Enough Of These Damn VoIP Silos

If you are a consumer going shopping for VoIP-related product/service, welcome to land of confusion. And if you are looking at CES for help, well you are out-of-luck pardner!

You can walk into Radio Shack and look hard for the much vaunted Skype kit; you can go to Fry’s and assaulted by scores of phones and networking products that work with either one phone service or the other. An ATA for Vonage, another one for AT&T and on and on. All these choices, that work with one service at a time. Time to switch? Well, perhaps its time to go and buy more gear. Dano is right…every VoIP is a silo!

This boneheaded approach is on display at CES 2006, again.

Over past few days, we have been bombarded with one announcement after another from handset makers who are touting WiFiphones for Vonage or some other phone service. Bunch of speaker phone and USB handsets that work exclusively for Skype. Netgear is pushing routers that work with Skype, no PC required. Even Microsoft jumped on the bandwagon, where Bill-G in his big CES keynote showed off two wireless handsets from Philips and Uniden that work only with Windows Live Messenger, and MCI powered PSTN service. Does anyone else see this as the continuing balkanization of VoIP?

This is a honey trap for the VoIP industry. Just like the cellular industry, the closed handset model popularized especially by CDMA-based carriers in the US, has forced the carriers to underwrite the handset costs, just so they can lure the consumers and restrict them to a specific service. At least, the cellular service industry has the economics to support this cost structure. In case of VoIP, the carriers will be spending like drunken sailors, forced eat the costs of the hardware, because consumers sure enough are not going to pay for every gee-gaw. (I bet chip makers like Texas Instruments are the only ones who come out winners in this madness!)

Want proof of this? Vonage is giving $100 rebate on any hardware you need to buy in order to sign-up with Vonage. When the price of voice is falling to zero, how long before this starts to cut into a company’s skin, much like a pair of trousers, three sizes too small.

Forget the financial apocalypse for a minute, just wait for the consumer anger. Anytime a new technology wants to ingratiate itself with consumers, the focus is on making things easier. Not VoIP. No Sir….no way!

Imagine mom’s confusion when she finds that here Microsoft phone only talks to Microsoft phones, or Skype phones don’t play nice with others when it comes to free phone calls. Sure you can make PSTN calls on the cheap, but hell you can do that even with your mobile phone. Just wait for the clock to turn 7 p.m. in the evening. Someday Microsoft’s Live Messenger will talk to Yahoo, Google Talk will call AIM, but don’t hold your breath.

The silos of VoIP are going to come and haunt the industry eventually, especially those who are banking on VoIM. But then it is a perfect opportunity for one smart entrepreneur, someone with a devotion to consumer and ease of use to build a “Trillian” or “Adium” of VoIP. [That should be a start, before we get to real interoperability.] All you need to do is channel your inner Steve Jobs!