VoIP Phone Services — Let’s Keep It Simple

Yesterday Andy posted a reference to an article in today’s San Jose Mercury News about various new “mobile lifestyle” companies that want to change the way we are using phones. But Michael Arrington has made an excellent point in stating that:

A bunch of VOIP services have launched to help people make cheaper calls from normal phones. None of them are compelling for the mass market.

I think the question any VC’s need to ask when considering funding of any of these startups is “How do you intend to readily migrate these services into the mass market?”. This is a market that fundamentally picks up a handset, “dials” a number (or looks it up in an embedded directory to dial) and makes contact with the called party. Unless it can perform this basic simple algorithm for establishing a voice connection, additional services and features become technology showcases without hope for any mass adoption (and all the associated revenue opportunities).

Over the past three months I have had the opportunity to use the VoIPVoice UConnect when in my office and their CyberSpeaker W Skype phone when on the road. (Both use the same driver software and start with a standard telephone keypad user interface.) Two weeks ago I had the opportunity to preview what is coming out this fall in cordless phones. As mentioned previously I am evaluating some relatively new wireless devices. Over the past year I have not had to pay more than 3 cents a minute for any landline long distance calls whether at home or on the road beyond any basic service fees (and since mid-May that has gone to zero for SkypeOut calls within North America).

The combined experiences have helped me establish a base line for the level of simplicity I would expect as we see the emergence of both cordless phones and wireless mobile devices that use or access Skype (and/or other VoIP-based services) while serving as a standard telephone handset:

  • Can I continue to use a legacy phone setup and services (in my case my Bell Canada line) while adding Skype access and functionality?
  • How easily can I make normal phone calls when “on the road”?
  • How readily can I access my Skype Contacts?
  • How easily can I also add the ability to either synchronize with my Outlook Contacts or use my Outlook Contacts with Skype (via, say, Skype Outlook Toolbar and/or Skylook)?
  • How easily can I employ Skype’s Instant Messaging functionality? Is the IM functionality integrated with SMS services?
  • How readily is the billing model understood? Does the pricing give me a favorable ROI?

Michael makes an excellent point with respect to Jajah, Rebtel, Hullo and ConnectMeAnywhere when he states:

None of these services is good enough to change user behaviors in the mass market. Having to be at your computer, or call special phone numbers, is too much trouble for most people. Certainly forcing the person receiving the call to hang up and call back isn’t very attractive. And traditional POTS rates continue to fall fast, meaning the incentive to go with a hard-to-use VOIP provider is lower.

Going forward this basic telephone simplicity is a required feature set as we see the introduction this fall of Skype-enabled cordless phones, Skype applications for wireless handheld devices and the evolution of Skype USB phones. (Note that I have intentionally excluded from this discussion a new category of voice-enabled home/personal entertainment devices such as those offered by Sony (Mylo); they never intended to be replacements for traditional phone handsets.)

P.S. – I see that Russell Shaw also finds the ROI is not there for a dedicated Skype WiFi phone.

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About Jim Courtney

Bringing over thirty years' experience in the sales, marketing and management of cutting edge technology businesses.

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