Google Ups the Ante on VoIP, HD Voice
According to Global IP Solutions (GIPS), Google-subsidiary Google Acquisition Holdings has agreed to acquire the Norway-based company to ramp up its focus on real-time video and audio communication over the Internet.
At $2.12 in cash per share, Google will pay a hefty sum for GIPS, totaling around $68.2 million or a 27.5 percent premium over the company's current stock price. In the past year, the search giant has also snatched up VoIP software startup Gizmo5 and video compression technology provider On2Technologies for comparable sums. (See Google Buys Again.) Outside of a lot of financial jargon, the press release on the planned acquisition didn’t cite specifics on what Google will do with GIPS, but it’s safe to assume Google Talk and Google Voice, its ad-supported unified calling service, will be the biggest benefactors.
Google will also inherit GIPS's customers, for whom it powers backend VoIP engines. The list includes Yahoo Inc. (Nasdaq: YHOO) for Yahoo Messenger video calling, AOL Inc. (NYSE: AOL)’s AIM instant messaging platform, Nortel Networks Ltd. , Goober Networks , Oracle Corp. (Nasdaq: ORCL), Samsung Corp. , and several others. (See GIPS Powers Goober UC.)
Google was also on GIPS's customer list and, as the sole owner, is promising GIPS customers that nothing will change for them -- they will continue with GIPS or transition to Google’s services that spring from the acquisition. Still, the outlook could be bleak for competitors like Yahoo as Google integrates the processing software into its video and voice calling services.
In just the past few weeks, GIPS has also extended its video conferencing and chat capabilities to iPhone, iPad, and, importantly for Google, Android developers. (See GIPS Enables Android HD VoIP and GIPS Lands Motorola Android Deal.) GIPS was the first to bring voice chat to Android, a capability that Google can now capitalize on.
“GIPS’s technology provides high quality, real-time audio and video over an IP network, and we’re looking forward to working with the GIPS team at Google to continue innovating for the Web platform," Rian Liebenberg, engineering director at Google, said in the release.
Will Google catalyze HD voice?
Outside of VoIP, GIPS has been putting its resources into a still-nascent market, high-definition voice and super-wideband voice, which it provides to LG Electronics Inc. (London: LGLD; Korea: 6657.KS) ’s fixed mobile convergence initiative. (See GIPS Brings HD Voice to LG.)
HD voice has taken a backseat to issues around mobile data for most wireless operators, but Robert Poe, Heavy Reading contributing analyst, says that cable telephony and mobile operators could propel HD voice to the mainstream and give incumbent telcos, whose TDM-based legacy infrastructure can’t support HD calls, a run for their money. (See HD Voice: Silence Isn't Golden.)
Google’s acquisition of GIPS will throw its name into the ring too, helping it compete against both the cable and wireless operators and Skype, the company credited with paving the market for VoIP.
“[Voice-over IM] services like Skype, Yahoo, and Google Talk stand to gain the same benefit from HD voice, as do hosted VoIP providers: the ability to overcome perceptions of poor sound quality during calls transported over the Internet,” Poe wrote in the report. Skype, which has its own group chatting capabilities, has been successful in part because it employed HD from the start, demonstrating that VoIP calls could sound better than traditional phone calls, Poe says.
Google’s acquisition is pending approval by 90 percent of GIPS's stock owners, but it says more than 50 percent are already on board. The company would not provide an interview at this time, and Google had no comment on the acquisition.
— Sarah Reedy, Senior Reporter, Light Reading Mobile