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there will be numerous VoIP services from telco, cable, and ISPs that one will be able to use to basically call for free.

Skype is free, already (if you ignore the cost of the internet connection, which is already paid). Can't get cheaper than that. So I wonder what advantages the me-too services from Microsoft, Google, telcos etc. will bring to the table. They can't undercut a price of zero.

Probably the battle will be over the cost/benefit of value-added services.

Skype with its early lead and now strong backing from eBay looks darn well positioned to stay ahead of the others.

And the brand thing is also pretty important. Why does Apple iPod outsell competing models from Creative and all the rest that are cheaper and more powerful? iPod has become 'the' brand. Nokia's brand carried it ahead of the pack too.

Skype has that going for it so far. Skyping is a verb.

Google has a great brand and I imagine that if anybody puts up a serious challenge to Skype, it will be them.

Telcos don't worry me. They are awfully-managed, over-charging businesses in general.

The situation seems to be sizing up a lot like the IM wars. IM networks are proprietary so you can't call into one from another. Even if free you have to maintain accounts with each in order to inter-communicate (though there is one service that bridges them I think).

At some point people will start asking why the VoIPs don't inter-operate. Maybe services will crop up to bridge them. In the conf. call Skype explained that they wanted to be first to market rather than go through the long process of establishing an industry-wide standard (which would have also left them without a business model). Even if a standard emerges, there will be differentiation among providers for value-added services and that's where Skype's brand will be worth a mint. If they continue to execute well.

As far as eBay's interests are concerned, they will limit their VoIP provider to Skype I presume just like they limit their bill payment services to PayPal. So if ya wanna play ball on eBay you are driven to Skype sooner or later. Yes this is coercion but I can't think of anybody who can challenge them competitively with a better deal, except perhaps Google who as SwapUSA has pointed out pose an alternative through their paid search model.
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