Lindows chief hears Net phones calling
Having done battle with the record industry and launched into a set-to with Microsoft, Michael Robertson is now taking on the phone companies.
Robertson's new self-funded venture, called SIPphone, was unveiled Wednesday morning after nearly a year of preparation. SIP stands for "Session Initiation Protocol," a technology that lies at the heart of the fast-growing Internet voice business.
The new company is selling phones that allow customers to make Internet-based calls for free, anywhere in the world--but there's a catch. They can only call other phones that use the same technology, leaving most of the world's regular telephones out of reach. Still, Robertson believes that over time, the technology can provide serious competition for traditional telephone companies.
"I think that there's a real parallel here to MP3," Robertson said. "That was about the digitization of music, while this is about digitization of voice calls. The same reverberations that went through the music industry are going to go through the telecom industry."
Robertson's venture is one of a new wave of companies that hope to capitalize on the spread of broadband Internet connections and maturing digital voice technologies, to provide consumer Net voice plans that compete with traditional phone service.
The call of VoIP
Internet calling, also called voice over Internet Protocol, or "VoIP," has hovered at the fringes of the Internet business for nearly a decade. Backers have long called it a potentially significant threat to the established telecommunication industry. But until recently, quality of service hadn't reached the point where it could provide a satisfactory replacement for ordinary calling.
Led by companies such as Cisco Systems and Nortel Networks, the technology is now beginning to filter into large corporations. Standards such as SIP, which governs the initiation and routing of Internet calls, have improved service dramatically and have helped companies crack those markets.
The technology is also being built more deeply into PCs, as companies begin to add more advanced voice services into applications such as instant messaging. Microsoft's decision to add SIP support into the latest versions of its Windows XP operating system has made it much easier to perform Net calls by using a basic PC--though customers still must sign up for another company's services.
Where consumer-focused companies like Vonage and Packet8 offer flat-rate, unlimited calling that competes directly with ordinary phone calling, SIPphone is aiming at a longer-term goal, Robertson said.
By allowing free calling--but only to other people who use the same technology--Robertson hopes to catalyze a community of people who increasingly use the Internet for communications. The initial market is likely to be those who make international calls or who have already replaced their land line with a cell phone and a broadband Net connection, he said.
Business talk
Initially, Robertson's company is offering two phones for $129.99. The phones will work as soon as they are plugged into any live broadband connection and come pre-configured with their own telephone numbers, he said.
The idea is similar to that of Free World Dialup, an older start-up that Net voice advocate Jeff Pulver created. That service has 43,000 subscribers around the world, according to the company.
Analysts said the idea would likely appeal to a small market but that few people would want to use two sets of telephones for different kinds of calls.
"There certainly are opportunities for a community of users to be able to call another community of users," Meta Group analyst Elizabeth Usher said. "But I would see this really adopted for things like college students calling home for money."
In the course of his tumultuous career as an entrepreneur, Robertson has shown a knack for identifying technologies on the brink of breaking into the consumer market and serving as one of the primary vehicles for bringing them there. His MP3.com was one of the early standard-bearers of the digital music revolution, before it got shunted from the spotlight by the arrival of Napster.
His current Lindows project, which provides a Linux-based consumer operating system to compete with Windows, has found its way into computers that are sold at mainstream outlets such as Walmart.com and The Brick, a popular Canadian retail store.
But in his consistent role as an industry gadfly, the towheaded Robertson has also attracted a number of lawsuits. MP3.com was sued nearly out of existence by the major record labels after offering a consumer service that was deemed by the labels--and a federal judge--to be infringing copyrights. Lindows is defending itself against a lawsuit filed by Microsoft, which sees Linux as the biggest threat to its continued desktop dominance and contends that the Lindows name violates Windows trademarks.
As the head of an Internet phone service provider, Robertson would again be trying to shake up an entrenched industry that's dominated by powerful corporations with near-bottomless pockets--in this case, the traditional phone and cable TV companies. He said he'd continue devoting most of his time to Lindows but would be CEO of both companies while SIPphone finds its feet.
"There are a lot of very smart geeks out there already using SIP calling," Robertson said. "But we want to bring that to the masses."