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Videophoning goes Mass Market

August 26th, 2004 · No Comments

WSJ writes that videocalling is finally hitting the mainstream:

Video chatting is one of a slew of Internet-calling services that are becoming more attractive in large part because of the cost savings over traditional landline phone calls. As of the end of last year, only about 100,000 people were making their phone calls over the Internet, also known as voice over Internet protocol, or VOIP. But that number will balloon to about 10 million by the end of 2007, according to Yankee Group, a consulting firm, as more people are enticed by calling costs that can be 30% cheaper than normal local and long-distance rates.

Seizing on this burgeoning trend, some companies are hitting the market with new videophones and service options. The small Internet phone company 8X8 Inc. is, for now, the furthest along in that effort. It makes a videophone that sells in electronics stores for $299, or $499 for a pair. Unlike some of its competitors, it also offers a service package: $29.95 a month for unlimited local and long-distance calls. That means consumers can use the phone both for videocalls and regular voice calls, which isn’t the case with some of the other videophones.

Motorola, meanwhile, plans to come out with a $700 videophone called Ojo later this year. The upside is that owners can make videocalls to any other Ojo user, anywhere in the world, for free. But it can only be used for videocalls, because the company has yet to reach an agreement with a service provider. (The Ojo was developed by a startup company, not by Motorola.)

A middle of the road option is the VisiFone, from Viseon Inc., which sells for $599. It has less “latency” — the lag time that can occur between when a person says something or moves and when that action shows up on the screen — than some other videophones.

The videocalls, instead of using a regular phone line, are routed through the Internet. Users connect their videophones to a cable or DSL modem and then dial a phone number, just as they would with a traditional phone. For the service to work, both parties have to have fast Internet connections and, in most cases, the same type of videophones.

In a related story, NYTimes writes: “Linksys and Netgear plan to announce that they are selling equipment designed specifically for use by Vonage, a start-up company that has become a pioneer in providing so-called Internet telephony. The announcements underscore the continued growth of Vonage, which is based in Edison, N.J. More generally, the development underscores the idea that Internet calling is slowly beginning to creep out of the fringes and into the mainstream, according to Michael Wolf, an analyst with In-Stat/MDR, a market research firm. Mr. Wolf noted that Internet calling was used by only a small fraction of people in the United States, compared with the hundreds of millions who rely on traditional phone service. But he expects the number of users to grow from around 600,000 at the end of this year to 1.5 million at the end of 2005.”

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