VoIP’s Winners and Losers in a Down Economy

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I try to escape it - but I can’t. Everywhere I turn. Everything I see. Everything I read.

The economy. It sucks.

I look at every glass as half full - I am an optimist. When that glass has a big crack in it, though and is leaking like a sieve, I am forced to reconsider my position. Our global economy is a cracked glass and it’s not something Mighty Putty is going to fix.

Inevitably, the VoIP industry will be affected by the flow of water out of the glass - many in the VoIP industry will drown in the undertoe the current it creates, while others will harness the power of the current and ride it to greater prosperity. I am an optimist - let’s take a look at some of the potential winners in VoIP industry in a down economy…

The Winners

1. Mobile VoIP Service Providers - No start-up costs. No hardware to buy. Free and or cheap minutes. As budgets tighten around the world, Mobile VoIP will be a very attractive way to lower one’s communications costs - both for businesses and consumers. Question is, can current Mobile VoIP providers can stay afloat on thin margins?
2. Hosted VoIP Providers - With Bandwidth.com’s release of Phonebooth, the age of the “free seat” is upon us. With scability issues caused by the cost of per seat fees out of the way, getting a fully functional phone system for free is an attractive option for money strapped small medium businesses. Through in the IP phones on lease and you have yourself a no-brainer. Expect more Hosted VoIP providers to follow Bandwidth.com’s lead.
3. Triple Play Providers - Why lower all three bills individually, when you can do it in one swoop? Makes sense to me and I suspect it will for most consumers who want to cut their communications and entertainment costs. Comcast, Time Warner, etc should do well.

The Losers

1. Residential VoIP Providers - Consumers will certianly be quick to try and lower their expenses - and their phone bill is no exception, but they won’t be looking at the pure plays like Vonage as the triple play is too powerful a concept for consumer not to turn to it. Catastrophic comes to mind when thinking about the sort of losses the residential VoIP provider space will experience.
2. Phone Systems Vendors - VAR’s are going to take some healthy lumps as the marriage between upfront costs of equipment, installs, maintenance and the tightening of credit makes purchasing a premise based phone system a tough decision for a small business - even though the will save money eventually. In a down economy an 18 month ROI is still too long to make any substantial capital outlay. This will inevitably roll back up to the vendors - who will feel similar pain.
3. Small Medium VAR’s - It is has been echoed that this economic downturn will hit SMB’s hard. The vast majority of VAR’s out there are serving this sector. When cash is tight, credit tough to get and other bills to pay, spending on something new will be out of the question - if people aren’t buying, you aren’t selling and if you aren’t selling you won’t be in business much longer.

The economy. It sucks.