Just a quick post inspired by a 2 part series that ran in the Globe & Mail the past 2 days. Catherine McLean did a nice assessment of the state of wireless in Canada, and raised some valid questions as to why wireless penetration lags most other countries, as well as why we pay more up here. I've touched on these themes a number of times before, and it's just nice to see these ideas validated elsewhere.
Anyone who spends time with me at conferences in the U.S. knows that I only use my cell phone as a last resort. It's really hard for Americans to understand this, as it's very common to have long distance included in your plans, even for Canada. So, you don't think twice about making mobile calls to anywhere in the U.S. and often elsewhere. It's simply not the case for Canadians, unless you live on your cell phone and have a special plan that covers roaming and LD outside Canada. Simply put, I'm not a power user with my cell phone, and just don't use it enough to warrant having one of these high end plans.
Anyhow, back to the story in the Globe. The main thrust is to eaxplain that cell phone service is more expensive here, and there's a nice comparison of various plans, both in Canada and the U.S. Throughout the article, various points are raised to help explain why, namely:
- It's less competitive here. We only have 3 major carriers, and maybe 20 overall. Conversely, the article states that the U.S. has some 180 mobile offerings to choose from. Is it any wonder why prices are higher here? The majors - Bell Mobility, Rogers and Telus - make much healthier margins than their U.S. counterparts, and don't have a whole lot of pricing pressure from competitors.
- Our carriers can justify a higher pricing regime because the cost of building out their networks is more than the U.S. As the article says, they must cover a comparable geographic footprint to U.S. carriers, but with 1/10th of the customer base. There is some truth to that, at least in terms of building east to west. However, 90% of our population lives within 100 miles of the U.S. border, so it's not quite apples to apples. But still, it's a valid point.
- Our major wireless carriers are also our major wireline carriers - Bell and Telus. It's not quite like that in the U.S., but all these carriers face the same market realities. Wireline is declining, while wireless is a go-go business. So, both Telus and Bell rely heavily on the profits from wireless to offset their losses in wireline. In that light, it's a simple business decision to support higher pricing for wireless service.
- Wireless penetration is lower here. We're not as addicted to wireless - at least yet. There's a whole body of work devoted to explaining why wireless is less ubiquitous here, and I'm not going to address that now. The main point is that wireless still has lots of room to grow here - all the more reason for the majors to keep it a small club and to maintain high margins as long as possible. The article also notes that historically, our wireless carriers have been money losers, and it's pretty much taken until now for them to finally start making some profitable returns on the all infrastructure they've been building the last 20 years. So, following that logic, it's finally payday for them, and they deserve to recoup some of the investment.
- Another reason wireless isn't as prevalent here is the lack of LNP - local number portability. We haven't had nearly the amount of wireless substitution that's happening in the U.S. - largely for this reason. That's going to change early next year, and that's a key reason why all the mobile carriers are lining themselves up now for what looks to be an explosive year ahead for growth. I suspect you will see some price cutting next year once LNP comes into play, and the wireless operators will mount aggressive campaigns to wean people off their landlines once and for all - especially from operators who don't have a PSTN wireline business, like Videotron, Rogers, Shaw, Virgin Mobile or Amp'd.
- Foreign ownership restrictions make for a cozy three-way among Bell, Telus and Rogers. We do have other mobile carriers here, but they're pretty small or regional. If these restrictions were lifted or eased, that would open the door for U.S. operators or multinationals like BT or T Mobile. They could either acquire controlling interest in a domestic operator, or invest in one to build out their networks and acquire more spectrum. There are many possibilities here that could shake up the market big time, but I don't see this happening so soon.
I'm just touching on some of the big themes here, but there's certainly more to the story. The Globe pieces are both a good read, and as usual, the online versions are the most interesting because they have tons of reader comments submitted online.
So, once you've read this, hopefully you'll know where I'm coming from when I tell you I hardly use my cell phone when I travel.
