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Profitability Will Be the Key to Survival
Analysts do not see a bright future for VoIP pure plays, but I think the future is just find for profitable VoIP pure plays. You see if your a profitable VoIP pure play, control your costs, and do not spend like Vonage, the biggest thing you’ll have to worry about is being bought by a larger company; a viable exit strategy and not exactly “death”. The reason for all of the doom and gloom is that most of the high profile VoIP pure plays are spending like pigs on marketing and advertising, and losing money because of it. I wonder how many small or medium VoIP pure plays these analysts are aware of…I doubt many. If they did they would know that their are dozens that are growing, profitable, and are not worried about how they are going to survive.
I agree that eventually VoIP pure plays will have to broaden their horizon’s, but then again, what business doesn’t? The less profitable or unprofitable your company, the sooner changes will need to come, but if you are currently profitable, you can be patient with your growth and expansion. This is the future I see for profitable VoIP pure plays, not the one most analysts are forecasting.
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{ 3 comments… read them below or add one }
I completely concur, not mentioned in the article however is QOS . This is a big deal for pure SMB hosted VoIP. If your Cableco, suddenly starts offering a competing service to your VoIP provider, who guarantee’s QOS? The network owner can prioritize packets, but can Sunrocket, or Vonage? One line is no big deal, but 12 or 24 concurrent lines is a different story - how do they offer that service with five 9’s?
QoS is a huge concern, especially in the small medium business sector. Although pure play’s cannot prioritize packets on the WAN, they can use a variety of devices, like an EDGE mark device, that can be used to remotely monitor QoS. Companies such as Bandwidth.com have been doing this with every customer and it seems to be alleviating alot of the QoS issues.
Residential VoIP will always be another story, but in all reality, folks like Verizon are having the same QoS issues with VoIP that Vonage and SunRocket are having. My brother has VoiceWing and FiOS, and when I call him the call quality is not great all of the time.
Profitability, as with all businesses, is still the key to survival!
Telio, in Norway, is often touted as a profitable version of Vonage. See Jon Arnold’s analysis here: http://blogs.pulver.com/jarnold/archives/2006/11/vonage_and_teli.html
Of course, there are some fundamental differences in the market they are addressing.
But the main point is, they didn’t blow their brains out with marketing.
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