Jon Arnold on Vonage

Jon Arnold has done a great job of analyzing how Vonage is doing and according to the Arnold, the latest quarter had some ups and downs. Jon spells out why Vonage may not make it into 2009 and I for one would be sad to see this happen as Vonage does a great job with its services and web interface.

In addition, if Cable becomes one of the few choices left for residential service, we all lose as Vonage allowed the ATA to move with the customer. In addition, the ability to block calls at certain hours of the day has not been widely matched by the cablecos, etc.

Here are some excerpts of an article which is worth a close read:

Vonage is trying to strengthen its value proposition with new features such as visual voice mail and virtual phone numbers, and planned features such as outbound fax and ContactBook, but it essentially remains a landline replacement service. I agree with Jeff Citron’s position that there will always be a market for best of breed services like this, but it’s increasingly becoming a niche, as the bundle continues to win the day. Furthermore, most of the global growth potential for residential VoIP lies outside the U.S., where Vonage has limited presence and brand recognition. Their survival rests primarily on how they do in their home market.

Vonage has to rise above that and find ways to become exceptional providers of customer service. In my view, it is far more important for them to protect the base they have worked so hard to build so far, than it is focus on growth for the sake of scaling the business.

  • Ike Elliott
    February 20, 2008 at 7:17 pm

    Vonage’s 2.6 million subscribers are of suspect value, when they are churning at 3% per month. At that rate, Vonage is losing over a third of their customer base every year, and has to spend over $200 in marketing costs just to replace every one of the subscribers. So far, Vonage has managed to add more subscribers than they lose each quarter, but the spread is narrowing. Couple that problem with the bad credit markets and Vonage’s looming $253M debt expiration at the end of the year, and Vonage has some serious risks to navigate this year. More on by blog at http://ikeelliott.typepad.com/telecosm/2008/02/risky-business.html

  • walter little
    April 6, 2008 at 9:58 pm

    have been a vonage customer for a few years and delighted with the service and flexibility….As they compete with bundled services from the legalized extortion of the cable companies, I hope they spend a bit more time reminding their present and future customers of the flexibility of their service, which allowed me to take one of my phone numbers to our other home in florida…they do not talk much of this but it is a big item

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