Doug on IP Comm – An independent voice on VoIP, telecom, and IP Communication

Vonage spins up marketing – not HD – and business focus

Posted on: May 18, 2009

Over the blogosphere, there’s a lot of buzz about Vonage launching its newest ad campaign focusing on “sounds good” and maybe kinda-sorta-maybe bringing HD voice into the mix. But it appears to be more wishful speculation since the company didn’t touch upon HD voice quality in its annual conference call – the real deal is a continued emphasis on a mobile app coming in the second half of this year and maybe SIP trunking.

A clearer parsing of buzz vs. intent revolves around a listen to the Q1 2009 conference call, where Vonage wants to reposition its brand image from “cheap” to “value.” The company noted that temporary price drops didn’t work as a long-term strategy in bringing in new customers, so they had to move onto the value message.

More interestingly was Vonage’s talk about new services, including a pledge to deliver mobile apps in the second half of this year on mobile smart phones – it and about a gazillion other players.  Vonage will support a 3G and WiFi app for customers to dial internationally. Since 8×8 already does this sort of thing, Vonage is likely doing alpha/beta trials on an off-the-shelf app or apps right now.

Vonage talked about a “bring your own broadband” and hosted PBX offering – this smells more like SIP trunking support/service offering to me, my friends.  That also seems like a no brainer – if you’ve got the switches and network, you might as well route calls on it.

The company is also going to add a service with an international number pointing to a U.S. number – again, something that is relatively old-hat rather than revolutionary.

Net-net IMHO:

1) Vonage realizes that it’s got a mature (i.e. not going to grow by leaps and bonds) customer base in consumer VoIP, so it needs to squeeze out costs on the back-end for support and on the front-end to bring in enough new customers – at a reasonable SLAC/customer acquisition cost – to offset its monthly churn rate.

2) Like everyone else in the telecommunications world, Vonage realizes it can make more money and profit from business customers. SIP trunking seems to be an obvious “winner” and I suspect they’ll cut a deal with one or more IP PBX vendors; Digium’s Switchvox seems to be an obvious no-brainer – and no AsterisktoSkype gateway required.

3) The mobile VoIP client and international number presence plays are an off-the-shelf incremental money makers; Vonage won’t get rich, but the cash will help since it is a software overlay on top of sunk costs for the existing network.

4) Vonage has enough brand and big-buck marketing budget to cause some annoyance – not fear — at other business VoIP service providers.  Be interesting to see if Vonage can leverage its relationship with Best Buy to slip into Geek Squad for some SMB business VoIP penetration.

Source: Smith on VoIP and the VonageQ1 2009 results conference call


1 Response to "Vonage spins up marketing – not HD – and business focus"

[…] Last month,  some folks believed Vonage’s “sounds good” campaign indicated the company was going to roll o…e.  I went to the horse’s (or is it bird’s?) mouth: Vonage_Voice on Twitter and […]

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