Will VoIP do to telephones what the PC did to computers? It’s still too early to say but the quick answer is probably yes. In case you’ve been napping Voice-Over-Internet-Protocol (VoIP) has been widely promoted as the next big idea – a killer Internet application that will reshape the global telecommunications industry and any company that comes into contact with it. A case in point is eBay’s acquisition of VoIP provider Skype for around US $2.6 billion. Not bad for a loss-making company. But that’s the price companies are willing to pay to protect themselves from disruptive technologies or to align themselves with the growth opportunities offered by a rapidly maturing Internet. VoIP means that people can make telephone calls over the Internet for free – so distance and call duration are irrelevant.
It’s predicted that by 2015 all calls will be free, which is creating something of a headache for telecommunications companies. Traditionally, the business model employed by phone companies is to use voice as the major revenue generator and to then focus on maximising revenue per customer. However, the model used by Skype throws this out of the window. Skype’s aim is to be the largest communication platform in the world. In the short term this is limited to voice communication, but there’s no reason why it can’t include video or text as well. Skype has no cost per customer because users buy their own hardware (a computer and Internet connection) and there’s no marketing cost either because customers recruit other users. The last time I looked, Skype had around 50 million users and was adding to this at the rate of 150,000 per day. This isn’t the death of telephony, but it’s certainly the end of telecommunication companies as we know them. In the future voice applications will probably be given away free as part of a larger bundle of services, so companies that offer mobile-only access could be in trouble. People may also ditch telephone numbers in favour of ‘name addresses’, much in the same way that numbers have already moved from being physically tied to a building (a house or an office) to the individual. So how long before we see Apple computer bringing out an iPhone?