The VoIP world sees its fair share of startups and acquisitions. Major telecom companies are finding that it may be easier to purchase smaller VoIP startups than to try to compete with them. And now, the rapid growth of the VoIP industry is sparking interest from large companies.
VoIP is no longer a new technology. Smaller startup companies are able to compete against larger telecommunication companies by offering special features and pricing to niche markets. Larger companies have taken note of this and are finding that it may be easier to simply acquire startups instead of trying to compete. Furthermore, companies like Google are noticing that VoIP is here to stay and are willing to invest money in the industry.
Although it may be too early to tell, recent acquisitions have the potential to shape the future of the telecom industry. These are the top five most important VoIP acquisitions likely to have the most impact.
1. Google It
The Players: Google and Grand Central
The Purchase: Google purchased Grand Central in 2007 for around $50 million.
The Details: When Google gets involved in anything people take notice and the acquisition of Grand Central was no exception. The public waited nearly two years for the re-packaging of Grand Central, now called Google Voice. Finally the search engine giant released the new product earlier this year following Grand Central’s platform of offering users one number of the rest of their life.
It Matters Because: Google, being an apparently unstoppable technology juggernaut, has the ability to do anything — and do it well. The company has plenty of fire power to steal customers from established voice players by offering them better service for free — figuring out how to make money off it later.
2. The Frog Prince
The Players: British Telecom and Ribbit.
The Purchase: In 2008, British Telecom purchased Ribbit, a San francisco Bay Area-based internet telephony startup, in a deal worth $105 million.
The Details: Although smaller startups like Ribbit can’t compete on a mass distribution or financial level like the larger telecom giants, they sure can shake things up a bit by offering unique features and innovative business models. Ribbits platform allows for app developers to interact with a telephone network and easily build unique plug-ns, which means they have a steady flow of new features. British Telecom in turn benefits from the perceived innovation and adaptability of a small start up.
It Matters Because: It won’t be surprising to see more and more mutually beneficial deals happening like this one. It seems companies are seeing that it’s easier to work as a team then to stand alone.
3. The Ring
The Players: IIS Group LLC and Ring 9
The Purchase: Purchase terms unknown.
The Details: IIS Group, LLC acquired all of the assets and operating network of Ring 9, including the company’s VoIP and hosted PBX service. ISS Group, LLC will receive roughly 3,000 customers from 34 states, giving ISS Group, national reach and an expanded customer base.
It Matters Because: IIS Groups purchase shows that established companies are recognizing the potential of VoIP, and are willing to buy up established customer bases.
4. Catching the Sun
The Players: VoIP Logic and Sundial
The Purchase: Hasn’t actually happened — yet.
The Details: VoIP Logic has been offering hosted solutions for several years. The purchase of Sundial engineering services which will help VoIP Logic back up the service.
It Matters Because: Acquiring the engineering services from Sundial only serves to benefit VoIP Logic, which is lacking in that area. Making smart decisions in these times can make all the difference. Hopefully more companies follow suit.
5. Purely Speculative
The Players: Packet 8 and ……?
The Purchase: Not Yet!
The Details: According to a Fierce VoIP report, Packet 8 acquired some $16 million in cash and investments in January of 2009. Apparently the company is averaging about $14 million a quarter, which gives them some room to make a purchase.
It Matters Because: If an acquisition does happen it will have a significant impact on either residential or hosted VoIP services — or both.