Monday, April 16, 2007

Vonage - More Bad News - No Workaround In Sight

This ran in today's USA Today, and is not good news for Vonage - ugh.

Reading this article makes it very clear that it's going to be all or nothing with this Verizon patent claims issue. The language they're using indicates that if it all goes Verizon's way, Vonage simply does not have a future.

This just shows you how much their backs are to the wall. At this point, without a workaround, they have to convince the judge and jury that these broad, sweeping patent claims are indefensible, and that in essence, Verizon didn't invent and doesn't own VoIP. I think they have to bet the farm on it, and my guess is they will win.

Admitting they have no workaround may in fact, be true, but the way it's positioned now, this seems like a gambit to raise the stakes and show how one-sided this thing really is. If the ruling totally favors Verizon, then Vonage's days are numbered. And once that happens, they'll be emboldened to go after the cablecos. They could go after the other VoIP pureplays, but that won't be necessary, since once Vonage is vanquished, the others will simply go away on their own (mind you, 8x8 is rightly making a lot noise lately about all of its patents, so they may be spared).

The potential domino effect here is ominous, and while I don't think it will all come to pass, the possibility alone should be enough for the judge/jury to see things in a more balanced light. If Verizon gets all the spoils, competition would be crushed, the price of VoIP will surely increase, and consumers would have less choice and less innovation.

The plot thickens...

Hat tip to Alec Saunders on the USA Today story. And if you're wondering how the bad weather looks in Ottawa today, you gotta check his blog...

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