Technorati tags: Wireless, Jon Arnold, Catherine McLean
Friday, November 24, 2006
US Thanksgiving - Canadian-Style
How American - is that in-your-face enough for you?
Last night, thanks to my Mother's urging, I did a first, even though I've lived here a thousand years and have been a dual citizen for some time. I attended a U.S. Thanksgiving dinner put on by Democrats Abroad, which does a great job of building community amongst American ex-pats, and in this case, here in Toronto. And yes, it's all about being a good Democrat, and revelling in the recent election wins that give Democrats very good reason to believe they'll be back in the saddle in 2008.
I really didn't know what to expect at this dinner, but it was a lot of fun, and even though I didn't know anybody, there was definitely a nice sense of cameraderie and shared values about a lot of things. Here are a few photos that will give you a better sense of what I mean.
As usual, photos are courtesy of my Nokia N90...
Yes, we're taking over Canada, in case you were wondering...
We certainly have a few things in common...
Good crowd - full house, I'd say. Treasurer Joe Green showing off a bumper sticker if you care or dare to show your true colors on the road! Small world - Professor Green was on the faculty at York University when I did my MBA there. I didn't study with him, but I sure remember him.
Technorati tags: Democrats Abroad, Jon Arnold
Thursday, November 23, 2006
Vonage and Telio - Quarterly Results Comparison
If you've been following my blog for a while, you'll know I'm one of a handful of people this side of the Atlantic following Norway-based Telio, who I long ago dubbed as the "Vonage of Europe".
Well, both operators released their quarterly filings recently, and having compared them before, I thought it would be a good idea to look into the state of the nation for both.
First off, I'd like to say that I didn't comment on Vonage's filing a few weeks ago, but there was no shortage of predictable gloom and doom from the bloggers. Sure, there were some poor results, and it's very easy to jump all over these and paint Vonage deeper into a corner. Frankly, I didn't think the numbers were so terrible, and despite the shortcomings, the news wasn't all bad, but nobody seemed to cut them any slack. Well, I will, but I'm also trying to be balanced. You don't have to look far to find trouble with Vonage - that's easy - but they're in a very tough market, and they're fighting hard to hold their own. Listen, it wasn't that long ago that people couldn't say enough good things about them, right?
This post isn't about a deep analysis of what they're doing right and wrong. Rather, I'm continuing my theme of Vonage and Telio, especially since their numbers both came out so recently. I'd love to see Vonage make it - don't get me wrong, but I also want to draw attention to how Telio is having success in the same business. Vonage is doing some important things right, but in my books, Telio is simply doing more things right, and I think they are showing the way for what it will take for a pureplay broadband operator to make it in VoIP.
So, let's first look at some Q3 highlights from Telio.
Overall, the news is good, with incremental quarter-over-quarter growth in all areas. Slow and steady - nothing wrong with that. Here are some key highlights...
- 8% revenue growth from Q2, at 76.1 million NOK
- Gross margins holding steady at 55%
- Pre-tax profit in Q3 of 2.8 million NOK
- ARPU holding steady at 300 NOK
- Economies of scale starting to be realized. They have a nice metric showing the ratio of Opex per subscriber, which makes a lot of sense. In Q1, it was 443 NOK, and has trended down nicely since then. In Q2, it was 361, and now it's 310. Clearly, as the subscriber base grows, their Opex is being held in check, and Telio is leveraging the power of IP economics nicely.
A few other highlights that round out the story...
- Telio is on track to hit 1 billion minutes of traffic this year. That's triple from last year, and they claim to now be carrying 7.2% of all residential fixed line traffic in Norway. That's pretty impressive for a company most of you have never heard of.
- They seem to have the ideal balance of price and quality for a value proposition that is hard to beat. Their presentation cites independent sources showing that their price per minute is the lowest of all local operators, and their quality rating comes out well ahead of the pack.
