Vonage's High-Spending, Low-Return Ways Make It Ideal For The MVNO Market

from the misguided-strategy dept

Things have been a little bit quiet on the Vonage front since the company's shambolic IPO last year, but it's been more of the same: slowing growth and poor financial performance. Apparently, though, the company has a new plan -- BusinessWeek swears that Vonage is going to become an MVNO and start selling wireless service. The article says that with such a move, "Vonage might have a better shot at profitability." But that's really not clear at all, since the virtual operator market has been one largely characterized by heavy losses and high customer-acquisition costs, with very few hits to balance all the misses. The article further surmises that Vonage needs to get into selling multi-service bundles to survive and succeed, but this, too, doesn't make a lot of sense. It's rather unlikely that Vonage will be able to undercut the cable operators that are beating it at VoIP by reselling their broadband and TV services under its own brand. It already offers one commodity product, VoIP, where it really only competes on price, so trying to bundle together a few others and take on some formidable rivals (like cable and telephone operators), again, competing just on price, doesn't seem like the wisest idea. The company says it will introduce new products like dual-mode cellular-WiFi handsets, but again, all these really aim to do is offer cheap calls -- and that's a strategy that isn't currently working for Vonage, and one that isn't sustainable once its rivals also drop their rates and remove any differentiation.
Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. identicon
    James, 20 Feb 2007 @ 9:21pm

    No More Vonage

    I actually just switched from Vonage to VoipYourLife yesterday. I had been with Vonage for about three years. Although I pay about the same, VoipYourLife offers more features which Vonage charges extra for. I am also able to use my own VoIP equipment without having to pay an extra $10 a month.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Follow Techdirt
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it

Email This

This feature is only available to registered users. Register or sign in to use it.