YMAX and VocalTech Merging

Barron’s has a curious story about the merger of YMAX and Vocaltech. YMAX is the Florida-based parent company of Magic Jack. VocalTech, based in Israel, is one of the software pioneers of the voice-over-IP revolution. From their roots in the first retail soft phone they went on to become an early leader in VoIP to PSTN gateways.

My very first exposure to VoIP was using Vocaltech’s Internet phone software way back in 1997. At that point I was on dial-up and Internet Phone allowed me to call my girlfriend who lived 900 miles away without concern for call duration or cost.

In an odd fashion Magic Jack is a good fit into their historical business. Magic Jack replaced the Internet Phone software with a USB dongle and their SJPhone variant. VocalTech has their own soft phone offering, as well as many back-end technologies.

Magic Jack bought SJPhone some time ago. They also hold a number of patents that may have value beyond the retail operation of the business.

Magic Jack claims to be substantially facilities based, having a number of soft switches installed in support of their retail operation. As VocalTech is in the soft switch business perhaps there are some synergies to be realized in the combined companies. Some people seem to think so.

Maybe this is a kind of back-to-business-as-usual for VocalTech, who seem to have slipped from view as the industry has grown up around them over the years.

While this is something of a curiosity from a business perspective, I’ve always felt that services like Magic Jack were of limited interest. I feel that they are just one more sign of the plummeting cost of calling on a per-minute basis. Being wholly focused on low-cost PSTN replacement they offer little in the way of real innovation in the nature of the service being offered.