I have been using Gizmo extensively for the past several months, and have been working with the just released 2.0 version for several weeks. We use Gizmo as our primary SIP client to dial into the Radio Handi group communication platform. I liked the 1.x versions a lot, as they were fairly idiot proof compared to other SIP softphones.

With the 2.0 release family, Gizmo has made a significant step forward, and is also doing something important for the VoIP industry by promoting real interoperability. Many features are being rolled out in the 2.x release series, the most significant of which is the ability to log into a secondary SIP phone service.

This is an important feature because it turns Gizmo into a dual personal/business softphone by allowing users to simultaneously register with Gizmo for personal calls, and a company PBX or secondary VoIP service for work related calls. This feature adds real value in an industry that, until recently, has been characterized by a race-for-the-bottom price war. Price is important, but at some point cheap enough becomes free, and it is by integrating with other systems that products like Gizmo can set themselves apart.

This is where standards and interoperability matter, and why I think Gizmo will win the battle for profits in the VoIP space. Skype is without doubt the dominant player in the market today, but they are growing their business by slashing prices, which may make for impressive subscriber numbers, but also dismal margins. It is well known in that business users generate a disprortionate share of telecom profits, while personal usage generates much lower margin.

Example, I was in London as I wrote this. I took a call from an important client on my T-Mobile phone. It was an expensive call, but considering who I was talking to, I was happy to pay $30 to schedule a meeting that otherwise would not have happened. I may be willing to put up with the hassle of finding a hotspot to make a laptop call on my headset to my mom, but if a client or investor is on the line, I’ll drop a coin to take the call.

Gizmo is clearly on the right track by enabling business class features in a softphone that is very easy to install and use, as well as easy on the eyes. I have a few gripes about the layout of the user interface, such as the need for multiple line appearances to juggle calls on hold, and some annoying minor glitches, but considering the youth of the product, I am quite impressed with it. As more and more business phone systems and Centrex-class services become SIP compatible, products like Gizmo will become more and more valuable.