Yahoo: We'll Squash Skype

Yahoo this week will release a new version of Yahoo Messenger designed to compete head to head with Skype, Om Malik reports in his blog. The revamped Yahoo service is expected to allow people to call PSTN phones as well as make PC-to-PC calls. Skype has too much of a market lead at this point for the new Yahoo service to make much of a dent in it. And having eBay behind it will certainly help fend off Yahoo.

But over time, I expect Yahoo to take away market share from Skype. And you can certainly expect AOL, Microsoft, and others to follow suit as well.

The real winner in all this may be small businesses, for whom telecom costs are far too big of an expense. Install a VoIP client on all desktops, and free PC-to-PC phone and low-cost PC-to-PSTN calls will dramatically cut costs.

Of course, we're then left with the problem of incompatible VoIP clients. But we'll leave that for another blog.