6 Comments

Summary:

Things are not looking good in VoIP land, and some of the marginal players are feeling the pressure of resurgent cable operators, and scorch earth tactics of Vonage. Presence of natural born channels AOL and Yahoo is giving some people a pause. e911 is proving to […]

Things are not looking good in VoIP land, and some of the marginal players are feeling the pressure of resurgent cable operators, and scorch earth tactics of Vonage. Presence of natural born channels AOL and Yahoo is giving some people a pause. e911 is proving to be a major migraine for most. In other words days of price-arbitrage are over, and shake-up might be under way. Andy reports that Lingo is in layoff mode. This could be AWCS sending signals of an VoIP-implosion.

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  1. Thomas Hirsch Wednesday, June 22, 2005

    Rather extreme statement, Om. VoIP is just gathering steam. It is very, very difficult to run. Sure, a couple small firms may not make it. But it makes no sense to write obituaries at this time. Shake-out, not shake-up. Haven’t heard of Lingo.

  2. I think like DSL and cable broadband, as long as tiny tots offer a plain vanilla voice service, they will lose to the incumbents. it is a shakeout. there are 1000 plus VoIP providers and they are all playing the same game – its extreme point of view, but then i don’t believe in this parastic business model. technology is here to say, but will be different kind of winners here as well.

  3. Thomas your statement ignores the fact that Lingo is run by Primus Telecom, a $1B+/year international telco with some solid voip knowledge. Small firm it is not compared to most in the VoIP market place.

    Where it does falter is in its marketing, especially in its home USA market. “Haven’t heard of Lingo.” While its management team has mentioned on quarterely calls that they plan on continuing to invest in its future growth, the company seems to have once again come under severe P+L pressure to take immediate action and drop expenses.

    While Citron&Co have been able to attract $1.3B+ valuations for Vonage as it looks to exceed 1mil subscribers this year; I have not seen Primus achieve a tier 2 comparative valuation ratio on its 70k+ Lingo/VoIP subscribers. As both a Vonage user and a Primus shareholder, it seems to me that Vonage is light years ahead in marketing, managing the perceptions of customer service issues, justifing its high acquisition costs to the market and its single-minded focus on growth.

    It will be interesting to me to see if Primus can once again manouver through its financial situation, re-channel all its SG&A to growth and service and build some sustained marketing competancy. This is a familiar story to those who have known the company since 2000.

    All of this is personal opinion based on what little I know both Vonage and Primus have been up to recently. While Vonage may or maynot have an exit strategy to be acquired, it seems to me that Primus has no choice but to focus on operations and profitable growth.

  4. Thomas Hirsch Wednesday, June 22, 2005

    Om – “there are 1000 plus VoIP providers and they are all playing the same game” Not really. There are perhaps at most 20 VoIP providers in the USA, and many resellers. That’s fine. I mean, probably 100,000 convenience stores resell Coca Cola. That doesn’t mean that 99,900 of the stores will fold. Most of the VoIP resellers service small, specialized communities to which they have much better access than the companies that run the VoIP.

  5. I think this is incorrect. there is many more pure wholesale providers than 20, and if you factor in tons of indies like vonage, well the numbers are large enough to create an over supply situation. the coke example doesn’t hold up. a convenience store just doesnt survive on selling coke. if it did, well i bet you 99,900 would be going out of business

  6. Thomas Hirsch Wednesday, June 22, 2005

    Can you name more than 20 companies that run VoIP in the USA (don’t just resell it)? Also, most resellers have businesses besides VoIP — in fact, VoIP probably is a rather small part of their business. The resellers are often ISPs of one type or another. Further, and I may be wrong about this, cable companies offer “digital” telephone service, not VoIP, in that the cable companies just connect to the PSTN via their digital cables.

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