Tuesday, November 21, 2006

ChangeWave's Latest VoIP Survey - Good News for Skype and MSOs

I�ve been receiving research from ChangeWave for some time, and they publish a quarterly survey called �Consumer Home VoIP Trends�.

Their latest survey was done in mid-October, and with a base of 2,640 ChangeWave members, the data is pretty current and substantive. As with my previous postings about ChangeWave, I�m only going to present some high level findings. It�s not my research, and I don�t want to cross any lines here.

First off, the respondents are ChangeWave members, so it�s not truly a Main Street sample. I�d say this audience is probably above average in terms of being tech savvy, which is probably closer to what readers of this blog are. So, here�s what they�re saying at a high level.

Market Penetration
21% are using residential VoIP, and another 13% plan to in the next 12 months. That may be above average for the general population, but I think this says a lot about how the takeup of VoIP continues to be strong, and that landline is going in the other direction.

VoIP Offering Used
So who�s #1? Well, among the 562 �users�, it�s Skype. Huh??? This is the only real problem I have with their survey. I don�t consider the IM/P2P offerings like Skype to be replacements � they�re complements. So, I wouldn�t call it a �service�, but perception is reality, and the reality is that Skype was the most popular response � 29%. Vonage was #2 at 24%, with �my cable company� third at 16%.

There�s a lot to digest here. First, Skype is the most popular. I buy that, but I wouldn�t put Skype on the same level as the services people are paying money for (of course some do pay money for Skype Out/In, but you know what I mean). If I were King, and doing this research, I would qualify this, and furthermore ask if they�re using Skype in conjunction with the VoIP service they�re subscribing to. I suspect the majority uses both. Believe me, I�ve offered to help them on this, but nobody is getting back to me�.

Also, consistent with Vonage�s general fall from grace, they were #1 as recently as ChangeWave�s April 2006 survey. In fact, since this survey started in June 2005, Vonage�s share has steadily fallen from 36% to where it is now at 24%.

So, why lump all the cablecos into one category? We all know they�re taking over this market now, and I really wish they would break out the providers out by name. That said, it�s useful to see that collectively, cable has 16% of this sample. I suspect the real market share number is higher - remember, Skype has 29% of this sample, which I don�t get at all.

Finally, I wanted to mention that new names are showing up on this list that weren�t there before, like Jajah, AIM Phoneline and GoogleTalk. That�s a good sign. Hopefully ChangeWave knows what to do with this, as future waves need to refine this question to properly reflect the various types of VoIP offerings out there now.

Satisfaction with Service
Overall, people like their service � 90% are either �somewhat� or �very� satisfied. That�s a really good sign, and it holds up pretty much across the board. That said, it�s not surprising that satisfaction with Vonage is a tad lower than the others.

The same holds true when asking about the likeliness of changing services in the next 6 months. Overall, 16% are either �very� or �somewhat� likely. Cable users are well below this, and Vonage is notably above. Again, no surprise here, and the data is likely consistent with what more exhaustive studies are finding.

Who ya gonna call?
Lastly, I wanted to cite the big question � for those considering switching, who would they go to? Here, the response base is only 88, so you need to be more careful with the data. These are current VoIP subscribers who are �very� or �somewhat� likely to switch in the next 6 months.

With 42% saying �don�t know�, the market seems pretty open for stealing away VoIP subscribers. Cable leads the pack at 11%, with Skype close behind at 9%, and then Vonage at 7%. These are whom you�d expect to see, and no real surprises there.

There are several others mentioned on the list, all much less frequently, and all pretty familiar � except one. Google Talk. Yup � 5% mentioned them. That�s probably the standout data point of this whole survey for me. I know the base is small, but to see Google Talk right up there at Vonage�s heels tells me they�re on a lot of people�s radars, and that�s not good news for everyone else on this list.

Finally, there is another key segment to consider � those not using VoIP, but are considering doing so in the next 12 months. For this sample, the base is 332. This really says a lot about market sentiment for the next wave of residential VoIP adopters.

Number 1? Skype � 20% said that�s who they would mostly likely go to. Hmmm. It sure is interesting to see what people�s perceptions are � Skype is who they think about first � ahead of the rest. Am not sure if that�s really money in the bank for Skype, but no doubt they�d be happy to hear it. Even more interesting � less than a year ago � December 2005 � only 3% of the sample said this. Wow.

Who�s #2? The cablecos � 17%. Again, they only report aggregate data for this group, so we don�t know which MSOs they�re talking about. Regardless, as a category, cable VoIP comes through very nicely here.

Where�s Vonage? Thought you�d never ask. They�re #3 at 15%. Back in April � just before the IPO � they were #1 at 21%, so things have changed.

Something else to watch for � just behind Vonage on this list are the RBOCs � VoiceWing at 8% and CallVantage at 4%. So, they�ve got heavy competition both ahead of them and behind. Not a fun place to be, for sure.

Just one more thing to build on from this point, which I think says a lot about the direction the 3 main players in this survey are going � Vonage, Skype and the MSOs. Let�s look at the net results when you consider both churn and adds for each.

Vonage � 22% of subscribers are �very� or �somewhat� likely to switch. That itself is a huge finding. Hello - 1 in 5 Vonage customers are at risk, Mr. Citron.
Conversely, 15% of new subscribers will most likely go with Vonage. That�s a net loss of 7%.

Skype � only 12% are at risk, but 20% will come to them. So, they would have a net gain of 8%.

Cablecos � same story here. Only 9% at risk, but they�ll get 17% of new subs. Again, that�s an 8% gain.

I know it�s a relatively small and focused survey sample. However, I think these results are pretty indicative of where the market is going, even if the data is predictive rather than behavioral. I don�t think it�s a stretch to say that things are getting harder, not easier for Vonage, and it�s very clear to me that the same is true for the overall competitive landscape.

To wrap, I'd like to thank ChangeWave for putting this research together, and I don't think I've gone too far sharing these high level findings with you here.


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