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March 29, 2007
This is perhaps the latest
JibJab. It was forwarded to me today so I am sticking with this concept. Loyal readers please let me know if I am incorrect. This is media related and average in terms of humor.
| This entry was posted at 8:10 PM.
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March 29, 2007
Many people have been asking me about the Vonage situation in light of a recent
stock downgrade from Citibank analyst Michael Rollins, who said that Vonage probably has a couple of years to go and at that point they will undergo a financial restructuring or bankruptcy. Recently many have been asking me what I believe the future of this company to be.
The recent
Verizon lawsuit regarding patents Vonage infringed upon is probably not final if my sources are correct. Many believe the patents Verizon has are not unique and were indeed awarded based on technology which was not invented by Verizon. This of course would have to be proven by someone. I suppose Vonage did their best to do this but was obviously unsuccessful.
Still, Vonage is a young company and apparently patents are not their forte. They were also hit with a slew of patent lawsuits and the odds were stacked against them. In lawsuits it is not uncommon to throw many things against the wall and hope something sticks. In this case Verizon was successful with this shot gun strategy.
So if you take this patent issue away (and I am not suggesting it is over or close to over), Vonage will be dealing with a little less of a problem. As you may recall, damages were determined to be $58 million in damages and 5.5% royalties on any sales going forward.
Now many others have already told me they believe, as I've
written in the past that the amount of money that Vonage spends annually on marketing is still toohigh. In fact, it's astronomically high for a company of it's size. They are going to spend upwards of $160 million in 2007. The New Jersey based VoIP leader can comfortably cut back on marketing and still do well.
There's a
law of diminishing return in marketing whereby if you spend let's say $25 million; everything over $25 million is not as effective as the first $25 million. So they can cut back marketing comfortably and still have a bunch of money left over, which could go to the bottom line and actually make the company profitable.
In the end the company will probably have to deal with coming up with a triple-play offering of some kind, partnering with some sort of broadband provider, WiMAX or other company. So that's something for later. But for the next three to four years, Vonage is in pretty good shape from the standpoint that they have a critical mass of users – over 2 million in fact. They're a large pure play, the largest domestic pure play VoIP provider. I think their prospects are better than many have realized or give them credit for. That's my feeling about Vonage. Let's see what happens in the upcoming quarters.
| This entry was posted at 7:45 PM.
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March 29, 2007
I am headed back from CTIA and am on an airplane heading back to Connecticut. A look at my watch and out the window makes me think we are in Virginia along the coast. Sometimes you luck out and have the seat empty next to you. Today is not that day. Anyway, CTIA was a busy show and it is interesting that the show can encompass so many disparate topics from mobile music to consumer applications to devices to power supplies to base stations to IMS.
In fact it almost seemed like I was looking for needles in haystacks for the areas of interest I cover. For the most part I avoided getting too engulfed in the latest gadgets as you could spend weeks just absorbing them all. Instead, for the most part I focused on companies targeting service providers or enterprise customers.
I think the most impressive technology was shown by a company named Vanu which makes equipment in the software defined radio space. This allows a base station to support multiple standards such as CDMA, GSM, EVDO, etc. The technology is very similar to what you may know as host media processing or HMP. Basically the DSPs are replaced with software running on Intel processors.
This technology allows service providers to save money while reducing time to market. I hope to cover all the companies I met with as soon as I get a moment. I am really looking forward to it actually.
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I am headed back from CTIA and am on an airplane heading
back to Connecticut.
A look at my watch and out the window makes me think we are in Virginia along the
coast. Sometimes you luck out and have the seat empty next to you. Today is not
that day. Anyway, CTIA was a busy show and it is interesting that the show can
encompass so many disparate topics from mobile music to consumer applications to
devices to power supplies to base stations to IMS.
In fact it almost seemed like I was looking for needles in
haystacks for the areas of interest I cover. For the most part I avoided
getting too engulfed in the latest gadgets as you could spend weeks just absorbing
them all. Instead, for the most part I focused on companies targeting service
providers or enterprise customers.
I think the most impressive technology was shown by a
company named Vanu which makes equipment in the software defined radio space.
This allows a base station to support multiple standards such as CDMA, GSM,
EVDO, etc. The technology is very similar to what you may know as host media
processing or HMP. Basically the DSPs are replaced with software running on
Intel processors.
This technology allows service providers to save money while
reducing time to market. I hope to cover all the companies I met with as soon
as I get a moment. I am really looking forward to it actually.
| This entry was posted at 4:56 PM.
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March 29, 2007
One of the most interesting parts of the technology space is actually the hosted e-mail market, where Yahoo!, has recently done something amazing with their e-mail product allowing you to have infinite storage. Now there was a time when Google’s Gmail product was the underdog and they decided to allow 1 gigabyte of storage and was pretty big step above the 4 megabytes Yahoo! provided.
Google immediately upped the ante and now Microsoft and Google are offering somewhere in the neighborhood 2 to 3 gigabytes of free email storage. It is also worth noting that Time Warner’s AOL service has been offering unlimited storage since last summer.
I guess the scale of what Yahoo! is doing is amazing to me just due to the fact that they're giving away unlimited storage for so many of their users. In fact in February Yahoo! email attracted 243 million visitors and Microsoft’s Hotmail had 233 million.
In the same month Google had 62 million visitors to their Gmail offering. It's important to note this number represents a 68% increase from the prior year. There is a great AP
story that details what's happening with the various email providers. It also shows what seems to be the future of the internet and more importantly the future of services on the internet. Simply stated, the business model being pursued by many is to give software for free and then find ways to monetize it. This is obviously what Skype has done with their product -- giving away a free voice over IP client and utilizing the reach of the client to generate an enormous amount of revenue from added services.
Google also has done a great job spending a tremendous amount of money to build the best search engine and then monetizing the search engine with advertising. So it remains to be seen what other services will be become freely distributed and ad supported. I think this trend really bodes well for consumers and at the same time makes it a lot more difficult for other providers to compete with the likes of Yahoo!. It seems the only way to join in the e-mail party now is to do something out of the box.
So hats off to Yahoo! for giving away so much. With all this e-mail competition, consumers are going to be the winners.
| This entry was posted at 12:59 PM.
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March 29, 2007
I recently learned that 8x8's Packet8 service was
awarded a US Government contract and, there's going to be an installation of 15 Packet8 Virtual Office unlimited extensions at the US Army's, Yuma Arizona facility. It looks like the voice over IP market has gotten to the point where the government has really caught on to it and is beginning to roll out installations on a pretty widespread basis.
We've been seeing the Army, and other parts of the government coming to our
Internet Telephony Conference & Expo shows since about 2001. It looks like now, the various branches of the government and military are taking voice over IP very seriously, and they see that IP communications is a great way to go in terms of communications from the stand point of reliability, redundancy, etc.
It's interesting to note that, the military has been a big user of voice over IP, in installations in remote areas that needed satellites for communications. Subsequently, what they've been able to do is use high powered compression equipment to send multiple conversations, first these conversations are encrypted and then multiple conversations are compressed into packets, and send up to satellites, and then sent back down to the receiving and calling parties.
So, this is not the Army's first foray, or the military’s foray into voice over IP, but it does show that the technology's continuing to grow in our military, and hopefully it will allow our soldiers and officers to be more efficient, and more productive, just like voice over IP has done for consumers and business users.
| This entry was posted at 12:13 PM.
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