- Telio is by far the dominant broadband VoIP player in Norway. Similar to Vonage, there is a lot of distance between them and all the other broadband operators. They have a nice chart comparing Telio's revenues and gross margins against their peers, and the numbers speak for themselves. In Norway, there's Telio and everybody else.
These numbers alone tell a good story, but the best news is about where Telio is going. They've got a great business model for fixed line VoIP, but it's just the base. What really distinguishes Telio is their focus on FMC, and to me, this is where the paths with Vonage start to diverge. It's not hard to see that mobile VoIP is the big story right now, and Telio very much at the vanguard. They're already doing voice to a small extent, which not only reduces their costs, but makes for a tighter relationship with subscribers. Next year, Telio will be adding SMS, MMS and video, and this will continue to expand once WiFi comes to market later next year.
And you'll never guess who they're partnering with for mobile VoIP. Nokia - what a surprise! In fact, they are the first operator to deploy FMC on the Nokia Service Suite, with support for the N80 and E61 handsets. When you look at how far Telio has taken VoIP, it only stands to reason that Nokia would go to market with them before anyone else. Their partnership was announced on October 31 at the VON show in Berlin. I wasn't there, but I know it was a small show by VON standards, so this news didn't get much coverage. Now you know!
On to Vonage, and some key highlights.
- Their Q3 results came out the same day as the Telio/Nokia news, and I doubt anyone connected both events at this time.
- I found it interesting to note how they describe themselves in the press release - "a leading provider of broadband telephone service". Wasn't that long ago that Vonage was THE leading provider, but times have changed!
- Several key metrics are going in the right direction - revenues are up 12% and losses are down 12% from Q2, and even better, losses are down 18% from Q3 2005. So, sure they lost $53 million in Q3, which is the better part of a half a mil a day, but at least the trend is positive.
- ARPU was flat at $26.33, which is on par with Telio. In absolute terms, Vonage's ARPU is up $1.49 from last year, but this eaten up most by E911 charges, so they're not really growing the business revenue-wise on a per subscriber basis.
- Direct costs continue to decline, and are now at $6.86 per line. Again, a similar story to Telio - Opex is being held in line. However, the big difference is the marketing spend, which of course is what's killing them.
- Marketing spend was 57% of revenues in Q3, at $91 million. So, not only are they spending $1 million a day in advertising, but they're losing about half that amount in terms of earnings. The good news, however, is that the trend is down - in Q2, marketing spend was 63% of revenues. Comparatively, Telio's marketing spend is only 11% of revenues.
So, what's not going right?
- The pace of subscriber growth is slowing - but only slightly . Vonage added 204,591 subs in Q3 compared to 213,937 in Q2. A lot of people jumped all over that, but I don't see such a big red flag there. We all know how competitive this market has become and it's only going to get tougher. It's still a big number, so to me, this is neutral metric - there's both good and bad news here.
- Churn has edged up to 2.6% from 2.3% in Q3 2005, and yes, that's a big concern. Again, this comes with a competitive market, and churn effects everyone. We all know that reduced churn is key for Vonage's survival, so let's move on.
- The cost of doing business is increasing. If you look at the line items a bit closer, there's one that caught my eye - their CPE subsidy. It's up from $24.48 last year to $29.79 in Q3. Again, we all know how competitive things are, and this is symptomatic of what Vonage needs to do to stay top of mind with both subscribers and their retail partners.
And finally, a bit of guidance from their CEO, Mike Snyder - "we anticipate we will generate adjusted operating profits as early as the first quarter 2008".
Well, then, there you have it. Just 6 more quarters to go to be in the money - maybe. When you're a public company, it's all about the profits and returns to shareholders. I think this quote sums it up nicely, especially in comparison to Telio who is already in the black. I'd love to see Vonage be profitable by then or even sooner, but that is such a long time away, and there are so many variables that could derail their plans at any point in time.
All I can say is that based on what Telio has shown us to date, one can only imagine where they will be in Q1 2008. Again, Vonage can still be a good story, but in my mind, Telio is a good story today, and one that I think will unfold more favorably if they continue to execute well.
