Yahoo Inc. following a growing number of internet companies is now set to make calls between PCs and fixed line phones a part of its offering in an arena that is fast expanding beyond voice. A natural expansion of its communications offering that till now consisted of mail, instant messenger and blogs, Yahoo now seeks to challenge Skype in a turf where it is a lead player.
Expanding beyond the core areas of web search and entertainment, Yahoo has taken the route most Internet companies have taken to grow their businesses. Yahoo by lowering prices is actually seeking users of its popular instant-messaging application to go beyond messaging to voice calls. While the software for placing and receiving calls remains free, the service comes at a yearly subscription of $29.90 and necessitates a speedy Internet connection besides a prepaid Yahoo account.
Like Skype, Yahoo too offers PC-to-PC calls for free while PC-to-phone calls are charged. However the company intends to undercut Skype with a cent lesser charge for a minute-long call to a phone. Skype with 216 million users of its software around the world is however an established player.
Its advantage is further increased given the understanding that nearly 2 million of its users actually pay for their outbound calls. Now a part of eBay Inc., Skype also gained ground in North America and is thinking beyond voice calls. It is in fact making a long-term commitment to users to offer a wider choice of communications.
Gizmo, a player in the voice-over IP market that launched only in July this year has attracted some 300,000 users in less than six months. Clearly Skype's monopoly over the market is over and new players are gaining. But as Analyst Kate Griffin from Yankee Group Research Inc. believes, "Yahoo, if they want to gain traction here, will have to unseat that (Skype's leadership)”. Yahoo being popular as it is with Internet users has the benefit of a captive audience for its new product in the many who visit its site regularly.
Irrespective of Yahoo or eBay, these auxiliary offerings are not purely meant to add revenue but are intended to enhance their current online offerings such as auctions and online shopping. They improve the online experience by say allowing music lovers to discuss favorite songs or buyers and sellers to interact and get a feel of what there is about. For Yahoo the new service only enhances the appeal of its site opens the possibility of cross selling as Vice President of Yahoo, Brad Garlinghouse puts it.
Though Yahoo retails co-branded Internet service through phone companies, this new phone service opens up opportunities to link e-mail and home voice mail or the possibility of adding ring tones to the home phone. Available shortly on a trial basis to users of its instant-messenger across 180 countries, the service targets a large chunk of the expected 27 million users in North America who take to Internet calling by 2009.
