Exclusive: Google Has Acquired Gizmo5

Washington Post ^ | Monday, November 9, 2009 | Michael Arrington

[nickcarraway]

Last month Skype was in talks to acquire VoIP startup Gizmo5. It was a perfect backup plan in case all that IP litigation didn't work out. Gizmo5's SIP infrastructure could theoretically replace Skype's proprietary P2P back end.

After the Skype settlement, though, Gizmo5's strategic value to Skype sort of plummeted. In the meantime, Google bought them, say multiple sources with knowledge of the deal, for around $30 million in cash. The deal is done, say our sources, and will be announced shortly.

Gizmo5 is a good fit with a number of Google products. Google Talk allows voice calls between users but has no PSTN link to allow incoming or outbound calls to real phones. Gizmo5 does this well already.

And Google Voice is a great VoIP and phone identity service, but they have no endpoint for calls. Gizmo5, which by the way already integrates with Google Voice, is a soft phone end point for Google phone users. In other words, you will be able to make and receive calls to your Google Voice phone number from your computer.

This looks to me like Gizmo5 will be the glue that puts Google Voice and Google Talk together into a single product. And that product looks a lot like a Skype competitor.

[ConservativeMind]

This, coupled with having bought On2 (which has the finest online video and audio compression), could help make them rather formidable. However, whether there are any real profits to be fighting for is another question.