Suggestion to Vonage

Posts: 22 · Vonage Forum Associate Joined: Jul 12, 2006 Posts: 22

I own stock in Vonage and think you are a great company. The street is looking for profitability and knows that Vonage will continue to gain market share. The media is saturated with Vonage Advertisements to the point where by cutting your television budget by as much as fifty percent will not substantially affect new memberships. Investors will welcome this news. They will know that you are looking at the bottom line in concert with new memberships. The traditional phone companies will continue to attempt to defeat you because Vonage is the biggest competitive threat that they face.

Posts: 66 · Full Forum Member Joined: May 25, 2006 Posts: 66

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The traditional phone companies will continue to attempt to defeat you because Vonage is the biggest competitive threat that they face

Vonage is no threat to the phone companies. Any of the big telco's could squish Vonage anytime they wanted to.

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Will cutting advertising costs benefit Vonage's bottom line?

Any cost cutting will "benefit the bottom line". That one's a no-brainer, there is no answer other than "yes". A more interesting question would be "Is it in Vonage's best long term interest to cut back on advertising?" - i.e. questioning the board's current policy.

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I own stock

Dump it and put it down to experience.

Posts: 94 · Vonage Forum Senior Joined: Jun 17, 2006 Posts: 94

[quote="trillian"]

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Vonage is no threat to the phone companies. Any of the big telco's could squish Vonage anytime they wanted to.

Don't be naive. Time Warner,Comcast,and Optimum Online are spending like crazy (almost as much as Vonage) and they still have a ways to go to catch up with Vonage.

Once you get a satisfied customer, it will be diffciult to attract them away.

I am a satisfied customer and I don't think I would leave Vonage unless they raised prices dramatically. My brother says the same thing. We need the portability and the low overseas rates!!

Posts: 66 · Full Forum Member Joined: May 25, 2006 Posts: 66

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Time Warner,Comcast,and Optimum Online

And you're calling me naive? Wink

http://www.vii.org/afteluso.htm

Posts: 94 · Vonage Forum Senior Joined: Jun 17, 2006 Posts: 94

If the shoe fits?

Vonage and the Voip technology is the biggest threat that the bell operating companies have. Don't be fooled by that.

Saying that there is no threat is being blind. Without Voip, the bell operating companies wouldn't ever lose a customer. Consumers had no choice.

You can argue that Vonage may not be successful in attaining that critcal mass, but the bell operating companies are scared to death with the threat.

Posts: 66 · Full Forum Member Joined: May 25, 2006 Posts: 66

Vonage's only threat is to itself. There is only one outcome, and that is reduced costs of telephony, down to almost free or completely free. Great for the consumer. Great for the network owning incumbents who control broadband/TV/cable etc.

The incumbents will be around for many many years yet. Viewing a company like Vonage as a threat is "naive". You do not understand the industry that you are discussing.

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Consumers had no choice.

They still don't. What does your Vonage service sit on top of, and who supplies that? And when the supplier of that offers you cheaper telephony than Vonage are offering you (and believe me Ma Bell can afford to price cut), what are you going to do? What are 99.9% of Vonages customer base going to do?

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the bell operating companies are scared to death with the threat.

LOL

They had the opportunity to buy Vonage for less than it IPO'd for and do you know what happened?

Posts: 94 · Vonage Forum Senior Joined: Jun 17, 2006 Posts: 94

If you think its a great industry, then buy Verizon or Bellsouth.

No threat anywhere???

Posts: 66 · Full Forum Member Joined: May 25, 2006 Posts: 66

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No threat anywhere???

Oh no, there are threats alright, it's just that Vonage isn't one of them because it has no competing infrastructure. It cannot compete. It relies on voice generated revenues to make money. As soon as those revenues are not available, it has no income.

This is one aspect of pure voice provision that so many people fail to grasp as they're not thinking beyond the technology. Beyond to the infrastructure on which it relies. I regularly have to hammer this point home to clients. They don't get it at first either. Someone mentions "VoIP" and dollar signs light up, but you need to think about how that product gets delivered to your customer and understand how that delivery mechanism is currently changing.

You'll see the effect once the inevitable price cutting and triple play bundling starts to kick off. When that happens Vonage has nowhere to turn, as it can't offer anything else. Critically, it has no network from which to offer services.

Question # 1 : if your broadband provider said to you that it could offer you the same service that Vonage does, but it'll give it to you for free, as you're a good customer for broadband, what would you say? Would you keep Vonage, even if it's costing you an extra $20/month (or whatever it is in the US)?

Question # 2 (and I put this to you as I have no doubt that Vonage will try to compete) : What would Vonage have to offer you by way of value add to pursuade you that Vonage is worth paying for, rather than just taking the free service from your broadband ISP? And what is it that Vonage could offer you here, that your broadband ISP couldn't?

Question # 3 : What can Vonage offer you that your broadband provider can't ?

Ask those three questions and you'll begin to understand the predicament of the pure voice provider company like Vonage.

Every broadband provider knows that Voip will be a big key into getting market share in broadband and that the traditional telco per minute charging model is dead in the water. And behind those broadband providers, more often than not, you'll find a sleeping giant. The incumbent telco.

Vonage is just a cut-price telco, and it's a cut price telco that's about to get undercut. In a big way.

Anyway, you can see all of this unfolding right now if you look around. I can't really explain it to you any better than this. You either get what's happening in the industry right now, or not.

Fundamentally, Voip is becoming part of the feature set of networking, much in the same way that e-mail did before it.

Posts: 94 · Vonage Forum Senior Joined: Jun 17, 2006 Posts: 94

When and if the cable companies start offering Voip for free
then I'll agree with you.

If your competitors start offering you single product for free, then I agree that you are screwed.

If GM started to offer cars for free, then Ford is screwed and if Colgate started to offer toothpaste for free, then Crest is screwed.

However, I have not seen that yet. Vonage continues to be the lower priced product.

If your these holds any water, then we'll start seeing the cable companies undercutting Vonage's prices. Again, we've seen them match Vonage's prices. We haven't seen them undercut. Cable companies are public entities and have to worry about showing P&L every quarter.

Posts: 66 · Full Forum Member Joined: May 25, 2006 Posts: 66

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When and if the cable companies start offering Voip for free.

Or so close to free that you wouldn't notice, which is what happens effectively with email - it's just part of a "bundle" of services which your broadband connection can supply. The supplier hosts the email server infrastructure for it as a loss-leader/value-add. It's wrapped up in an overall monthly fee.

They're already building it.

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Cable companies are public entities and have to worry about showing P&L every quarter.

Yes they do, but the killer app is not voice. It's video. We've known that for a long time - that's why telcos are out buying innovative video related software companies and turned their nose up at Vonage when Citron was trying to sell it privately.

Voice is a freebie. Skype, Yahoo!, MSN and GTalk have made sure of that. The public perception of "VoIP" is not the same as the public perception of "PSTN".