VOIP Wars, New Kid On The Block, MS Joins The Party

Back in September Skype was all the rage, news was good, people were subscribing by the thousands and eBay bought them for a rather substantial $2.6bn (£1.3bn). Nobody could claim they paid under the odds but are there now better alternatives further devaluing eBay's investment?

Three months on and it's still difficult to see the strategic reasons for eBay buying Skype. Ok, so they can better support customers who want to talk to each other but that would of been possible without spending so much money, and for $2.6bn they could have developed their own VOIP network.

They may well see a chance to cross sell customers, Skype is strong in Europe where eBay is not and eBay is strong in North America where Skype is not but eBay is going up against some big opponents in the online messaging arena. To kick off Microsoft has VOIP support in Messenger, as does Yahoo! Messenger and iChat, Google has Google Talk in 'beta' and then you've got the corporate targetted options such as Vonage. Skype's unique seeling point has been that it has been consumer targetted, it has gained kudos with upwardly mobile individuals and it has integrated into landline telephony which the likes of Yahoo!, MSN, Google and iChat have not, but now there's better options which beat Skype at their own game.

If you have a chance take a look at Gizmo (http://www.gizmoproject.com). Calls to landlines are slightly more expensive than Skype but it has one distinct advantage and if you don't use Skype to make landline calls then it's a big benefit for you. Skype uses a proprietory communication protocol, this means Skype users can only talk to other Skype users. Gizmo uses the Session Initiation Protocol (SIP). Key to this is the fact that iChat, Yahoo! Messenger and Google Talk also use SIP, meaning users of these products can all talk to each other. The Gizmo's USP is that they have deployed server farms to route calls whereas Skype is peer-to-peer saving on the end users processing power and meaning that it can support up to 99-member conference calls versus Skype's 4.

To further cast doubt over Skype, Microsoft have today announced a link up with MCI to allow VOIP to landline calls through Windows Live Messenger, the upcoming successor to MSN Messenger. It will initially be only available in the US, France, Germany, Spain and the UK and while it too is proprietory like Skype, MSN has 185 million users to Skype's 53 million giving it a much better stab at being the proprietory standard - it's Windows only though.