* Reader views on Vonage's business plan and Lucent's blended services study
Today, we’ll feature reader replies to some of our recent newsletters.
After reading our newsletter last week about the high cost Vonage pays to acquire customers and the implications of this to its business model, Scott wrote to us with his conclusion that Vonage will never make money.
An MBA graduate from Cornell, Scott attached a spreadsheet to his e-mail response that included a break-even analysis. Based on his calculations he estimates it will take Vonage 49 months to break even on each new customer. He predicts that based on its growth rate, churn, and some assumed gross margin improvements Vonage will be “in the hole” by about $400 million by the end of 2007. Like us, Scott noted that he isn’t a financial analyst. Maybe we should check back again in January 2008 and see if perhaps Scott should become a financial analyst.
Jon also wrote to us about his views on Vonage. In his word, Vonage has always had a no-win model, although for reasons that differ from Scott’s analysis. Jon considers a BYOB (bring your own broadband) VoIP service model to be deficient because without commercial power, BYOB VoIP doesn’t work in the home. Jon also points out that the price for Vonage service isn’t that much different from a similar traditional phone company plan. (And we agree when considering some of the very competitive voice plans included in service bundles from telco and cable companies.) Jon’s final conclusion: “VoIP in business, Yes; VoIP in carriers, sure, [but] for residential, not too sure.”
Finally, Art Rosenberg, one of our longtime colleagues who is an independent consultant and analyst, replied about our piece highlighting Lucent’s study on blended services. Art said, “Here we go again” with blended! The last time that attempt was made in the communications industry was for call center agents … to “blend inbound and outbound call handling responsibilities.” Art has also studied the topic and prefers the term “transmodal communications” – which is a subset of “multimodal and crossmodal communications.”
Art’s analysis suggests that: “It is not just content media that is variable, as would apply to text and voice messaging, but also the real-time modality of the contact. That would include dynamically switching between asynchronous messaging, real-time messaging (IM), two-way voice calls (or video calls) and multi-party conferencing.”
Thanks to all who took the time to reply to our newsletters. If you’d like to express your opinion (either for sharing with our subscribers or for a unpublished response) please contact us using the e-mail links shown below.
