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Netgear + Skype = Major Trouble for Cisco?


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January 03, 2006

Netgear + Skype = Major Trouble for Cisco?

Olga Kharif

I am hearing that Netgear and Skype, the popular VoIP calling provider, are going to make a joint announcement at the Consumer Electronics Show tomorrow. Not sure what the deal is about; I expect, Netgear will start manufacturing handsets/adapters for the Skype service. One thing is clear already, however: The news won't please Cisco, Netgear's direct competitor.

Cisco already makes adapters for VoIP services such as AOL TotalTalk. It also already manufactures a cordless phone for use with Skype. Obviously, Cisco is intent on dominating the VoIP calling market, the same way its Linksys routers dominate Wi-Fi access.

If Netgear starts putting out Skype phones as well, that would give that gearmaker's position in this market a major boost. After all, Skype has more than 50 million users worldwide. It's probably the most successful VoIP service to date. So if Netgear starts making Skype phones now, that will heat up competition between that Netgear and Cisco. That will happen at a time when dozens of companies are rushing to put out VoIP phones and adapters, as the market has finally gone mainstream.

Of course, Cisco was in a similarly tough situation a few years ago, when the Wi-Fi market exploded, and the company managed to emerge as that market's undisputed leader. We'll see if history will repeat itself with VoIP.

03:34 PM

Cisco

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Actually, Cisco beat Netgear to the punch last October. Linksys partnered with Skype on VOIP phones. So is Skype just dual sourcing the hardware? Cisco bought LinkSys so it could compete with the likes of Netgear. All is notice is that Netgear is a few months behind Cisco. Either way, competition is good - who wants to send me a cheaper VOIP phone, or a free one?

Posted by: ITDefPat at January 4, 2006 12:55 PM

The difference here is that the Netgear phone claims to be able to work independent of the computer in any WiFi hotspot (The linksys product needs a computer though).

That is a very potent package.

Skype's biggest debatable disadvantage has been it's proprietary protocol which doesn't interact with any other industry standard protocols (VOIP, Instant Messengers via Jabber etc.) But with a standalone device like this, it is likely to catapult itself into a new level of dominance.

The downside is that this level of dominance is not going to be tolerated by the traditional telephony providers who will see a big loss in their long distance revenues as the non-IT types adopt this wi-fi device eagerly. So we will soon see a lot of pressure on Skype and VOIP providers by the traditional telephony heavywieghts (eg. taxation of VOIP, 911 services requirement, interconnect gateway costs etc.).

Posted by: Ashwin Jayamohan at January 20, 2006 10:30 AM

IMHO, Cisco or nobody will be in trouble, no matter with whom Skype is plus. Skype is at current position not because numerous users over the world use hardware based Skype. The market Cisco chases is not the same as Skype does.

Posted by: Peter at June 2, 2006 08:24 PM

I just purchased a Netgear WAG302 ProSafe Dual Band Access Point and a Netgear Skype phone.

It worked for one day and will not work anymore.

People with Laptops can bring up the internet at the front of my store, but I am less than two feet from the Netgear and can't get a signal.

Amazing.

Posted by: Edwin R. Myers at March 13, 2007 12:59 PM


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