By: Gino Lattarulo
When I was in the military during the early 90′s I can remember racking up disturbing amounts of long distance charges talking with my family and girl friend (mostly my girl friend) each month. Cell phone plans were still in their infancy and each minute cost more than a gallon of gas. Remember the “Brick” phone? Yeah, that baby cost four grand when it first came out. Nowadays cell phones plans are so cheap they are replacing traditional landlines. I admit it, I have no traditional ”home” phone. Phone companies like Verizon (NYSE:VZ), AT&T (NYSE:T), and Time Warner (NYSE: TWX) who had recognized this trend began offering unlimited home Voice Over Internet Protocol (VOIP) plans, and voila, Talk is literally cheap.
Enter Skype: Well, actually Skype is one of the pioneers of the VOIP revolution and is one of the main reasons phone companies had to jump on board in the first place. In 2004 when VOIP became commercially accepted as a viable source of communicating, companies like Skype and Vonage became innovators in marketing the service to consumers. Vonage (NYSE:VG) went public a few years ago with their broadband modem format and now Skype is jumping on the IPO bandwagon with their proprietary software based system. Skype to Skype calls are free while traditional calls are pennies per minute.
Enter Google Inc. (NASDAQ:GOOG): Once again it looks like the mega giant of the Internet is doing everything to continue its omnipotent presence. As Skype nears IPO status, Google has recently launched a free VOIP service from within Gmail that offers free calling to any phone or phone number in the United States and Canada. Perfect timing don’t you think? Although Google Voice will have little effect on the Google’s income structure, if embraced widely enough it will almost certainly pose a disturbing threat to Skype who charges $.02 per minute for domestic calling and relies on those charges to support their business.
As Google continues its path toward world domination, it will be a mind bending experience to say the least to see which companies it simply gobbles up and which ones are just pounded into dust. With pockets so deep they have mold growing on the cash, Google can pretty much do what it wants. And it does.
Disclosure: No positions in GOOG and VG
