As a reader put it nicely - VoIP business is no different than the long distance business. High costs of acquisition, and very low margins. In other words it is a sucker’s game. One IP Voice, learnt this the hard way, and had to file for Chapter 11 Bankruptcy protection as it tries restructures. Good luck! The company sells VoIP to small and medium sized businesses. Well good luck with the makeover, because selling VoIP to SMB is beset with precisely the same problems as the consumer market. Too many players, too little profit. We will see more of these press releases in 2007.
5 comments so far
9:15 AM PT
Dark Side of VOIP, Bankruptcies come to play…
GigaOM directed me to a press release by One IP Voice announcing that it has filed for Chapter 11…
..Om Malik also guided to me to another eye opening article “85 VOIP service Providers shutdown in 15 months”. Some of the companies mentioned …
1:25 PM PT
Om,
I certainly don’t agree with VOIP going bankrupt…
I think, those company who are shutting down are not providing anything new. Except for better price.
Now it is known fact that better price model never last long and big fish in the market tends to kill these mushroom companies..
That is why these companies failed.
Poor business model shouldn’t be linked to technology like VOIP. I have been reading that new customer are either switching to plain VOIP service provider or cable telephone. Now cable telephone is nothing but VOIP. It just that cable company like Timewarner and Comcast has invested in there last miles network to provide high speed.
So, i think, it is was an early shakeout and one shouldn’t get any impression about blooming VOIP sector.
Infact due to VOIP, we are witnessing changing meaning of whole Telecom domain. Now telecom company is not just telephone service provider but they are also selling services like home entertainment like plan of SBC and dish network.
I would say VOIP is here to stay.
7:10 PM PT
VOIP is not going anywhere. VOIP is going to be the new forefront of the way that we communicate with each other. It has already changed many different older communications companies and made others realize that there is something for them to be afraid of. (You hear that Verizon, Qwest, all you bells’s).
I think once a VOIP company starts to integrate thier online service, like skype, with a residential service (like sunrocket). I think you will see some major power struggles beginning to happen.
I just got Sunrocket a couple of months ago. From what I have read, they seem to be that company on the forefront of stuff. They and Skype will be interesting to see in the future.
Here’s my article about it.
http://www.crazyfilesandthings.com/2006/11/30/sunrocket-the-new-hotness/
9:32 AM PT
I also don’t agree VoIP is going bankrupt. But really, how many VoIP providers will there actually be when all is said and done? Just like most industries, there will be a few major players and most will fail. That economics.
-D
12:38 PM PT
VOIP is here to stay. Its just that the companies lack a good business model to generate revenue.
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