Skype to Buy Gizmo5 to Stay in Business

Skype's future is looking anything but secure, even with the recent sale, and with things getting a little desperate, the VoIP service seems to be looking at all options to ensure its survival. The latest rumor is that Skype is looking to buy peer-to-peer VoIP startup Gizmo5 for around $50 million. The deal is far from secured but it would make sense for the former to be interested in the latter's technology.

The VoIP service formerly owned by eBay has had somewhat of a troubled year. The auctions company hasn't been so successful at integrating the communications technology into the main site so it made plans to spin off the company in an IPO sometime next year. Those plans got bogged down when Skype's former owners filed a lawsuit through one of their current companies, Joltid, over a piece of technology licensed by Skype from the latter. eBay put on a brave face claiming that the IPO would go on no matter what but the fact was that, without the peer-to-peer component Joltid was providing, Skype was basically useless.

eBay managed to sell off a large portion of Skype to several private investors but the troubles for the company only intensified with another suit from founders Janus Friis and Niklas Zennstrom for copyright infringement. Another suit against Joost's former CEO, a company also owned by the two, Mike Volpi, who was involved in the Skype sale, added to the mounting legal issues.

Skype may very well come out unharmed from all of these lawsuits but as long as it is dependent on Joltid it will be vulnerable. One solution put forth a few months back was to develop its own technology to replace Joltid's but this could prove very difficult and very expensive for the company. Nevertheless it is working on an internal project that aims to do just that. Now the VoIP company is apparently looking at another alternative: buy Gizmo5 and use its technology to power Skype. It isn't a direct replacement, it can't do peer-to-peer calls like Skype but it could be adapted to do the job.