08 December 2005

Yahoo phone service

This article highlights how competition might be arising from unexpected sources for communications companies. The purchase of Skype by Ebay foreshadowed this, as do some of Cringley's speculations (on which I blogged earliers). Many people (besides me) have observed that the distinction between voice messaging (using an instant messenger interface) is indistinguishable in many respects from a basic voice call. This article shows how traditional lines of business are blurring ... here's a quote:

"Historically communications have been stuck in a bunch of different silos," said Brad Garlinghouse, Yahoo vice president of communications products, and a former executive at Dialpad.

"The home phone is one silo, the work phone is a silo, the mobile phone is a silo, instant messaging is another silo and mobile phone text-messaging is another silo," he said of how Yahoo plans eventually to tie together communication services.

Business 2.0 notes that the cost to Yahoo for this new service is probably well below the billions that Ebay paid to purchase Skype. In his blog, Om Malik comments on this as well, posting price estimates -- around $30 per year. Forbes has a an article that is very bullish on Yahoo's prospects in this market.

Do you think network externalities are relevant here? How is this new business model (for Yahoo) different from its previous one (in regard to voice communications)? How successful do you think Yahoo will be in executing the strategy suggested by the Forbes article?

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1 comment:

Martin Weiss said...

Here is a followup to this story ... How profitable will VoIP be with this new competition? Will Vonage survive as an independent company?