July 6th, 2006
Packet 8 CEO: don't confuse us with THEM. Me: OK, but only up to a point
Bryan Martin, CEO of VoIP company 8×8 (Packet8), is quoted in a press release that appears to take pains to distinguish Packet8 from that big Internet telephony competitor of theirs whose name starts with a "V."
Reading this document, it appears to have been precipitated by Martin’s concerns that Vonage’s legal and post-IPO stock price troubles have had an effect on 8×8 as well. "Some of the decline in our stock price my well be due to the current overall market declines, as well as the results of the recent IPO of one of our direct competitors," Martin writes.
He says this may have resulted in an effect on the validation "of a number of other VoIP companies, including 8×8."
That sounds plausible. But then as it is his job to do, Martin issues a four-point rebuttal about why Packet 8 really and truly is different.
The reasons:
Packet 8 has a "rapidly growing" small business segment;
Packet 8 offers video (as in the Packet8 Video Phone shown above, pix via Engadget);
The company is "extremely judicious about our customer acquisition costs";
8×8 actually has developed its own patented technology, and as a result, their services "are not plagued by sound quality or reliability issues that have affected other VoIP service providers."
OK, now let us go over each of these points.
Small business is a growth area for Packet8, but Vonage is starting to ramp up their services to this segment as well. I actually see a high tide lifts all boats scenario here.
Video is a differentiator, but I’m skeptical about how many consumers and SMBs really want VoIP-delivered vid. It’s a differentiator, true, but not a major advantage.
Customer acquisition costs relate to the significant difference in corporate cultures between a technology company that markets, and a marketing colossus with a technology. If there’s one key distinguishing characteristic between Packet 8 and Vonage, that’s it. It is absolutely not in Packet 8’s DNA to woo-hoo, woo-hoo-hoo. As Packet 8 says in their press release, "we have absolutely no intention of competing with nonsensical customer promotions. Gee, I wonder who they are referring to!
As to the patent/reliability issues raised by Martin, it does seem there is an implication that Vonage- which has been sued for patent infringement by Verizon- is in a less advantageous position to master a technology that they, unlike 8×8, do not even own. Legalities aside, there does not seem to be a huge gulf in performance between Packet8 and Vonage. My own experience shows Packet8 as slightly superior, but not in a stark way.
So while Packet8 has some grounds for these assertions, I question the consequential weight of them. I say this especially considering the fact that Packet8’s real competitors are not just Vonage, but the triple-and quadruple-bundled services ISP’s and IM’-ers who are almost all grown up now.
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
