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February 19, 2006

Ballmer slipped VoIP past the mobile operators at 3GSM?

Posted by David Hunter at 12:38 PM ET.

That’s the story from Tony Glover at the UK’s The Business online:

Microsoft has developed a Skype-style free internet voice service for mobile phones that City analysts believe could wipe billions off the market value of operators such as Vodafone.

The service is included in a mobile version of Microsoft Office Communicator due to be released this year. It will take the form of a voice-over internet protocol (VoIP) application that allows Office users to make free voice calls over wi-fi enabled phones running Windows Mobile software. It uses the internet as a virtual phone network as well as accessing e-mail, PowerPoint and other Office applications.

Microsoft chief executive Steve Ballmer dropped his bombshell at the mobile operators’ annual 3GSM show in Barcelona last week. The significance of his remarks was missed because of his effusive and eccentric delivery.

Ouch! Ballmer demonstrated a VoIP call during the keynote and VoIP was also mentioned briefly in the press releases, but I guess it took a while for the implications to sink in.

Cyrus Mewawalla, an analyst at Westhall Capital, believes VoIP, when backed by Microsoft, will have a more devastating effect on mobile operators than it did on the fixed-line operators, which saw their voice revenues slashed after the introduction of VoIP services such as Skype.

“Internet voice does not even have to take market share to force traditional operators to cut their prices. The mere thought of free voice is enough to make customers push for price cuts,” said Mewawalla, predicting a bloodbath for mobile operator stocks.

More by following the link, but the initial effect may be limited by Office Communicator’s target business audience.

Update 2/20: Mark Odell and Kate Mackenzie from the Financial Times have more in Internet telephony set to go mobile:

“Internet voice is going mobile,” said Jorma Ollila, Nokia chief executive, on Monday as the world’s biggest maker of mobile handsets unveiled its first mass- market model capable of supporting voice-over-internet protocol. VoIP is the emerging technology that offers cheap calls to users by routing them over the internet, instead of traditional phone networks.

About a dozen large mobile operators are “actively” looking at offering VoIP-based services, according to one senior industry figure.

Microsoft is increasingly moving into mobile software and its Windows Mobile operating system already supports VoIP.

The latest version of software developed by Symbian, 48 per cent owned by Nokia and currently the biggest supplier of operating systems to high-end mobiles, will do the same.

As a stand-alone mobile operator, Vodafone is seen as being more exposed to the inevitable pricing pressure than some rivals.

However, the UK-based operator accepts it is inevitable. “We have to morph from where we are now,” said Arun Sarin, chief executive of Vodafone. “That [VoIP] is clearly a world around the corner . . . it is two to three years away.”



Filed under 3GSM06, Conferences, Coopetition, Executives, Office, Office Communications Server, Steve Ballmer, Technologies, VoIP, Vodafone, Windows Mobile

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