Google Buys GIPS in Challenge to Skype

Google, via its Google Acquisition Holdings Inc. subsidiary,  has entered an agreement to purchase Swedish web communication provider Global IP Solutions (GIPS) for about $68 million in cash.

GIPS specializes in voice over IP (VoIP) and video processing technology for IP networks. Solutions include mobile voice and video conferencing, enterprise telephony, business telepresence, real-time communications for gaming and social networking, and unified communications. The company says it provides strategic advantage to users by allowing them to deliver IP-based voice and video solutions to existing and new applications and embed VoIP and real-time video capabilities into hardware and services.

As it has done with past purchases, Google is being rather vague about what exactly it plans to do with GIPS. In a joint press release, GIPS CEO Emerick Woods is quoted as saying the two companies plan to "transform and accelerate IP communications" through the deal. Woods also mentions full support of existing customers. Google Engineering Director Rian Lienenberg cites "real-time video and audio communication over the Internet becoming important new tools for users." 

Google must see some serious potential in the future of IP-based communications, as the offer price is significantly higher than any measure of GIPS’ stock this year. Some observers have suggested Google will use GIPS technology to move into the territory of IP-based communication platform Skype.

If this is true, Google is continuing its strategy of challenging clear leaders in their fields of domination. Google has been busy in the past year preparing its cloud-based Chrome OS, a direct assault on Microsoft Windows. Google obviously knows how to dominate a market, based on its leadership of the online search space. Now Google must prove it can dominate a market it didn’t help create.

GIPS intends to delist from the Oslo stock exchange after the purchase is complete, suggesting that GIPS will function as a division of Google or possibly be completely absorbed.