Gizmo punches standard VOIP business model

The open standards based internet telephony service Gizmo Project made a drastic move today by dropping the cost to zero for all calls to any phone owned by a Gizmo user in 60 countries, permanently. It’s not quite free calls to everyone everywhere, but it’s a big move away from the standard revenue model of charging for all calls to land lines and mobiles. Both parties on the call will need to have logged into and used a Gizmo account recently enough to be considered active.

Gizmo was founded just 13 months ago by a team that includes Michael Robertson, the founder of SIPphone,, AjaxLaunch and a variety of other projects.

Additional features that Gizmo has offered for some time include very nice one-click recording, $3/month call-in telephone numbers in 50 US and UK cities and a partnership with The use of open standards means that Gizmo is not a siloed service and can make calls across any other VOIP network that participates.

It’s been an incredibly compelling service for some time, only lacking the huge user base that Skype has. I use it to record calls and would use it all the time if other people did. As Skype languishes in a post-acquisition eBay abyss, today’s announcement will likely move Gizmo into a much better position in terms of number of users.

What does this mean for the industry? If calls continue moving towards free, then it’s going to be all about the value-added features. Video, better conferencing support, SMS – I can only imagine what sorts of features VOIP providers will be able to find substantial profit in. Perhaps these consumer VOIP services will have to make consumer VOIP a loss leader in exchange for building the strength of enterprise VOIP offerings. Ad supported free calls could be acceptable if the ads appear on the web interface. It’s hard to say what could take the place of burning through VOIP-out minutes, but interesting things will likely emerge.

Most likely this free VOIP future is still a ways off. Most paid calls out of the system are probably made to land lines owned by people who never use Gizmo or any other VOIP service. This greatly mitigates the impact of today’s announcement and you could almost call it little more than a cynical marketing move. As a proof of concept, though, it shows that VOIP to land and mobile numbers can be done for free. Skype does this intermitantly to land lines in different countries. We’ll have to see if Gizmo’s approach finds traction and builds its user base.