VoIP Grows 22%

I am a big believer in the fact that Vonage spends too much money on advertising. My thoughts are they are that they can cut down their expense without significantly reducung subscriber additions. But with VoIP growing at 22% and the intense competition coming from cablecos, the New Jersey based pure-play VoIP company is obviously trying to gain as much share as it can.

Some of the numbers coming from this recent VoIP market research report are staggering. For example VoIP revenues for the second quarter were up 173% at $607 million across the United States, compared with a year-ago level of $221 million.

In all there is tremendous opportunity to generate new VoIP customers but competition will remain fierce. In addition the cable companies don’t have the marketing expense of a pure-play VoIP company as they can sell remnant ad space on their TV networks.

With so much pressure on Vonage’s stock price the company will likely have to change strategy soon. The question is what are the options?

Blogged via wireless handheld

  • Alonzo Carr
    August 15, 2006 at 12:24 pm

    I agree Vonage spends way too much on marketing and I think in the end it is going to hurt them and if they don’t change their strategy soon they will become a prime takeover target. Maybe they should focus on quality and content since they have the numbers. I don’t think consumers are adverse to paying a couple of dollars more per month to get quality voip service and some relavent content. Vonage should try a portal approach….you know.. browser based voip.

  • Scott
    August 15, 2006 at 9:24 pm

    I concur with your comments that Vonage is spending too much, but I guess lots of these VoIP providers are doing that. Look at Sun Rocket and amount of marketing they have been doing. As a VoIP user, I feel these guys should look into providing better quality as there are still some issues. I still see problems with jitter and connections to PSTN phones. As these providers offer monthly plan of less than 30 dollars, cost is not as big factor for consumers as quality.
    VoIP Network Monitoring and Security Company

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