May 31st, 2007
Analysts: pure play VoIP companies have "no future"
If you thought that the prospects for Vonage and other “pure play,” non-bundled VoIP services were bleak, just wait until you read analysts comments contained in a newly published piece by Kelly Teal on xchange magazine’s xchange online site.
First, Kelly makes the point that margins for voice services have been driven down by the expense of VoIP itself, and are now being severely challenged in terms of price and functonality by cable and telco voice offerings that are bundled with larger packages.
OK, are you ready now for these zingers from a couple of clued-in telecom analysts? Kelly quotes two of the best.
“I don’t see how far it can go — there is no future,” Stéphane Téral, principal analyst for Infonetics Research, says of the VoIP pure-play model. “They really need to come up with something new that has nothing to do anymore with who they were in the past.”
Sally Cohen, an analyst who covers consumer VoIP and broadband for Forrester Research, says consumers are not really interested in a pure-play solution. Despite the mountains of money Vonage has spent on advertising to evangelize VoIP services to the nation, Cohen’s recently released report, “VoIP Marketers: Price And Features Slowly Win Over Consumers,” finds 3 percent of online consumers in 2004 paid for pure-play VoIP and that’s only risen two percentage points since then. That slow growth illustrates Cohen’s opinion that Vonage is “marketing to a disinterested public.”
It’s at this point where I digress from Kelly’s scene-set. Kelly then says that Vonage “sees” the inevitable downside of pure play. Yet as back-up, Kelly then quotes a Vonage spokesperson as saying Vonage hopes to unveil a dual-mode phone by years end. And perhaps more significantly, top Vonage execs still defend the pure-play VoIP model every chance they get.
I’m sorry. For Vonage, the issue is not in the phone instrument, it is in the service packages. Unless they get wise and present full-fledged triple-play offerings to the market, they will be a footnote.
I know I am repeating myself, but what about a package with a hungry upstart such as Cricket Wireless?
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
