What Google Could Do with Gizmo5

Google has bought Gizmo5, an IP communications firm with a deep understanding of Session Initiation Protocol, which has been adopted globally by communications firms as the protocol for handling IP-based communications including voice, video and messaging.

That of course means Google could do lots of things. The "grabber" headline might be that Google now wants to "out-Skype" Skype by introducing a feature-rich calling service able to communicate with standard telephone devices, but also allow all sorts of rich and affordable features for IP-enabled devices on broadband networks.

According to that logic, Google might be readying a disruptive global calling service aimed either at Skype or at the global tier one telecom providers, either mobile or fixed.

But Google has other options as well. Those options might make as compelling headlines, but could make virtually any Google application more compelling.

In any of a number of scenarios, Google might be looking at anything but becoming a challenger to traditional telecom services, and maybe not even a direct challenger to Skype. The value of SIP is that it can "communications enable" virtually any Web application.

It could add voice communications, video or audio conferencing, messaging or other message and call handling features to any other Web-based application. As eBay once described the upside when buying Skype, voice communications could be added to any potential eBay transaction.

That didn't materialize, but the point is that SIP will be easy to integrate with Web applications and global IP communications in the way communications service providers are used to providing it.

In the perhaps more likely scenario, Google would work to embed rich communications into any number of its applications. In its mobile search efforts, Google would be able to create a location-based search experience that included one click calling, for example.

The same would be true for its mapping and turn-by-turn communications feature for Android mobile devices.

SIP could help Google embed live communcations links in Google Docs, or Wave, allowing real time communications to be a simple one-click feature of collaboration.

The point is that Google likely is not looking at anything so pedestrian as a "Skype killer." Embedded voice, messaging and video communications might be a very attractive feature for any advertiser using any Google application as an ad venue.

In any of these scenarios, Gizmo5 brings Google, and Google Voice, the ability to embed communications in nearly every application. It is the mass market equivalent of "communications enabled business processes" in the enterprise space.

Sure, Google might leverage the Skype style communications to enhance Google Voice. But it seems unlikely to me to stop there. As VoIP proponents always have argued, the real value lies not in free or cheap calling, but in changing the nature of the communications experience. In all likelihood, Google is thinking that way.

Surprising Smartphone Statistics?

I don't know about you, but I found this bit of data on smartphone use surprising.  According to Nielsen, when looking at smartphone use with a baseline of 100, smartphone users  disproportionately tend to be 18 to 34 years old. 


One wonders what happened to the BlackBerry users between the ages of 35 and 54, whom one might think are over-represented among the ranks of smartphone users. 


Granted, this is an index with 100 as baseline, so it is more an example of "over-indexing" among some segments, but the findings still surprised me.


That was especially surprising given the over-indexing of smartphone used at least in part for business purposes. 


While smartphone usage is shifting from purely business use to both personal and business use, owners are still more than two times as likely to own a smartphone for business usage only.  


The study also suggests smartphone owners continue to be predominantly male, are 65 percent more likely than the average mobile subscriber to be between the ages of 25 and 34, and nearly two times as likely to make more than $100,000 a year.

Mobile VoIP is Inevitable, Yankee Group Says

Flat-rate data pricing has made mobile VoIP applications inevitable, and over time, all U.S. carriers will end up allowing them, says Yankee Group analyst Carl Howe. That, in turn, is going to have profound impact on the mobile service provider business model, as voice now is the key revenue driver.

Some of the effects are easy to predict. International call traffic will migrate to VoIP. In the U.S. market, for example, domestic voice calling minutes are cheap, but international rates are fairly high.

On the other hand, mobile VoIP also will shift international traffic from the landline networks (including use of VoIP from fixed broadband connections) to the mobile network.

Less easily quantified is the boost mobile VoIP will give to purchase and use of specific handsets, and the emergence of specific mobile VoIP user segments. For example, devices with front-facing cameras potentially can become the foundation for mobile videoconferencing services and applications.

If you think of BlackBerries as "email" centric phones, and iPhones as "mobile Web" phones, while other devices are "social networking" or "navigation" oriented, you can see where the niches might be.

It is conceivable that "flat-rate data plan caps will tighten," says Howe. Mobile service providers might try to avoid a wholesale collapse of voice revenue by trying to manage network capacity through through more-stringent bandwidth caps.

The operative word in that sentence, however, is “trying,” says Howe. Data caps and over-cap pricing are likely to receive intense regulatory scrutiny to ensure that operators aren’t gouging customers in an attempt to replace lost voice revenues.

