Last week, Google officially ‘fessed up to buying Gizmo5 for an “undisclosed amount.” Now everyone is falling all over themselves to spin this as the Greatest Thing since sliced bread. Excuse me, did everyone forget that it took Google a YEAR before it got its act together with Google Voice? Don’t expect this to be an earth-shattering kaboom for carriers for a bunch of reasons.
First, Gizmo5 has taken over $20 million in funding and reportedly was sold for a paltry $30 million. Gizmo5 has been shopping itself around for a while so it hasn’t made a ton of money. A lot of interesting SIP-based stuff sure, but not a ton of money. Can Gizmo5 scale? Probably. How long will it take? Probably not something that will happen overnight by any stretch of the imagination.
Secondly, Google will have to figure out how to integrate Google Voice and Gizmo5. Given all the time they spent futzing around with Google Voice, it’ll take them a couple of months to make a plan, and a bunch more months to integrate. By that time, Skype will have cleared out any lingering bad tastes over the extortion, er, IP property issues between it and its co-founders/current-owners and assuming there’s no other drama along that line… (Hmm, worth watching for).
Finally, free phone calls and ad-supported conference calls haven’t proved to be a successful (i.e. making money) business model to date, other than phone minute arbitrage which is going to end up going away sometime in the next three years because it drives both IP-based services and large carriers nuts.
Against this background, incumbent carriers — traditional phone and cable companies — aren’t going away. Landline sales have been declining for years and are at the point where they should start bottoming out. And a GV/Gizmo5 deal doesn’t really do a lot to bite into carriers making coin from “traditional” voice minutes and flat-rate data services.