Apple 2.0

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Why did Apple okay RingCentral?

August 24, 2009: 10:22 AM ET

RingCentral MobileHere's a question the FCC neglected to ask Apple (AAPL) in its inquiry into why the company rejected -- or as Apple prefers, declined to approve -- Google Voice:

Why has a free app that does essentially the same thing -- and would seem to raise the same red flags for Apple -- been sitting on the App Store for nearly 10 months?

The app is called RingCentral Mobile and not only does it perform most of the same functions as the Google (GOOG) app that's making all the headlines -- universal telephone number, voicemail, dial-by-name directory, click-to-call, call forwarding, answering rules, call screening, music on hold, etc. -- it was the template on which both Google Voice, and its predecessor, GrandCentral, were built.

Moreover, unlike Google Voice, RingCentral uses VoIP -- the voice-over-Internet protocol that causes AT&T (T) such problems. But like Google Voice, it "alter[s] the iPhone's distinctive user experience by replacing the iPhone's core mobile telephone functionality and Apple user interface with its own user interface for telephone calls ... and voicemail" -- to quote from the explanation Apple gave the FCC for why it didn't okay Google Voice.

There are differences. Google Voice is free -- or would have been if it had been approved. RingCentral Mobile is free, but it requires a subscription to RingCentral, a virtual PBX service that costs $9.99 a month for individuals and very small businesses and $99 a month for larger enterprises.

And unlike Google Voice, which is still in beta and available by invitation only, RingCentral is a profitable 10-year old company with nearly 90,000 paying customers and the backing of Sequoia Capital and Khosla Ventures.

More to the point, according to a source close to the company, RingCentral has signed a strategic agreement with AT&T to do "something much bigger and cooler that they will not discuss openly because of intense competition."

Could this have something to do with Apple's objections to Google Voice?

Of course, RingCentral does not pose the same existential threat to Apple that Google does. To quote the graph in Michael Arrington analysis in TechCrunch Friday that rings most true:

"Multiple sources at Google tell us that in informal discussions with Apple over the last few months Apple expressed dismay at the number of core iPhone apps that are powered by Google. Search, maps, YouTube, and other key popular apps are powered by Google. Other than the browser, Apple has little else to call its own other than the core phone, contacts and calendar features. The Google Voice App takes things one step further, by giving users an incentive to abandon their iPhone phone number and use their Google Voice phone number instead (transcription of voicemails is reason enough alone). Apple was afraid, say our sources, that Google was gaining too much power on the iPhone, and that's why they rejected the application."

These are some of the issues the FCC might consider when it meets Thursday to vote on whether to proceed with a full-scale investigation.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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