The other big unknown is whether service providers will be allowed to create optional "voice optimized" or "conferencing optimized" service plans for users that want priority handling of their own conferencing and voice bits, or "video optimized" plans for users who deem video apps to be key.

In a sign of things to come, Verizon Wireless and AT&T now allow use of mobile VoIP. Google's Android phones running on Verizon's network have VoIP applications available on them.

AT&T also now allows use of the Skype VoIP application on AT&T’s 3G network and iPhones. Vonage and iBasis, among others, also support mobile VoIP calling.

The VoIP trend actually only accelerates an on-going trend. U.S. mobile service provider monthly voice revenue per subscriber has declined from an average of $58 in 2000 to less than $35 in 2009. VoIP might accelerate that process, but is not singlehandedly causing it.

Data plan revenue is the obvious replacement revenue source. And with more application stores offering mobile VoIP clients, it will be hard to stop users from substituting VoIP for traditional calling. Of course, mobile providers have options.

They might not want to do so, but one way to prevent substantial migration to VoIP calling is simply to lower prices for tradtional calling, especially under conditions where voice is carried on one network, and data on a separate network. Part of the overall equation is the additional load mobile VoIP calling will place on 3G networks. In a sense, providing incentives for users to use the voice network for voice offloads traffis from the 3G networks.

Ease of use will emerge as a key issue as more mobile VoIP clients are made available. For many users, domestic calling is cheap enough that mobile VoIP will not provide much advantage, as compelling as international VoIP will be. Anything other than the normal process people now use to dial calls will create huge barriers to domestic VoIP usage.

Call quality also will be an issue. People are used to mobile voice call quality being less than landline. They are used to VoIP calls being equivalent to mobile call quality. But quality less than mobile will create barriers to usage.

On the other hand, use of high-quality codecs will be an incentive to use of mobile VoIP. Anybody who has used Skype high-definition codecs might have new incentives to use VoIP calling services that offer such experiences. Adoption barriers exist here, as both ends of a circuit must be equipped with high-performance codecs to maximize the experience.

The other unknown is the impact of devices able to support multitasking and integrate data services such as instant messaging and presence functions with voice sessions.

Carriers might want to ationalize data and voice pricing, says Howe. A $30 per month data plan capped at 5 GB a month allows your typical 24 Kbps codec VoIP user to talk for nearly 21,000 minutes. That makes the $60 AT&T charges for 900 voice minutes a month look pretty expensive, says Howe.

Operators should do the math on tariffs they charge and adjust rates so VoIP arbitrage becomes less attractive.

Service providers also should build their own mobile VoIP apps, optimized to work with 3G networks as well as Wi-Fi and 4G networks they also may own. That of course assumes such optimization will remain legal once the Federal Communications Commission finishes its rulemaking on network neutrality.

Does Social Media Advertising Work?

Some observers rightly will ask whether "free to use" social networks can survive forever without a clear revenue model of some sort. The general expectation is that viable revenue models can be created using some forms of advertising or marketing by brands hoping to reach their potential customers.

So far, the evidence is mixed, if promising. Reasonable observers will note that the way advertising or marketing messages are handled will be crucial. But lots of major retailers alread are betting that social marketing will pay off.

Telecommunications firms, Web media, retailers, financial and entertainment firms, automotive and health companies are among the companies already making use of advertising or other social network promotional opportunities.

Still, social media advertising and marketing remains a "work in progress." A new study by MomConnection provides evidence on that score. According to recent findings from MomConnection.com, 60 percent of users report having used a social network in the past 24 hours, turning to online communities and social networks for advice, support and connection.

But the survey also suggests that they do not use social networks as a resource when it comes to product decision-making. In other words, social networks are used to share information about products users already have experience with, rather than to choose new products they have not used before.

Moms are four times more likely to turn to their personal offline network of friends and family than online social networks for product recommendations and buying advice.

The study found that social networks are not a channel where most moms are receptive to gathering product information, but rather is largely for entertainment and personal communication.

Still, the results suggest that social networks might be growing in influence. About 24 percent of respondents indicated that they have used Facebook for product information and buying advice, while five percent have used Myspace for product information, while three percent have used Twitter.  

The survey also found that the respondents interact with brands on a surprisingly high level, actively requesting information and resources from the companies whose products they use. Some 81 percent have visited a brand's Web site for more information while 65 percent have signed up to receive a newsletter from a brand.

Some 36 percent have posted a link or joined a fan group on Facebook. Also, it appears that users become important "influencers" once they have formed an opinion about products and services. About 94 percent of respondents report they give advice to other moms in at least one product category.

