September 11th, 2005
Business Week's VoIP doom and gloom: they may not be all wrong, you know
Business Week’s Olga Kharif believes that the VoIP market has entered a phase what Federal Reserve Chair Alan Greenspan terms "irrational exuberance."
"I believe that we’ll see the VoIP world coming down to earth sooner rather than later, too," she writes.
Kharif seems to be basing her prediction on the belief that most VoIP companies are losing "a ton of money," cannot "assure" profitability, are overvalued as acquisition targets, face impending competition from more established brands or players, and lack differentiation of services.
Kharif also has a problem with the fact (according to networking vendor Sandvine) that there are currently more than 1,100 VoIP service providers. That’s too many, she believes.
Yes, she is right on those 1,100.
A lot of those may have a future selling out to small, regional broadband access providers that are looking to expand their service set.
As far as the bigger picture is concerned, sure, we are going to see a thinning of the herd. Happens in every industry that has lots of me-toos at birth. The market will decide, and cull the weak.
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
