Skype’s Plan B to Stay in Business: Buy Gizmo5

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Skype’s Plan B to Stay in Business: Buy Gizmo5 Skype’s Plan B to Stay in Business: Buy Gizmo5Skype’s Plan B to Stay in Business: Buy Gizmo5


13 October 2009

Folks at Skype might be getting a tad desperate in their prolonged fight with JoltID, the intellectual property company controlled by the Skype founders — Niklas Zennstrom and Janus Friis. And that’s why they might be looking to buy Gizmo5, a SIP-based calling service started by technology provocateur Michael Robertson. It’s rumored that the company might be taken out by Skype for about $50 million. The rationale behind buying Gizmo5 would be pretty simple.

Skype could buy Gizmo’s technology and build a backend infrastructure. Since Gizmo5 has its own instant messaging, SMS and voice services, the average consumer wouldn’t really see the difference. My sources in the VoIP world believe that it would be a Herculean task for Skype to pull off such an operation. And it would cost a lot of money. But think of it as grafting a pig heart to a human body: It can be done.

Back in February, Gizmo5 launched OpenSky, a new gateway that allowed people using any VoIP service to call Skype users and vice versa. This could come in particularly handy for Skype’s move to enterprise telephony.

Nevertheless, if it does indeed happen it would be a giant victory for Jabber, on which Gizmo5’s IM infrastructure is based. The Skype-Gizmo5 combination would also allow the company to offer an IM client that works with most of the major IM networks.

Robertson has taken every opportunity to take swipes at Skype in the recent past, trying to convince one and all that his SIP-based service was better than Skype. The market forces thought otherwise. Skype has now more than 400 million users and is worth $2.75 billion.

Gizmo5 says it has 6 million users, though it is hard to verify that number. Nevertheless, it must come as sweet vindication for Robertson, who been desperately looking for an encore since his first company, Gizmo5 has raised closed to $20 million, so at $50 million it would give its investors a nice return.

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