TELECOM Digest OnLine - Sorted: Vonage: Recipe For Success?

Vonage: Recipe For Success?

Lisa Minter (
Tue, 02 Nov 2004 13:33:28 -0500

Jack Decker's Note: Although this article deals with Vonage
specifically, it talks about future trends and the possible future
direction of VoIP regulation, things that would be applicable to all
VoIP providers. I tend to avoid sending out "puff pieces", that is,
articles that are thinly-disguised promotions from a company's product
that don't say anything we haven't heard before, but this article
raises some interesting issues that I suspect are of interest to
everyone that has an interest in VoIP. I would simply note that
although Vonage may be the best-known VoIP company, it may not offer
the best value for all customers.

Vonage: Recipe For Success?
By Faultline
Published Tuesday 2nd November 2004 11:05 GMT

Analysis say 'Vonage' to anyone in the communications industry and
they say: "Oh the VoIP people." Ask if they'll make it, and you may
get responses like, "well the RBOCs hate them and they have hundreds
of lookalike competitors."

The salvation of Vonage is that when you ask anyone to name one of
these 20 or 30 start ups that have copied the Vonage model, they
usually hesitate, stammer and go to look them up. Perhaps being first
into a revolutionary market, even if you don't have much in the way of
breakthrough technology, may well be enough.

But the headline numbers say everything about the company that
virtually invented paid consumer VoIP services across America. In
2002, the year it launched, it acquired just 7,500 customers. A year
later it had 85,000. Now it boasts 300,000 accounts, each paying
roughly $30 a month, which makes its run rate for revenue around $108m
for a rolling 12 month period. With 600 staff that only gives them a
revenue per employee of 180,000, pretty low for a technology company,
but it is partly explained because it is currently ramping
revenues. It is also ramping staff and said this week it will add 600
more employees between now and Q1 2005.

Full story at:

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