Vonage has never struck me as survivable or anything beyond an alternate dialtone channel. I’ve never been a subscriber or a fan. CNet news had this the other day, as Vonage tries to convince themselves and everyone else that they’re doing just fine…

I am still confident though, that Vonage, or any other service provider of their size, could at any time get the SMB product right, and be very successful with it.

Just about every big telco has had a VoIP offering which has either been abandoned or, like Vonages SMB offering, left to wither. These are firms that have excellent infrastructure and strong operational processes, with no shortage of resources. Yet they’ve struggled in this space, and usually with a larger customer that allows greater resources to be profitably applied to sales, delivery and support. Why? Speaking for a hosted product like ours, I’d say it’s a matter of focus that starts with a product that isn’t just an Enterprise system deployed to fewer seats and extends all the way through to support. Including, of course, sales. It’s not like there are any raging national success stories in the space amongst traditional telcos – or channels. The under 25 seat market has been extraordinarily fragmented for a reason.

I agree with Paul’s assertion that the market can be a tasty meal. It’s a market Aptela is enjoying excellent success in – we’ve sold VoIP to thousands of SMBs. At least for us, its required laser focus on a product with a delicate combination of functionality and simplicity and a sales model and infrastructure designed to deliver business grade service and support, all while managing costs relentlessly so that we can deliver the value that market demands.

Anyways, the reason Vonage “dropped-out” of the SMB market has to do with three particular factors:

1) Timing 2) Technical Support 3) Focus

1)In 2005, when Vonage had a true SMB offering, they were “early” to the party. In 2005, VoIP was still a bit of a mystery to the SMB, especially the ones that Vonage was targeting (25 seats and under). Without a solid reseller channel (integrators, phone VAR’s, etc.)that had a good handle on the technology, it was pretty tough for them to grow.

2) There is more liability and technical support required for the SMB customer than the residential customer. Mission critical communications requires different types of support personnel. Chances are, being a large residential provider, they were not staffed to handle the type of inquiries and issues that happened.

3) It is tough to be all things to all people all at once. It is tough to win “two drag races” at the same time. Vonage picked the path of leastr resistance at the time (residential) and drag raced to the lead (however temporary that will be). They could not due both, so they dropped the service that required higher levels of support, accountability, and service in hopes of winning one race.

Now, more than ever, I think Vonage is in a great position to make a move into the business space. They already have a brand name, distribution channels, and deals with equipment manufacturers. They would need to staff accordingly, and build in-roads into local var’s/integrators, but with their brand name, marketing prowless, and willingness to spend, that wouldn’t be too hard. Question is whether they launch a hosted or SIP trunking type service…