Technorati tags: Vonage, Jon Arnold, Telio
Well, both operators released their quarterly filings recently, and having compared them before, I thought it would be a good idea to look into the state of the nation for both.
First off, I'd like to say that I didn't comment on Vonage's filing a few weeks ago, but there was no shortage of predictable gloom and doom from the bloggers. Sure, there were some poor results, and it's very easy to jump all over these and paint Vonage deeper into a corner. Frankly, I didn't think the numbers were so terrible, and despite the shortcomings, the news wasn't all bad, but nobody seemed to cut them any slack. Well, I will, but I'm also trying to be balanced. You don't have to look far to find trouble with Vonage - that's easy - but they're in a very tough market, and they're fighting hard to hold their own. Listen, it wasn't that long ago that people couldn't say enough good things about them, right?
This post isn't about a deep analysis of what they're doing right and wrong. Rather, I'm continuing my theme of Vonage and Telio, especially since their numbers both came out so recently. I'd love to see Vonage make it - don't get me wrong, but I also want to draw attention to how Telio is having success in the same business. Vonage is doing some important things right, but in my books, Telio is simply doing more things right, and I think they are showing the way for what it will take for a pureplay broadband operator to make it in VoIP.
So, let's first look at some Q3 highlights from Telio.
Overall, the news is good, with incremental quarter-over-quarter growth in all areas. Slow and steady - nothing wrong with that. Here are some key highlights...
- 8% revenue growth from Q2, at 76.1 million NOK
- Gross margins holding steady at 55%
- Pre-tax profit in Q3 of 2.8 million NOK
- ARPU holding steady at 300 NOK
- Economies of scale starting to be realized. They have a nice metric showing the ratio of Opex per subscriber, which makes a lot of sense. In Q1, it was 443 NOK, and has trended down nicely since then. In Q2, it was 361, and now it's 310. Clearly, as the subscriber base grows, their Opex is being held in check, and Telio is leveraging the power of IP economics nicely.
A few other highlights that round out the story...
- Telio is on track to hit 1 billion minutes of traffic this year. That's triple from last year, and they claim to now be carrying 7.2% of all residential fixed line traffic in Norway. That's pretty impressive for a company most of you have never heard of.
- They seem to have the ideal balance of price and quality for a value proposition that is hard to beat. Their presentation cites independent sources showing that their price per minute is the lowest of all local operators, and their quality rating comes out well ahead of the pack.
- Telio is by far the dominant broadband VoIP player in Norway. Similar to Vonage, there is a lot of distance between them and all the other broadband operators. They have a nice chart comparing Telio's revenues and gross margins against their peers, and the numbers speak for themselves. In Norway, there's Telio and everybody else.
These numbers alone tell a good story, but the best news is about where Telio is going. They've got a great business model for fixed line VoIP, but it's just the base. What really distinguishes Telio is their focus on FMC, and to me, this is where the paths with Vonage start to diverge. It's not hard to see that mobile VoIP is the big story right now, and Telio very much at the vanguard. They're already doing voice to a small extent, which not only reduces their costs, but makes for a tighter relationship with subscribers. Next year, Telio will be adding SMS, MMS and video, and this will continue to expand once WiFi comes to market later next year.
And you'll never guess who they're partnering with for mobile VoIP. Nokia - what a surprise! In fact, they are the first operator to deploy FMC on the Nokia Service Suite, with support for the N80 and E61 handsets. When you look at how far Telio has taken VoIP, it only stands to reason that Nokia would go to market with them before anyone else. Their partnership was announced on October 31 at the VON show in Berlin. I wasn't there, but I know it was a small show by VON standards, so this news didn't get much coverage. Now you know!
On to Vonage, and some key highlights.
- Their Q3 results came out the same day as the Telio/Nokia news, and I doubt anyone connected both events at this time.
