Skype = $30 or Gizmo = $624

Voice over Internet Protocol (VoIP) is really coming of age. In the last year, I’ve experienced a marked shift of companies I do business with using the Asterisk open source PBX, many people and companies using the Skype PC-based system, and hardly anyone I know using SIPPhone or GizmoProject.

This post is about Gizmo and Skype specifically and what accelerates adoption and what doesn’t.

I love Gizmo. It sports a far superior and more intuitive interface than Skype; recording capability built right in to the software; and an open vs. a proprietary protocol (Skype’s is closed).

When I’ve been in spirited discussions about Skype’s superior peer-to-peer architecture over SIP’s point-to-point one, I’m interested…to a point. What I care most about is a system that provides significant cost reduction, new features and benefits along with my biggest hot button: double the call quality over landline-to-landline calling (8khz on phone lines vs. 16khz with VoIP approaches taken by Skype and Gizmo).

But I’m really wrestling with why I’d use Gizmo over Skype. I’m on the phone an average of 10 hours per week which is 520 hours a year or 31,200 minutes (I call both local and long distance in the US and in Canada to both mobile and landlines) and:

  • I pay Skype $30 and have unlimited calling in the US and Canada for one year
  • I’d pay Gizmo $624 for those same minutes at about two cents per minute.

The international rates are cheaper on Skype which hasn’t been a big deal for me since the people I talk to internationally are on Skype. To show you how little I’m using Gizmo and how Skype-oriented I’ve become, I still have over $8 of the Gizmo callout minutes I bought early last year and instead have paid the money for unlimited US and Canada calling ($29.95); purchased a SkypeIn phone number ($30); adapters, Wifi phones and other Skype stuff all because of no unlimited calling on Gizmo.

I *really* want Gizmo and SIP to succeed since it’s an open protocol and everyone can play in this sandbox with software and hardware. But just like the early days of paying by the megabyte for access to the Internet, it wasn’t until Earthlink had an all-you-can-eat for $19.95 per month that the doors blew off Internet use. I believe that’s what it’s going to take for Gizmo to get on the radar screen of users who are using Skype (Note: there are 8,692,139 online with Skype now which is nearly 3 million more than this time last year so it’s being adopted quickly).

Am I missing something? Should Gizmo immediately offer an unlimited $30 for an all-you-can-eat deal for calling in North America?

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8 Comments

  1. Kris Tuttle on May 24, 2007 at 5:08 pm

    I’m sure the Gizmo folks won’t love this headline. As a heavy Skype user (we also closely track and publish Skype adoption in our published research each month) they do appear to really have a brand and a collection of features that work. Adoption for business use also looks very strong based on time of day usage analysis.

    I don’t think unlimited US calling on Gizmo would do anything for me in terms of switching but better integration into mobile access and use would be something that could put them way ahead of Skype if they could pull it off. My understanding was that because of SIP they would have a better chance of doing this versus Skype but haven’t seen that aspect emerge anywhere yet.



  2. Ken Kennedy on May 25, 2007 at 11:53 am

    Valid points. One thing to note is that because of Gizmo’s SIP support, you actually do have flexibility in your choice of VOIP to PSTN provider. The Gizmo client will work with any of them, configured correctly. You’re still not (yet) going to find a $30/year deal, but you can get a lot cheaper than $624/year.

    http://www.voip-info.org/wiki/view/VOIP+Service+Providers+Residential

    You’re still talking probably the $200/year range for unlimited calling, but even that is driving down quickly. It’s the PSTN integration that unfortunately has an unavoidable cost; Skype is able to eat that cost in an effort to increase their customer base. But you pay a cost there…your lock-in to Skype is almost total, whereas with SIP you can move about if prices, plans, or terms of service change. I’m personally willing to pay more for that, but I realize some people aren’t.



