VoIP Blog - Tehrani.com

October 25, 2007

Today gave some great news for Vonage and its shareholders. Verizon and Vonage have settled the ongoing patent dispute for a maximum of $120 million. The company saw its stock close at $1.53 at the end of the day’s trading, down 4.38%. This news caused the stock to jump in after-hours a total of $1.12 or 73.20% (as of 6:00 pm EST). Certainly this is a staggering jump on a percentage gain.

 

This bit of positive news may or may not be the start of some positive momentum for this poster-child for pure-play consumer VoIP.

 

What happens next is hard to know but there is a patent dispute with AT&T which also needs dealing with.

 

The company is obviously more of a legal play than a communications/tech play and I wonder if from a financial perspective it is even fair to be looking at Vonage as a VoIP company. After all, when the fate of the company rests more on jurors and judges than customers, should this company set the pace for consumer VoIP?

 

For the sake of customers, shareholders and Vonage employees, I hope all legal issues get cleared up soon and the company can get back to focusing on attracting and retaining customers and not on winning patent disputes.

 

On that note, I should mention – I just switched to cable VoIP and while it works fine, I can’t believe how much more functionality Vonage had years ago than Cablevision has today. Vonage should spend some of their marketing dollars on explaining how many benefits and value-added services they have and not focus so much on price.

 

Vonage, you are the Lexus or Mercedes of VoIP… Why do your ads make me think of Chevy?

October 25, 2007

Did Microsoft make a good move investing in Facebook? The answer is definitely yes.

 

The $240 million price Microsoft paid for a 1.6 percent stake in Facebook values the 3.5 year old company at $15 billion.

 

This is a small amount of money for Microsoft and gives the Redmond-based company access to Facebook’s 35 million registered users. According to Quantcast the social networking site has 25 million unique visitors per month. This is a staggering number and shows that more and more people are using Facebook as their Internet launch point. In a way this site is the new AOL and Microsoft could now have some very premium real estate to run ads on.

 

So let’s explore why this deal makes sense for Microsoft. The company has a small ad network meaning relatively few advertisers and publishers compared to Google. I don’t have exact figures but these facts are certainly undisputed by anyone familiar with the matter.

 

Microsoft is doing everything it can to increase the size of this network relative to Google but this is almost impossible to do.

 

The only logical way to rapidly accelerate the size of your advertising network is to have oceanfront property that advertisers stand in line to access.

 

In short this deal could be a fantastic way for Microsoft to get access to the premium ad inventory of tomorrow.

 

Is their a downside to this deal and more involvement between these two companies? Yes. We all know that social networking users are fickle and members might switch to another social networking company if Facebook overdoes it with ads.

 

The company has to be very careful as it rolls out its revenue generating strategy.

 

For Facebook, this deal means they have access to virtually unlimited capital and resources. Furthermore, Facebook becomes the “cool” internet poster child at Microsoft. There cannot be a more enviable position for the company to be in.