Litigation-beleaguered Skype is in negotiations to buy peer-to-peer VoIP startup Gizmo5, say multiple sources. The price tag is said to be in the $50 million range, but the deal is far from consummated. Other potential buyers may be looking at the company as well. Gizmo5, which was founded in April 2003, has raised $6 million to date, plus an unspecified amount from founder/CEO Michael Robertson.
Skype, which is being sold from eBay to a new investor group, doesn’t have control over it’s core P2P technology, and that intellectual property is now the subject of two lawsuits – one against Skype and one against Mike Volpi and Index Ventures, who are part of the buyout group.
That puts Skype at significant risk. Without the technology Skype can’t make Skype to Skype calls, the core of its service. And those lawsuits don’t appear to be close to settlement – some people close to Skype saw that there is a good chance the cases will actually end up being tried in a court.
We’ve heard Joltid wants as much as half of Skype Unless Skype makes huge concessions to plaintiff Joltid and settle the case, they have two backup plans.
The first is to rebuild the back end themselves. The second is to acquire someone who they can plug in in lieu of Joltid. Skype is doing both.
They have an internal project called Gecko to build a SIP based P2P back end for Skype. And they’re hiring like crazy. Theo Zourzouvillys, Bruce Lowekamp and Jason Fischl are just a few of the senior VoIP/SIP experts they’ve brought in recently to work on the Gecko project within Skype Labs.
But Gecko may not be progressing as quickly as Skype needs it to. That’s where Gizmo5 comes in.
Gizmo5 is a solid Skype-like service. With just 6 million registered users, it’s far from a competitive threat. But Gizmo5 is a tested, partially scaled SIP P2P VoIP system with a team of engineers that understand the issues Skype is facing.
Unlike Skype, Gizmo5 isn’t able to do all calls over P2P. Server nodes are still used for NAT and Firewall traversal. But bandwidth prices have dropped substantially over the years, and the cost savings from Skype’s architecture may no longer be necessary for the business to remain profitable.
More on this as it develops.
I guess a Skype acquisition will lead to Gizmo’s Google Voice integration being discontinued
That is exactly what I was thinking as I read this. I’m still hoping for google voice and google talk to be integrated.
I’m just amazed how come Google hasn’t yet come up with Voice and Talk integration! It looks like a no-brainer to anyone.
Unfortunately, that’s most likely the case. Unless, of course, it integrates with Skype instead. Now THAT would be awesome.
But yeah, I’d love to see integration with Google Talk first.
Either way it would turn out to be good.
Great, sounds like an IP lawsuit turning into a patent lawsuit (I’m assuming JoltID has patents on it’s code). Whatever happens, I hope Skype A) stays around B) keeps comparable performance to what it has now. Fingers crossed.
From my own experience Gizmo’s quality is much below par Skype’s, especially Video communications.
This actually sucks, as Gizmo seems to be the only real Skype alternative.
Badly needed competition going down the drain once more…
Skype is struggling but I am sure they need the technology.
Browser based VoIP is the future. Check out Java based FriendCaller.com Gizmo5 requires Adobe Flash, so just another dependency in terms of codec, streaming etc. FriendCaller is SIP compatible and provide true peer-to-peer connection as Java applet
Browser based VoIP is the future. Check out Flash based Gizmo5. FriendCaller.com requires Sun Java, so just another dependency in terms of codec, streaming etc. Gizmo5 is SIP compatible and provide true peer-to-peer connection as Flash applet
Eric, there is a big difference if a company like FriendCalller owns its own IP, it can decide which codec to use, what firewall strategy to use, how to manage its RTF streaming etc etc or if you depend on Adobe and simply integrate what Adobe provides. You have seen that early flash VoIP players could not really work since they could use only Nellymoser codec and had to stream through the Adobe Media Server, later Adobe improved some aspects of this but the dependency is still there, not only technical, we talking about the same business model as with the Adobe PDF, give the reader away free and charge a bundle for the creator
Martin, I get your point now.. I thought you ment from the consumers point of view not from the company’s tech..
As a former Michael Robertson employee who was forced to use Gizmo5 as it’s main communication software, I can say with impunity that it sucked. They’re engineers couldn’t even create a taskbar icon that wasn’t totally aliased and uglified the whole task area. Plus it always crashed and was totally buggy.
sounds like you’re completely unbiased.
I am a player hating prick.
So that I don’t piss anyone I know off.
I forgot to mention that MR is a genius when it comes to business acumen and being in the right place at the right time. He also stands up to big dogs and wins. That is truly admirable.
Gizmo5 is actually pretty good (I still use it sometimes, I never use Skype) and I was picking and screaming about only a few silly issues.
Kudos for positioning it to be Skype’s White Knight.
Wow, what a reversal.
are you like bipolar.. or just scared as shit that they figured out who you are…
No, as a real user of both services I testify that Gizmo5 sucks real bad!
i never quite got the hype around gizmo5. i have always found it a bit unreliable, expensive and the software extra intrusive in such ways as making itself very difficult to uninstall or even just not startup automatically.
it is also interesting that skype chooses a company that built its entire reputation on skype bashing(for using a closed technology)
better choices for a takeover would be sipgate, t-pad, or perhaps even the betamax group in germany.
BTW. Where did this little tidbit of news come from? Skype? Gizmo?
