they can purchase prepaid voice credit in $10 and $25 increments.

Yahoo is also planning to give away avatars and ringtones, which apparently were a big push for Skype in terms of monetizing its audience. Yahoo believes that it has a better profile of users – in US and Western Europe to monetize its efforts, in comparison to Skype, which is pretty strong in Asia and Eastern Europe. This doesn’t necessarily mean a slam dunk for Yahoo either.

There is word that Microsoft has started to integrate its Microsoft Live with MCI network, and AOL is already offering some of the same features. Skype’s partnerships with hardware makers, while increasing the risk of drawing the ire of incumbents, take away the need for a computer. Yahoo, however could leverage its IM position to become a default “presence manager” but that’s sometime in the future.

I am told it is a remarkable improvement over the previous version. While, the older Yahoo Messenger had dial-out/dial-in features through an arrangement with Net2Phone, the new messenger will be exclusively using the DialPad back-end to route calls to Yahoo partners such as SBC, Verizon and BellSouth. (That should keep them happy!) The prices of calls within US are almost half that of Skype, something to ponder about!

(I hope to catch up with Skype North America big cheese Henry Gomez, and get a first hand low down on how he is going to fight of the new competitors.)

20 Responses to “For Skype, One More Headache Called Yahoo”

  1. Hooray for Skype etc.

    My local POTS company charges me 3 times for a land line and 1/3 of the features.

    My taxes on my bill amount to 14%. Go figure

    Does VOIP have a future??

  2. What does this mean to us Dialpad customers?? Will we get this deal as well now, along with the chance to purchase a phone number? Or will all my loyalty to them be fornaught?

    I would appreciate any help in finding the answers. I have tried but I can not get any answers. Thanks for your assistance.

  3. I wonder how far all the skype-type comapnies will go as SPs begin to have more and more control over the type of traffic that gets carried over their networks. As SPs get more control, they may not be inclined to limit such traffic as skype, which adds loads on to their networks but provides no revenues.

  4. I wouldn’t trust Skype with my kid’s playphone. That’s what they are is a playphone service. Would you trust your phone service to these yoyo’s who change passwords on your behalf without your permission and don’t reply within 24 hours. I’m out. SkypeOut!!

  5. Jim Dermitt

    There are connections that you just don’t know about Om. I’d tell you more if I could, but this stuff is classified. I shouldn’t even be talking about it really.

  6. Google on Wifi. “We are excited about the widespread enthusiasm for this technology and are currently investigating ways to make it more broadly available in the future.”

    Maybe you’ll need a Google avatar first to get that emotional bond established. I’ll investigate it and let you know when I find out. For now wifi is on hold and avatars are the new new thing in digital lifestyle. It’s so exciting! Maybe we can hack something together using Hello Kitty 2.0.

  7. Avatars aren’t my thing. It seems like another cheap gimmick or some sort of cult of personality marketing trend. I did a news search and most of the top avatar stories were from India. I guess they have a bigger avatar industry than the U.S. does. Now text and pictures aren’t good enough for communication, so you will need to bond with your avatar. Get a life!

  8. Xen Dolev

    As was discussed earlier this week here, Yahoo is already in the process of building an emotional bond with its users through their messenger Avatars. Now Yahoo plans to extend their regular IM services – to a VoIP experience, which is a significant upgrade in service and a leap forward. On top of that they will strengthen their value proposition by allowing their users to personalize the VoIP experience with avatars and ringtones. In doing so, the user’s emotional bond can be translated into customer loyalty and revenues.

    Creating, maintaining and getting emotional involvement with a personalized avatar are a business strategy which Comverse, Mobile Avatars, Klonies, shares with Yahoo. Klonies, a new mobile-web personalization service, allows users to create a character from the mobile phone and/or the web. After choosing a certain look, the user can call his friends who get to see this newly created Avatar (Klonie) on their handsets. So this Avatar is now the representation of the caller in the mobile sphere, just like on the web. This way, you could personalize the way you look on your friends’ mobile whenever calling or sending an SMS.

    This is a very similar experience to what Yahoo intends to introduce to their customers. In both cases, self generated Avatars are used to represent the user with their communication counterparts. The value lies in creating an emotional bond to this character and thus increases the likelihood to use the service and prefer it over the competitors offering.

  9. Personally I think the ebay/skype deal was a mistake. Ebay did this on the basis of improving communications for their users.

    I read this.
    “Toronto, Canada, December 01, 2005 – Canadian company Vbuzzer challenges Skype on the use of their proprietary approach, maintaining their position that an open standard protocol is best for VoIP users.

    Vbuzzer is challenging the proprietary protocol many VoIP companies are using which has left users vulnerable to security holes, virus attack, memory leaks, abnormal port activities and paying for inferior quality. “We are appealing to every VoIP provider to employ an open standard protocol,” says Mike Mu, President of Softroute Corporation the developers of Vbuzzer. “What a nightmare it would be if we had to use different protocols to browse AOL or Yahoo online, but that is exactly what is happening in the VoIP world. Users suffer from incompatibility across the network. It’s absolutely ridiculous when companies like Skype use their own proprietary protocols and then have to convert to SIP when user’s call “out”. There’s a lot of lost quality,” insists Mu. The recent announcement by Yahoo and MSN to interconnect their IM and VoIP networks endorses Mu’s argument.”
    Plus Mu just makes sense, I think.

    As for proprietary vs. open standard, I don’t see proprietary as lasting too long. Any successful encryption has been developed as an open standard. Proprietary encryption always fails and I believe proprietary voip will fail. For Skype, the headache may be it’s own making. Take an aspirin, innumerable research articles have be published about aspirin. Aspirin has developed as an open standard. A lot of research is being done now to find out if aspirin can be used for other problems.

  10. Not only Skype, all current VoIP players will be feeling the heat brought about by Yahoo! and bigger companies like MSN, Google and AOL are eyeing the bazaar with lustful eyes.

    Anyway, with IPFones coming up with the first ever clear and high-quality calls via Internet using USB handsets more will follow soon. Now we can truly hope to see innovations like a mouse being doubled as a handheld device that can blink or beep when a call comes through.

    I hope I can get a patent for this:-P

  11. voip is hw and sw. only the computer won’t fit up to your ear. phones will ease usability, but will still need the features of today’s and future soft phones.

    skype really ticked me off today, enough to go somewhere else. they cancelled my password and gave me a new one, but sent it to my old e-mail address. so i can’t get into my skype. all my data and money are gone, not to mention i can’t use the darn thing. forget 911, just give me my phone back! maybe not, i don’t think i want it.

    Hello Yahoo!

  12. VoIP works best as hardware not software. For common adoption, a user needs something to just plug in and use it like a regular phone. These software solutions will die in the end.