Now Google Really Is A Phone Company, Confirms Gizmo5 Acquisition

Nov 12, 2009 at 6:38pm ET by Greg Sterling

You saw the rumors earlier in the week and we reached out to Google for confirmation of the reported Gizmo5 acquisition. But at the time they didn’t say anything. In fact they said, “We’re always talking to various companies about various things, but we don’t comment on rumor or speculation.” It’s no longer speculation because Google has confirmed that it has acquired Gizmo5, “a company that provides Internet-based calling software for mobile phones and computers.”

The estimated value of the deal is $30 million. As discussed indirectly on the Q3 Google earnings call, Gizmo5 represents one in a category of strategic “small acquisitions” that Google would be resuming, the company said.

The Gizmo5 team now joins Google Voice, enabling it to become a stand-alone phone service — like Skype. Skype is gaining momentum as an alternative to traditional telcos and wireless carriers in international calling situations. Skype has 480 million users around the world. For example, Skype with WiFi on my iPod Touch turns it into a phone. I spend $2.95 per month to make unlimited calls in the US and Canada. But I can easily switch my account online to cover Europe or the entire world for a very modest increase over that fee.

Expect a similar suite of calling plans and services to roll out from Google Voice, making the traditional telcos quite grumpy. Arguably Google has the capacity to popularize VoIP calling across networks in ways that even Skype cannot. Previously the Google Voice service required an underlying account and telephone number from a traditional telco. Now it doesn’t need one.

When Google Voice originally launched, we asked whether Google Voice was going to become a “Next-Generation Telco?” The answer now is definitively “yes.”

One final thought: for regulatory purposes Google argulably now should be considered a telecom carrier.

Greg Sterling is a Contributing Editor at Search Engine Land, and writes a personal blog Screenwerk, examining the broader world of media and advertising. He also posts at a Local Mobile Search, which is focused on the mobile Internet.

See more articles by Greg Sterling >

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