This acquisition should be in the $110M range.
Simple. BT acquired Ribbit for $105M or so with DONUT in revenues. Gizmo5 now has leverage, eh
Why using the Gizmo software? SIP router to cordless phone works great!
right. I’m also guessing Skype could just plug their whole backend into vonage for $24.99/month. That might work.
That was hilarious!
I worked on the gizmo core heavily, integrated Video over IP and outright on the Mac. It is horrid, it has dependencies on resiprocate that are years old, cannot be updated without rebuild and there are open source licenses being broken in this core. It uses the obsolete rfc3489 and thus can traverse non symmetric NAT’s which allow UDP and everything else must be relayed that is not direct. The backend uses SER and what we dubbed SRS basically an RTP relay. The backend system crashed every day or two(still have the emails). In attempt to fix these I brought up the matter of ICE along with NAT-PMP and UPnP and MR dismissed them as “unneeded”. I built the ICE stack and then was told we would hold off. I invented the Flash front end to SIP dubbed gizmocall about 3.5 years ago and was hugged by MR for it. MR does this, kicks off tons of projects and companies and see which ones succeed. He is a gambler with nothing to loose after the lucky streak that was mp3.com. This would be the worst internet acquisition ever, yes worse than Skype. Gizmo5 might be worth $1,000,000 but I doubt the evaluation could be even that, perhaps $500,000. You could build the company Gizmo5 from scratch with a few servers OpenSer, pjsip, reTurn and a GUI in very little time and bandwidth, at least IMHO.
Since you’re smarter than the CEO (who has built and sold multiple companies in different net industries) as well as the entire engineering team I assume you have built your own company which is now getting millions of users and generating millions in revenue. Please post the name of your company so we can marvel at your brilliance.
You sound like a former employee who thinks he was the entire brains of the company, but for some *mysterious* reason doesn’t work there anymore because somehow they didn’t recognize your genius.
p.s. Bandwidth prices have plummeted which anyone can confirm with one Google search to prove that you’re completely uninformed about even the most basic aspects of business and technology. See: http://gigaom.c...s-keep-falling/
“Unlike Skype, Gizmo5 isn’t able to do all calls over P2P. Server nodes are still used for NAT and Firewall traversal. But bandwidth prices have dropped substantially over the years, and the cost savings from Skype’s architecture may no longer be necessary for the business to remain profitable.”
I am sorry this is a flat lie. Not a word of truth.
Let me correct this.
STUN and RELAY servers are used for ALL firewall traversal. Bandwidth prices are as high as ever and the Skype distributed architecture is still needed to remain profitable, thus my previous paragraph where I state that “They have an internal project called Gecko to build a SIP based P2P back end for Skype”.
Is this Fox news? Seriously, you’ve done better.
“Unlike Skype, Gizmo5 isn’t able to do all calls over P2P.”
Sorry, but every single call that is direct or traverses a NAT is a p2p(peer to peer) connection. The only non p2p part of gizmo5 is the SRS relay.
P2P != autonomous distributed system
HO-LE SHET!!!! Gizmo Project is still around?!!
Too difficult to decide whether to use Gizmo + Google Voice in this scenario
Most likely, in case of refusal of Joltid’ technology Skype will be built on SIP. Does it mean more interoperability with sip providers?
Michael, a friendly reminder:
“control over it’s core P2P technology”
The possessive is “its”, not “it’s”. The latter is the contraction of “it is”.
Pleased help do your part to eliminate this scourge from the internet!
+1 Please help save nouns from feral apostrophes.
For example, “DVD’s”.
As the plural, I mean. I suppose that even DVDs can possess something.
If skype get the gizmo5, I bet the free lunch is over. Skype like to charge customers for connection fees.
Right now, we can use GV and gizmo5 for free calls. After skype in, nothing will be free. SKYPE is Evil.
I’ve been trying to use Gizmo5 since it was Sipphone and it has always sucked. Flakey since day 1. Nearly unusable on Linux, which was surprising since Robertson was responsible for the Linspire/Lindows fiasco.
I have been using Gimzo5 for two years now and I don’t have any problems with it. There is something called VoIP Adapter.. you don’t need to run Gizmo5 softwares on your PC or MAC..
What’s wrong with you people.. Gizmo5 is awesome..
Never used the Gizmo software, instead I have my Asterisk box log into my Gizmo account, so essentially it’s on my home phone.
If Google Voice allowed direct connections from SIP clients then it wouldn’t matter who owned Gizmo.
Come on, guys… buying a proprietary SIP network in order to shore up a network driven by a completely different set of protocols makes absolutely no sense, as we discuss in some detail over @ GigaOm:
http://om.bit.ly/4FYN2N
The better question is: Who seeded this rumour?
Skype is evil because Skype will permanently keep your Skype account no matter what. After the time-wasting hassle of sending e-mail concerns and sending e-mail complaints regarding account deactivation and account cancellation when I don’t need these guys, Skype is evil – because once you sign up, their genetically-engineered artificial toxic will preserve their names and their personal data so they will never decompose and will never corrode as they will linger throughout the servers of soul-less minds. If anything like this, Skype will end up becoming like a landfill full of unused accounts, making it not efficient and not good for the server environment.
So before you sign up at Skype, you better think of a good reason about why they will keep their account names for no reason. Skype is evil.