Move Over, Skype: Intel's Backing Jajah

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For Jajah, the Intel alliance signals a strategy shift. Until now, the company has focused on enabling calling between traditional phones. Now, the startup, previously funded by Silicon Valley heavyweight Sequoia Capital, which was also an early investor in the likes of Apple (AAPL) and Google (GOOG), is stepping onto Skype's PC-to-PC calling turf. It's a natural progression, given that as many as 70% of calls made by Jajah users are initiated via a computer (see BusinessWeek.com, 9/26/06, "Jajah's Mobile Ambitions").

Jajah is also about to go after business users, another market coveted by Skype. Today, only about 7,000 of Jajah's 2.5 million customers are small businesses. But the company plans to rev up advertising to businesses later in 2007, Scharf says.

Call Your Mother

Intel says Skype remains an important partner. "We aren't in a position where we're resource-constrained, where we have to go with one provider," says John Tennant, director of strategic relationships for Intel, which also works on Web-calling technologies with Cisco Systems (CSCO) and Packet8. In addition to technology collaboration, the two companies have begun joint marketing.

This Mother's Day, they will jointly offer free calling to moms for Skype users in the U.S. and Canada. "We certainly value all our relationships," says Saltzman, of Intel Capital. "We're going to continue to work with all these companies and others. I wouldn't anticipate this affecting our Skype relationship."

Skype seems unfazed as well. "We will continue to work together," says Don Albert, vice-president and general manager for Skype North America. "Our engineers are looking at the road maps for the future." What's clear is that, when it comes to the future, Intel is hedging its bets. "We think there's a large group of consumers for whom Skype is not appropriate," says Scharf. "Skype [which requires headsets and software downloads] is too sophisticated for the vast majority of people. Jajah is not."

Kharif is a reporter for BusinessWeek.com in Portland, Ore.