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Will Vonage Die?
This analysis from Art Reisman says that Vonage is going to die. Art’s claim is that once the incumbent players decide that VoIP is a real challenge there’s nothing to keep them from offering the service more efficiently at the same price-points.
I don’t disagree with this view to a degree. I’ve looked at VoIP as a business in some depth on some prior business deals I was considering and there’s nothing about what Vonage is doing from a technology or business standpoint that offers significant competitive advantage. What’s more, this is a business where margins are thin and so size and operational excellence are critical to success. The incumbents already have both of those in spades.
Where Vonage has any advantage at all, it’s in their ability to take advantage of their green field position to do things that are more complicated in a business with lots of legacy issues. One example that springs to mind is Vonage’s online provisioning system and it’s link to their after-sale, self-service account management system (see Customer Starts With Custom). I moved all my phones to Vonage earlier this year and I love the ability Vonage gives me to manage features in my account whenever I like.
In the end, however, the gist of the article is spot-on: all services from all players will eventually be value-adds running over IP. Will Vonage die? Maybe, but I think they have an opportunity to emphasize the advantages they get from being new and small to out-maneuver the competition. Either way, the consumer will win and Vonage is part of making that happen.
Posted by windley on June 28, 2006 1:32 PM
Comment from Kenneth Burgener at June 28, 2006 4:36 PM
I use Broadvoice over Vonage, because Broadvoice service is only $10 a month verses Vonage's $20 a month. So cost is a big factor. If one of the "incumbent players" can get me service for even less, with about the same features and high reliability, I will be switching.
Comment from Adam Levy at July 7, 2006 8:51 AM
Vonage is going to die - but perhaps not for the same reasons that are listed in this article. The incumbents are hugely bloated and through they collect most of the termination charges, I don't believe that it could make that enormous of a dent in a lean VoIP company. HOWEVER, Vonage is a company that has taken customer service to a new low. They have outsourced most of their agents to foreign countries, and have made the cancellation process virtually impossible, to the point where consumer advocate columnists across the country are repeatedly commenting on Vonage's poor service. As analysts are now harping on the golden question "Would you recommend this company to a friend?" to determine future success, I think Vonage's days are numbered.
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