Vonage’s SMB Biz is MIA

After being announced with the usual positive-thinking press coverage in 2005, Vonage’s plan to sell Voice over IP services to small businesses seems to have been left to die slowly on the vine.

Whether it’s a casualty of strategy or lack of infrastructure is unclear, but what is apparent is the total absence of any mention of SMB subscriber numbers in the company’s latest fiscal report, for Q4 and year-end 2006.

While Vonage still does offer a Small Business Premium service, it looks like something more for single-person offices or telecommuters rather than a true SMB offering. A Vonage spokesperson said the company does not break out business customer numbers and that the company’s focus is on consumers, clearly a strategic decision. But it’s one you have to wonder about when Vonage’s competitors, especially cable companies and the telcos, seem to be targeting SMB aggressively, rather than retreating from the market.

Jeff Thompson, CEO of startup WiMAX provider Towerstream, said his company can still connect customers with Vonage VoIP, but the once-a-big-deal relationship isn’t much more than an old press release at this point. “They [Vonage] have kind of changed the way they price their business plan,” said Thompson, who said his company will help customers find any VoIP provider they like, including offerings from Speakeasy (whose Seattle wireless infrastructure Towerstream just purchased) or Bandwidth.com.

Since the VoIP market for SMB is still in its infancy due to a number of factors — resistance to change, lots of unproven providers with short track records — Thompson guessed that just because of its brand name and early moves, Vonage might still be the actual numbers leader in VoIP for SMB.

But with players like Digium, Covad, Fonality and all the big telcos and cablecos readying their wares, it likely won’t be long before someone else moves into the lead of what promises to be a high ARPU market. We are just left to wonder why Vonage decided to leave that meal on the table.


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