Google VOIP Apps Stare Down Startups

While Google and eBay prepare click-to-talk VOIP applications, one startup says it has been deploying such services for years with very little competition

December 14, 2005

4 Min Read
Google VOIP Apps Stare Down Startups

EStara Inc. made "click-to-talk" a Web reality long before eBay Inc. (Nasdaq: EBAY) and Google (Nasdaq: GOOG) expressed interest in the technology, but will there still be a place in the world for a small company like it once the big boys catch up?

The question matters now more than ever as companies of all sizes are growing wary of Google's ability to penetrate IP communications markets to reach their customers with a better or cheaper service.

Enter click-to-talk, an application that allows a customer to connect with a business (or another person) via a Website. Several online businesses see click-to-talk as a way to keep customers from bailing out of an ecommerce transaction over a simple question. (See Poll: Google Talk Heard Over Skype Hype.)

Google, which already has a consumer PC-to-PC VOIP service called Google Talk, has been experimenting with click-to-talk, but it won't say what its intentions are.

EStara has been in business since 1999 and holds several patents for click-to-talk and related technologies. (See Skype Extends Its Tentacles.) But eStara VP of Technology Joe Siegrist tells Light Reading he didn’t believe his company’s patents on click-to-talk technology could preclude others like Google from developing (and selling) their own flavors of the communication feature.

Here's what Google's FAQ page has to say about click-to-talk: “We're testing a new product that gives you a free and fast way to speak directly to the advertiser you found on a Google search results page -- over the phone." Google has been beta testing the feature at various areas of its property over the past month.

So even with its long head start, eStara could face a serious risk of being pushed out of future click-to-talk deployments should Google decide to resell the feature -- or give it away to companies as a value-added service for advertising on Google.

Meanwhile, eStara is amused at the buzz it's getting for likely being next on the list of companies Google may marginalize. “It’s made us laugh a little bit because everybody talks about how ingenious Google is for coming up with this technology when eStara’s been doing this for five years,” says eStara's Siegrist.

EStara's click-to-talk solution includes a set of phone numbers, PSTN interconnection, software and integration, as well as a full suite of reporting features. The company has sold solutions to 12 large Internet directories around the world, the biggest among them being Verizon Communications Inc. (NYSE: VZ), Yahoo Inc. (Nasdaq: YHOO) Ireland and, Inc. (Nasdaq: AMZN).

Amazon was the first U.S. customer to do a major rollout; around 14 million of its advertisers use the click-to-talk service. Verizon Superpages started using eStara click-to-call in 2003 and the call link appears near some 100,000 advertisers at the site, eStara says.

In order to connect click-to-talk calls to any business that signs up, eStara has established interconnection agreements with such PSTN backbone providers as MCI Inc. (Nasdaq: MCIP), Level 3 Communications Inc. (Nasdaq: LVLT),and AT&T Corp. (NYSE: T).

EStara makes its money from the sale of the original application and set-up services, as well as on an ongoing basis tied to metrics like Web traffic, number of telephone numbers issued by the client, and number of VOIP calls placed from the client's site.

EStara, which is privately-held and VC-backed, has been profitable for the past eight quarters, and has seen revenues increase in each of the last 19 quarters, Siegrist says. The company, he says, has no plans of going public.

The company says it faces little or no competition to install turnkey click-to-talk solutions at large enterprise customers like Amazon.

But that position won't last forever. And when Google and others become more active in taking advantage of their reach and IP technology to find more platforms for its advertisers, eStara looks to be a sitting duck.

"It's been kind of mystifying to us to watch it all unfold -- being the company behind the scenes making it happen for a lot of companies out there," eStara's Siegrist says. Siegrist is the co-inventor of the first “PC to phone VOIP for eCommerce” application, the company says. (See Links: Facing the Google Future and Google Searching.)

— Mark Sullivan, Reporter, Light Reading

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