  3. Lenny on May 25, 2007 at 3:28 pm

    I’ve actually posted messages in the Gizmo Project forum about unlimited calling. Their policy is against unlimited plans.

    http://forum.gizmoproject.com/viewtopic.php?t=6602&highlight=&sid=14d1317470ba63bbdb23916135c1b8f6

    Too bad. I much rather use the open SIP protocol for many reasons, the primary being that I am no longer tied to any particular service. The other is that I can use an ATA and have all of my home analog phones work like normal phones work. To obtain the same with Skype, I must use a USB adapter connected to a computer running Skype software. I do NOT like that approach at all. Hardware-only for my primary home communications.

    I am often tempted by the skype offer, but for now, I will just stay with Vonage.

    One other noteworthy point – Grandcentral is a great free service (www.grandcentral.com) that integrates with Gizmo project and works with all of your phones. I’ve been testing it for a few months and it’s a great service. You should check it out in case you’re not already aware of it.



  4. David Beckemeyer on May 26, 2007 at 11:42 am

    I question whether anyone would really make 100% of their calls on their PC using Gizmo or Skype, so weigh that before you fall too much in love with Skype’s $30/yr. plan — especially given the many reports of quality issues (such as http://www.toyz.org/mrblog/archives/00000258.html and http://www.telepocalypse.net/archives/001085.html)

    PhoneGnome offers a $14.95 per month plan with unlimited calling to US/Canada, that works on your regular phone or PC. $180 per year is a lot less than $624 and more convenient (you just pick up the same phone you use now and dial, no switching your current service or adding a VoIP bat-phone) http://www.phonegnome.com/minutes.html



  5. Shadow on April 26, 2008 at 1:07 am

    Skype doesnt seem to offer that anymore.

    I’d go with gizmo anyway, as you get vastly superior service, and it’s true VOIP. it’s interconnected with other VOIP networks, where skype is skype.

    Gizmo can talk to gtalk users, FWD users, and even do “backdoor dialing” which unfortunately plays an annoying message when you call someone like a telemarketing ad, but is handy if say, you’re out of minutes and you need to call someone, or have a very long convo with them 😉

    That works by going though the VOIP subsystems many telcos are using. it’s cool.

    Skype only has better rates because of ebay’s backing. otherwise, they couldnt offer an unlimited service at such a low price. I also dislike the 180 days policy where any unused minutes you paid for are thrown out by skype.

    The other perk of gizmo = you dont have to use their client, it’s handy for some things, but if you want to use their service with a smaller, streamlined VOIP app or phone (a real VOIP phone) it’ll work.



  6. Steve Borsch on April 26, 2008 at 8:55 am

    Agreed that the SIP protocol-based stuff has lots of advantages, but that wasn’t the essence of my post. My point was that Gizmo was MUCH more expensive than Skype (and I’ve seen ZERO evidence of an ebay underwriting of Skype…do you have any sources you can cite?).

    I have another SIP-based offering that follows your logic and, I’d argue, makes more sense than Gizmo: Vonage.

    I pay Vonage less than $400 per year; unlimited North America; cheap rates elsewhere; they have a $9.95 per month client for your computer (which I don’t use because of Skype); and if I head to our place in Arizona, I can unplug and pack the tiny box and hook it up there and all calls come to it.



  7. Dimensions Web Design on September 23, 2009 at 3:58 am

    We use Skype for all our home calling needs, along with a tracphone when we are out.
    Our Skype call quality is far superior to our previous VOIP provider, and we have never had a problem with our calls.
    That being said I don’t support their proprietary standards, and recently went to Gizmo5.com to switch over.
    However I found the website to be confusing, and I could not find out how much I would be paying for CallOut, CallIn, and OpenSkype services without being forced to sign up for an account, and add these services to it.
    Result? Another 3 months with Skype…



  8. Joe on October 1, 2009 at 10:18 am

    Now you can make free calls if you use Gizmo5 in conjunction with Google Voice, at least for now. Just set up google to forward to the sip number that gizmo gives you, and all calls you make through Gvoice are free, until Google decides to start charging anyway.



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