Are Android Users Different From iPhone Users? Does it Matter?

It is a bit early to determine how Android users might be different from other smartphone users, including iPhone customers. Some early studies suggest Android users are heavier Web application users than iPhone users are.

Others, such as a recent survey by comScore, suggest Android users are slightly less intensive users of mobile Web applications.

So far, the comScore study suggests, Android users are heavier users of video applications, capturing and uploading video significantly more than iPhone users do.

The behavioral pattern might be important if one assumes the Android has potential to create one or more new niches in the smartphone market.

Lots of attention now is focused on whether Android devices are "iPhone competitors." Some might argue it is more likely Androids will appeal to different types of users, for different reasons, as most BlackBerry users likely have different priorities than iPhone users.

How Junction Networks Deals with Traffic Pumping

Google Voice recently has drawn attention from the Federal Communications Commission for its practice of blocking calls to some high-cost telephone numbers used by free conference calling sites. And it appears Google Voice is not the only provider of affordable calling services that finds the high-cost numbers a problem.

Junction Networks, a provider of hosted business IP telephony, has taken another tack, announcing that it will begin charging a higher fee for outbound calls to those exchanges.

“Free conference calling and other ‘traffic pumping’ services exist because the current carrier compensation system allows rural carriers to pass extremely high fees on to other carriers, who often cannot come close to recovering the cost of calls,” says Rob Wolpov, president, Junction Networks. “As a result, we have been left with an overwhelming increase in fees for calls to a number of rural locations where these services operate.

“In order to maintain our low-cost business VoIP options and at the same time, allow our customers to call any number they choose, we have decided to charge the market rate for calls to the designated areas used by these services," Junction Networks now says.

Free conference calling services, adult chat lines and other “traffic pumping” services are often reached through the telephone exchanges of very small, rural operators. "In a legal but questionable arbitrage scheme, these calling services choose these rural exchanges precisely for their high termination charges -- the fees that sending carriers pay them to complete (terminate) the calls," says Wolpov.

Charging as much as 20 times the typical domestic termination rate, the rural telco then splits the profits with the service. While GoogleVoice has responded by blocking calls to those numbers, Junction Networks prefers the alternative: allowing customers to continue using these services at their discretion, but paying the actual cost of such calls.

Under the newe plan, Junction Networks customers can control the cost of any calls costing more than 2.9 cents per minute by simply completing an online extended dialing form.

Such traffic pumping schemes are expected to be addressed at some point. For the moment, blocking is seen as the lesser evil for some service providers who do not make a living from call termination, though cost-based pricing will make more sense for firms that do charge for calling services.

Google Voice arguably has a different problem. It provides Web-enabled calling features that sometimes require call delivery to such telephone numbers. Sometimes Google Voice provides the actual outbound call origination, rather than processing inbound calls to a user's own telephone numbers. When originating calls to the high-cost terminations, Google Voice has no direct revenue model at all.

Advertising is Changing from "Push" to "Pull"

Consumer packaged goods companies that typically have preferred mass media are making a significant move into social media messaging, says eMarketer. And where pushing ad messages to potential customers has been the dominant focus, social media allows retailers to engage in different ways.

“By looking at social media as a way to listen to consumers, respond to their needs and create ongoing dialogue—instead of as another way to advertise to them—CPG companies can reinvigorate their marketing and create new bonds with consumers,” says Debra Aho Williamson, eMarketer senior analyst.

That doesn't mean consumer retailers are abandoning traditional advertising by any means, she says. So far, social media advertising represents only a small fraction of the total dollars going to that channel, according to Nielsen AdRelevance.

And here's the difference: many mass market retailers consider social media to be "earned" media, historically the province of public relations, more than "paid" advertising. For that reason, more effort is going into blogger relations programs and promotional interactions that complement display advertising, for example.

Social media more frequently is seen as a way to “humanize their brand and create loyalty simply by being available when consumers have a problem, question or compliment,” says Williamson.

Telecommunications firms are leaders in the social media messaging space, as are Web media firms. About 20 percent of all social network site advertising over the last year (September 2008 to September 2009) has been spent by communications firms, while 19 percent was spent by Web media firms.

This is a significant shift. At some level, one might note that retailer spending is shifting from "advertising" to "public relations;" from "ads" to Web-based interactions on social sites. That means spending for Web operations overall is growing, most likely displacing spending that previously would have been devoted to tradtional display advertising.

The shfit from a "push" approach to a "pull" approach is tangible, if seminal.