- I found it interesting to note how they describe themselves in the press release - "a leading provider of broadband telephone service". Wasn't that long ago that Vonage was THE leading provider, but times have changed!
- Several key metrics are going in the right direction - revenues are up 12% and losses are down 12% from Q2, and even better, losses are down 18% from Q3 2005. So, sure they lost $53 million in Q3, which is the better part of a half a mil a day, but at least the trend is positive.
- ARPU was flat at $26.33, which is on par with Telio. In absolute terms, Vonage's ARPU is up $1.49 from last year, but this eaten up most by E911 charges, so they're not really growing the business revenue-wise on a per subscriber basis.
- Direct costs continue to decline, and are now at $6.86 per line. Again, a similar story to Telio - Opex is being held in line. However, the big difference is the marketing spend, which of course is what's killing them.
- Marketing spend was 57% of revenues in Q3, at $91 million. So, not only are they spending $1 million a day in advertising, but they're losing about half that amount in terms of earnings. The good news, however, is that the trend is down - in Q2, marketing spend was 63% of revenues. Comparatively, Telio's marketing spend is only 11% of revenues.
So, what's not going right?
- The pace of subscriber growth is slowing - but only slightly . Vonage added 204,591 subs in Q3 compared to 213,937 in Q2. A lot of people jumped all over that, but I don't see such a big red flag there. We all know how competitive this market has become and it's only going to get tougher. It's still a big number, so to me, this is neutral metric - there's both good and bad news here.
- Churn has edged up to 2.6% from 2.3% in Q3 2005, and yes, that's a big concern. Again, this comes with a competitive market, and churn effects everyone. We all know that reduced churn is key for Vonage's survival, so let's move on.
- The cost of doing business is increasing. If you look at the line items a bit closer, there's one that caught my eye - their CPE subsidy. It's up from $24.48 last year to $29.79 in Q3. Again, we all know how competitive things are, and this is symptomatic of what Vonage needs to do to stay top of mind with both subscribers and their retail partners.
And finally, a bit of guidance from their CEO, Mike Snyder - "we anticipate we will generate adjusted operating profits as early as the first quarter 2008".
Well, then, there you have it. Just 6 more quarters to go to be in the money - maybe. When you're a public company, it's all about the profits and returns to shareholders. I think this quote sums it up nicely, especially in comparison to Telio who is already in the black. I'd love to see Vonage be profitable by then or even sooner, but that is such a long time away, and there are so many variables that could derail their plans at any point in time.
All I can say is that based on what Telio has shown us to date, one can only imagine where they will be in Q1 2008. Again, Vonage can still be a good story, but in my mind, Telio is a good story today, and one that I think will unfold more favorably if they continue to execute well.
Technorati tags: Vonage, Jon Arnold, Telio
Wednesday, November 22, 2006
Natural Convergence Funding News
Very nice to hear yesterday that Natural Convergence just scored $10 million in funding, which is quite a lot for a Canadian startup.
Ottawa-based Natural Convergence is a Terry Matthews company, who just had a very successful exit in Convedia. There are many other well-known IP companies under his umbrella, including Mitel, Ubiquity, Newport Networks and NewHeights (who I recently did a podcast with).
Like these other companies, Natural Convergence has maintained a clear market focus, in this case, offering a hosted IP communications platform for service providers targeting the 40 line and under business market. One doesn't have to look far to see that SMB VoIP is hot these days, and Natural Convergence is well postioned to serve this market. There really are just a handful of players addressing this space in Canada, and their investors obviously have faith in their vision. So, congrats to David Cork and his team, and may you spend your money wisely! Maybe, just maybe this good vibe will rub off a bit on the Senators now...
Technorati tags: Natural Convergence, Jon Arnold, Terry Matthews
Ottawa-based Natural Convergence is a Terry Matthews company, who just had a very successful exit in Convedia. There are many other well-known IP companies under his umbrella, including Mitel, Ubiquity, Newport Networks and NewHeights (who I recently did a podcast with).
