Telefonica to shut down VoIP provider Jajah on January 31
Jajah, the Israeli startup and VoIP service provider to more than 15M users, will be closing its doors to free up employees to work on ToGo, a new product from UK’s O2
The VoIP market took another hit yesterday as O2, a subsidiary of telecom giant Telefonica, announced yesterday that the Israeli startup it acquired in 2009 known as Jajah will be shutting down its services come Jan 31st.
Development center in Israel to remain
Although it’s still unclear why Telefonica decided to close the site, Geektime learned from sources that the reports indicating a lack of profit as being the reason behind the shutdown, are incorrect. Geektime also learned that the employment status of the 120 workers at Telefonica’s development center in Israel will not be impacted in any significant way. This is primarily a policy change where the focus of the company’s employees will be reoriented toward a product called ToGo targeting reseller customers of UK’s O2 telecom. The new product is based on the Jajah’s platform, which allows users to make VoIP calls from network devices such as tablets or desktops in addition to smartphones.
Jajah was founded in 2005 by Roman Scharf and Daniel Mattes and raised $35M in investment from Deutsche Telekom’s T-Ventures, Intel Capital, Sequoia Capital, Globespan Capital Partners and other investors. After Google acquired Gizmo5 (which later was integrated into Google Voice service), a competitor of Jajah, The company found itself in a pretty good position sparking a bidding war between Microsoft and Cisco who toyed with purchase amounts ranging between $200-400M. Ultimately the company was acquired by Telefonica in December of 2009 for $207M and Skype was picked up by Microsoft for $8.5B.
Looking at what happened to the market soon after it’s reasonable to assume that Telefonica’s investment saved the company from going under far earlier. Competitors such as Jangl and Jaxtr went bankrupt or were forced to under sell. In 2010, Telefonica was the first to launch its VoIP service for customers of O2 Germany based on Jajah’s technology. The service was characterized mainly by discounted call rates for calls outside the country. In addition, users could choose five numbers outside Germany and assign local numbers using discounted call rates.
Geektime reached out to Telefonica for response. None has yet been received.