Vonage - The Saga Continues
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I mentioned it would be a light blogging week, and I just wanted to share a couple of Vonage posts that continue show how hard a road they have to make a go of things.
First, Andy Abramson - and others - have picked up on today's New York Times article about how things seem to be going from bad to worse. Unless you're a NYT subscriber, this link won't get you to the article, but the story has been widely covered in the blogs.
The basic idea is that Vonage is getting into hot water with its share purchase program for existing subscribers. With the stock down some 25% from issue date, Vonage is offering to make up the difference to brokers whose clients balk at paying $17 when it's trading way lower and no end in sight. It's a really messy situation on many levels, and the bottom line is that it's not good business to think of customers as shareholders. If/when things go bad, this is a disastrous recipe for giving customers a really good reason to leave. In essence, this puts Vonage on the ropes, and if the competition wants to do the rope-a-dope, they'll keep slugging away with price cuts, making it an even easier choice for borderline subscribers to leave. I really want to see Vonage succeed, but this share purchase program seems to be backfiring, and adding fuel to the fire. And we're not even talking about the potential legal and SEC implications. There are so many ways this can go wrong, and it's starting to look like these problems will keep compounding. Not good.
The fun part of the NYT article is the end - which is what Andy's post fixes on - that Vonage is looking more and more like an acquisition target. It's a provocative comment, but certainly not out of line based on how things are unfolding. I said something to similar effect on my guest post that ran on Om Malik's blog last week.
The second item come from a post Mark Evans ran last week. He did some nice digging through Vonage's S1 filing, and concludes that Vonage Canada has only about 52,000 subscribers. It's always been a closely guarded number, and if correct, confirms what most people suspect - for all their marketing efforts, Vonage Canada hasn't grabbed much market share. Andy wisely picked up on this post a few days back, and I'm glad he's helping get the word out. Thanks for paying attention to Canada, eh!
So, this isn't newsworthy, but I wanted to bring into the mix here as another example of the challenges Vonage faces in building a sustainable business.
And now for the teaser... I have another motive here. Tomorrow I'll be posting about another Vonage-like operator who's just going IPO. It's a great story, esp in the wake of how Vonage's IPO went. There's more than one way to do a VoIP IPO, and this is one that's going to work. Hang in there...
Technorati tags: Vonage, VoIP, Andy Abramson, Jon Arnold, Mark Evans
First, Andy Abramson - and others - have picked up on today's New York Times article about how things seem to be going from bad to worse. Unless you're a NYT subscriber, this link won't get you to the article, but the story has been widely covered in the blogs.
The basic idea is that Vonage is getting into hot water with its share purchase program for existing subscribers. With the stock down some 25% from issue date, Vonage is offering to make up the difference to brokers whose clients balk at paying $17 when it's trading way lower and no end in sight. It's a really messy situation on many levels, and the bottom line is that it's not good business to think of customers as shareholders. If/when things go bad, this is a disastrous recipe for giving customers a really good reason to leave. In essence, this puts Vonage on the ropes, and if the competition wants to do the rope-a-dope, they'll keep slugging away with price cuts, making it an even easier choice for borderline subscribers to leave. I really want to see Vonage succeed, but this share purchase program seems to be backfiring, and adding fuel to the fire. And we're not even talking about the potential legal and SEC implications. There are so many ways this can go wrong, and it's starting to look like these problems will keep compounding. Not good.
The fun part of the NYT article is the end - which is what Andy's post fixes on - that Vonage is looking more and more like an acquisition target. It's a provocative comment, but certainly not out of line based on how things are unfolding. I said something to similar effect on my guest post that ran on Om Malik's blog last week.
The second item come from a post Mark Evans ran last week. He did some nice digging through Vonage's S1 filing, and concludes that Vonage Canada has only about 52,000 subscribers. It's always been a closely guarded number, and if correct, confirms what most people suspect - for all their marketing efforts, Vonage Canada hasn't grabbed much market share. Andy wisely picked up on this post a few days back, and I'm glad he's helping get the word out. Thanks for paying attention to Canada, eh!
So, this isn't newsworthy, but I wanted to bring into the mix here as another example of the challenges Vonage faces in building a sustainable business.
And now for the teaser... I have another motive here. Tomorrow I'll be posting about another Vonage-like operator who's just going IPO. It's a great story, esp in the wake of how Vonage's IPO went. There's more than one way to do a VoIP IPO, and this is one that's going to work. Hang in there...
Technorati tags: Vonage, VoIP, Andy Abramson, Jon Arnold, Mark Evans
