VoIM: Instant Messaging Programs Are Latest to Offer Voice

By Erika D. Smith snipped-for-privacy@indystar.com

So you heard you can make long-distance phone calls for pennies instead of dollars. And you heard it has to do with something called VoIP.

You're right.

VoIP, or voice-over Internet Protocol, is a technology that routes calls over the Internet for a fraction of what you're paying now. All you need is a high-speed Web connection.

But now there's a way to make those same calls for free. It's called VoIM, or voice-over instant messaging.

Companies including Skype, Google, Yahoo!, AOL, ICQ and MSN offer this computer-to-computer calling as part of their instant messaging programs. Subscribers log on to their chosen program, and have a conversation with others using the same program. Users will need a microphone for their computer, speakers and sometimes a Webcam.

VoIM is really a spinoff of traditional VoIP, which works a bit differently.

VoIP subscribers use their own high-speed modem, plus an adapter to route calls over the Internet. Any regular telephone will work with VoIP, and Vonage is the most popular provider.

In general, traditional VoIP and VoIM are similar only in that both break voice calls into data packets and route them over the Internet.

The method is much cheaper than the traditional circuit-switched phone system. And the prices for voice-over services reflect that.

Consumers are responding.

For now, the United States has 2.5 million to 4 million VoIP subscribers. Some say that number will grow to 17 million by 2008. At the same time, the number of traditional phone lines, now about 120 million households, is declining rapidly.

"I think the biggest driver of this technology right now is price," said Joe Porus, vice president and chief architect for technology research practice at Harris Interactive. "On the flip side, it's a hard sell to the masses. This is not your father's telephone."

Still, the voice-over industry has gotten really crowded, really fast. This is especially true for VoIM.

Last month, Google Inc. rolled out a new instant messaging program with voice service. It's designed to compete with similar services from Yahoo! and MSN. Also, Microsoft Corp. acquired Teleo Inc., a startup that makes software specializing in Web calls.

And then there's Skype, which eBay Inc. agreed to buy on Monday for $2.6 billion.

Skype already has more than 50 million registered users worldwide, including more than 2 million who pay for its premium services, such as voice mail. In 2004, the company generated about $7 million in revenue. It's projecting $60 million this year.

Plainfield-based Brightpoint Inc. was confident about Skype's prospects even before eBay got involved. The company became a distributor of Skype software and products in August.

"Their success has been incredible," said Brightpoint's chairman and CEO, Robert Laikin.

The question is whether that success will continue now that consumers have alternatives, such as Google Talk.

Skype, which is the market leader, says most of its subscribers are business users. Other instant messaging programs are targeted to the masses.

That may be an advantage since about twice as many business users know what VoIP is than consumers, according to a Harris Interactive poll.

"People who are on Skype right now, will stay on Skype," Laikin said. "Once you have your community, in my opinion, you're not going to go to a Yahoo! or AOL and start an account."

But that can work both ways.

Yahoo! and others already have about 867 million subscribers, according to research firm The Radicati Group. That's expected to hit

1.2 billion by 2009.

"I think the advantage that Google and AOL have is that they already have a user base," said Jan Dawson, research director of the telecom research firm Ovum. "Not only am I a user, but my friends and family are all on the same IM platform. If I start introducing voice to that, I don't have to convince all of them to sign up."

The other hurdle that VoIM faces, regardless if it's Skype or Yahoo!, is the technology isn't exactly user-friendly.

Users are more or less tied to their computers. It's not like picking up the phone on your desk.

That's where Vonage, AT&T and other companies that offer traditional VoIP have an edge.

"For all the new-fangled things people like to talk about, the phone has been the phone for 100 years now," said Joe Laszlo, a senior analyst for Jupiter Research.

That's why Brightpoint has contracts to distribute Vonage and Skype products, Laikin said.

People will use each type of technology for a different purpose, analysts say.

VoIM, they say, will evolve as a compliment to traditional VoIP, not a substitute -- no matter the price.

"For the foreseeable future, the more a VoIP service resembles a traditional phone service, the more successful it will be," Dawson said.

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