Like these other companies, Natural Convergence has maintained a clear market focus, in this case, offering a hosted IP communications platform for service providers targeting the 40 line and under business market. One doesn't have to look far to see that SMB VoIP is hot these days, and Natural Convergence is well postioned to serve this market. There really are just a handful of players addressing this space in Canada, and their investors obviously have faith in their vision. So, congrats to David Cork and his team, and may you spend your money wisely! Maybe, just maybe this good vibe will rub off a bit on the Senators now...
Technorati tags: Natural Convergence, Jon Arnold, Terry Matthews
Canadian IP Thought Leaders Series - Cisco and Unis Lumin on Unified Communications
This week's podcast was a bit more ambitious than normal, but I think the results were worth it. For the first time, I had two guests, one based here in Toronto, and the other in the U.S.
My guests on the podcast were Glenn Mowat, the CEO and COO of Unis Lumin, and Richard McLeod, who is Cisco's Director of Unified Communications Solutions for Worldwide Channels.
The podcast was a follow up to a recent posting I did about Cisco's new Master Specialization Channel Partners program. The program is their highest level of certification for channel partners, and this particular edition focuses on Cisco's Unified Communications platform.
On the podcast, Glenn provided the systems integrator perspective as well as some Canadian flavor, and Richard added the Cisco view and where they see the opportunity to help enterprises leverage IP solutions and applications into making their businesses more successful. If you're interested in where unified communications is going, and what this means for the vendor-systems intetgrator relationship, I think you'll find this podcast of great interest.
You can download the podcast here, as well as read more about Glenn and Richard.
Technorati tags: Unis Lumin, Jon Arnold, Cisco, VoIP podcasts, Unified Communications
My guests on the podcast were Glenn Mowat, the CEO and COO of Unis Lumin, and Richard McLeod, who is Cisco's Director of Unified Communications Solutions for Worldwide Channels.
The podcast was a follow up to a recent posting I did about Cisco's new Master Specialization Channel Partners program. The program is their highest level of certification for channel partners, and this particular edition focuses on Cisco's Unified Communications platform.
On the podcast, Glenn provided the systems integrator perspective as well as some Canadian flavor, and Richard added the Cisco view and where they see the opportunity to help enterprises leverage IP solutions and applications into making their businesses more successful. If you're interested in where unified communications is going, and what this means for the vendor-systems intetgrator relationship, I think you'll find this podcast of great interest.
You can download the podcast here, as well as read more about Glenn and Richard.
Technorati tags: Unis Lumin, Jon Arnold, Cisco, VoIP podcasts, Unified Communications
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.
Comments???
Technorati tags: Changewave, Jon Arnold, VoIP, Vonage, Skype
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.
Comments???
Technorati tags: Changewave, Jon Arnold, VoIP, Vonage, Skype
Monday, November 20, 2006
Spring VON - Rated #1 Tradeshow
Jeff was up early this morning, but with news like this, can you blame him?
Tradeshow Week rated Spring VON the #1 trade show overall, and 2 of his shows made the Top 50 list. Lots of good news here, and I just wanted to share it in case you missed it.
We all know what VON means to the IP community, so it may not be a surprise to us, but it's great to see Pulvermedia getting this kind of recognition. So, congrats to Jeff and the Pulvermedia organization - it's always nice to get a pat on the back.
Technorati tags: VON, Jon Arnold, Jeff Pulver, Pulvermedia
Tradeshow Week rated Spring VON the #1 trade show overall, and 2 of his shows made the Top 50 list. Lots of good news here, and I just wanted to share it in case you missed it.
We all know what VON means to the IP community, so it may not be a surprise to us, but it's great to see Pulvermedia getting this kind of recognition. So, congrats to Jeff and the Pulvermedia organization - it's always nice to get a pat on the back.
Technorati tags: VON, Jon Arnold, Jeff Pulver, Pulvermedia
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