VoIP Now: Who's Making Money In VoIP?

July 17, 2006

Who's Making Money In VoIP?

Om Malik paints an interesting VoIP application scenario with an in-beta service called Jangl. Jangl deals with issues of VoIP presence as well as security using a unique bidirectional phone number that allows two parties to communicate without revealing their own phone numbers.

The example Om gives is one applying to the dating scene. Considering that there are online dating services like Verbdate, which integrate Skype's VoIP software to allow people to talk to each other for free, there's obviously a market for VoIP dating applications. But with the way the world is, partial anonymity, or at least security from having to reveal personal info, is a boon. Jangl does this by assigning a phone number between two parties, which acts as a bridge, regardless of the numbers they are using to make the call.

Jangl joins the growing list of new companies that are opting for private financing instead of going IPO. However, history shows that when a VC firm pumps in money, they want to not only make their money back but get a return on it. That's kind of why VCs exist, right?

Jangl is only in beta, so it's yet to be seen whether they can make money from their model. Still, with all the free VoIP options available these days, the ones taking advantage of the Long Tail phenomena will be most likely to succeed. That is, give away parts of your service/ product offerings for free, and hope that a large number of people will use your paid services once in a while. Or if you're lucky, frequently. (Which is why I think that Skype's plan to enter the enterprise VoIP market is a bad idea, besides the fact that their Skype is not enterprise grade.)

But since so much VoIP service is free, it's the companies that give good value-added services at a reasonable price who are candidates for business success.

Here's my jaded prediction: new tech (and web 2.0) companies will continue to stay private for the next year or two, followed by a large number of IPO offerings in the very late 00s, capped by a market crash in 2010. History (i.e., market data and news archives) shows a recession at the beginning of every decade since at least 1970, which inevitably means tech stocks crash and burn. Only those VoIP companies who develop a stable footing in the next year or two are likely to survive, and that means having private funding, instead of suffering the vagaries of the stock market and suddenly finding that cash is low.

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July 17, 2006 in Business, Networks, Privacy, Services | Permalink