Truphone adds phones, Google Talk

Truphone, a mobile VoIP service provider based in Kent, U.K., is planning to announce more Symbian handsets that can run its VoWLAN software, including newer S60 and UIQ devices, at the upcoming 3GSM show in Barcelona, Spain.

The company plans to support up to 25 handsets by the end of 2007, including Windows Mobile-based smart phones, TruPhone Chief Executive James Tagg said in an interview. Along with the added handsets, the company announced today that it has added interoperability with Google Talk (GigaTeam is happy about the news as we spend a lot of time using the Google service).

Truphone is one of a growing number of companies that are looking to bring low-cost VoIP calling to phones with either Wi-Fi or 3G capabilities. This group of start-ups has been receiving liberal doses of funding from the venture capital community. Truphone recently got £12.5 million ($24.5 million) in Series A funding from Wellington Partners, Independent News & Media, Burda Digital Ventures and existing investors.

The company works out of a converted barn in Kent, has 25 employees and is now working on putting more value-added features into its client. “We want to use cheap voice minutes to attract customers and then offer more services on top of that,” says Tagg. Truphone plans to soon offer services such as SMS-over-IP, video over IP and location-based applications. “We are also looking at gaming over IP via Wi-Fi,” says Tagg. Many of these features could be available by the middle of 2007.

“This year 60% of our revenues will come from voice, and by next year (2008) we hope to bring that down to 40%,” Tagg told us. He thinks it is part of a larger industry trend. He predicts that in 10 years the bulk of a carrier’s revenues will come from non-voice services. But that’s in a decade – for now voice is where the money is!

Tagg admits that cheap voice is not as much a lure in the U.S., but in Europe and the rest of the world where per-call rates are pretty high, it can be quite an enticement for customers. “Out-of- network calls in the U.K. can cost you 25 cents a minute, so if you can bring it down, you are an attractive proposition for consumers,” says Tagg.

Wi-Fi-based voice is a good option, he argues, because it is cheap enough and allows people to talk a lot. “People like to talk a lot when it is cheap enough,” he says. In other words, the voice hills might look barren, but there are still spigots of gold if you look hard enough.

But problems with this model could arise if Truphone has success to the point where people can make Truphone-to-Truphone calls for free — a dash of investment irrationality we’ve talked about before. Still, the company has a long way to go before it can turn into a major force – it has just a few thousand customers at present.

The good news is that an increasing number of mobile phones will have Wi-Fi built in. Broadcom and Texas Instruments have recently introduced Wi-Fi chips that are optimized for mobile handsets that are more powerful and consume less battery power – a constant complaint with the dual mode handsets. ABI Research is particularly bullish, seeing shipments of more than 300 million dual-mode cellular/Wi-Fi phones by 2011.

When asked if he is going to offer Truphone over 3G, Tagg replied that it is something the company has considered. “We are not offering it at present because there is a lot of confusion about the 3G data tariffs, and we don’t want our customers getting stuck with big bills,” says Tagg. The Bill Shock, he says can prove to be counter-productive for Truphone.

The company also added interoperability for Google Talk today. Essentially Truphone users show up as “contacts” on Google Talk and one can converse with each other for free.

‘On-net’ Truphone users show as ‘online’ in Google Talk, enabling people to know exactly when they can make a free call. Calls between Google Talk and Truphone are free because they are pure VoIP calls and take place entirely over the internet. Communication between Google’s servers and Truphone’s servers is via the standard XMPP protocol. (From Press Release)

Increasingly, it seems that the race is between Gizmo and Truphone for mobile VoIP mindshare. When we asked Tagg about his competitors like Gizmo Project, he retorted that they are good competitors and they are all going after the incumbents. “Vodafone has 200 million customers, and instead of competing with each other, we will be competing with them,” he says.

Tagg is pretty hopeful about his company’s prospects going forward, especially with the increasing number of smart phones shipping to the market. With smart phones growing rapidly — up to almost 35 million over the past year, a growth rate of 75 percent, according to Gartner — Truphone could get a little more traction as more handsets can handle the new applications.

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