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...
Technorati tags: Vonage, Jon Arnold, Verizon, VoIP
Monday, April 16, 2007
Friday, April 13, 2007
Nokia N95 - Not What the Wireless Carriers Had in Mind
It's been a Vonage-centric week for me, and I increasingly seem to be the go-to guy for the media when they make news (as you can see from my most recent media citings listed on the right side of this blog page).
Between that and project work, I'm a bit behind on other stuff, but wanted to comment on an item from yesterday that caught my eye.
Being part of the Nokia N Series blogger relations program, I get to trial some pretty cool phones. The latest is the N95, which I don't have yet, but others do. That said, I don't have to have the phone in hand to understand what N95 users are rightfully complaining about.
Andy Abramson posted yesterday about what's going on. The N95 has a lot of great features, with WiFi and Internet telephony being key. Well, it looks like some European mobile operators are disabling the N95's capabilities to make VoIP calls. Just basic self-interest at play here, of course. Why divert profitable minutes off your 3G networks to providers who are basically enabling free mobile calls?
So, just because you can do that, does it mean you should? That's the bigger question, and the one we really have be wary of. Oligopolies often behave in a manner that serves their interests first, and they do it because they can. With WiFi networks springing up like mushrooms, it's only a matter of time before mobile VoIP goes mainstream, and if you alienate the early adopter, you'll surely lose them when everyone is doing this. It's really no different from what the landline operators have gone through, and they're paying big time now that the cable operators have come to market with great VoIP and attractive bundles. History is going to repeat itself with wireless VoIP, and the incumbents can only put things off for so long.
Until that time comes, subscribers will be shortchanged, and downright angry when they lay out good money for breakthrough phones like the N95, only to find out the operators don't want them using some of the best features. Truphone is one of the mobile VoIP operators being affected by this, and there's a nice video on their blog that explains this in more detail.
Looks like this is a case where it doesn't pay to be ahead of the market, and maybe the N95 is here too soon. I would say the opposite, actually. WiFi is here today, and the sooner handset vendors bring these types of devices to market, the more consumers will realize that carriers aren't playing fair ball. It will take more than a few early adopters from the blogosphere to get the carriers to cry Uncle, so the sooner the better, I'd say.
Speaking of the Nokia N95, colleague Alec Saunders posted his review earlier today. He's a tecchie par excellence, and his review is really great, covering all the cool things you'd want to know about this fabulous phone. Can't wait to get mine, and will share my thoughts ASAP.
Technorati tags: Nokia N95, Jon Arnold, Andy Abramson, Alec Saunders
Between that and project work, I'm a bit behind on other stuff, but wanted to comment on an item from yesterday that caught my eye.
Being part of the Nokia N Series blogger relations program, I get to trial some pretty cool phones. The latest is the N95, which I don't have yet, but others do. That said, I don't have to have the phone in hand to understand what N95 users are rightfully complaining about.
Andy Abramson posted yesterday about what's going on. The N95 has a lot of great features, with WiFi and Internet telephony being key. Well, it looks like some European mobile operators are disabling the N95's capabilities to make VoIP calls. Just basic self-interest at play here, of course. Why divert profitable minutes off your 3G networks to providers who are basically enabling free mobile calls?
So, just because you can do that, does it mean you should? That's the bigger question, and the one we really have be wary of. Oligopolies often behave in a manner that serves their interests first, and they do it because they can. With WiFi networks springing up like mushrooms, it's only a matter of time before mobile VoIP goes mainstream, and if you alienate the early adopter, you'll surely lose them when everyone is doing this. It's really no different from what the landline operators have gone through, and they're paying big time now that the cable operators have come to market with great VoIP and attractive bundles. History is going to repeat itself with wireless VoIP, and the incumbents can only put things off for so long.
Until that time comes, subscribers will be shortchanged, and downright angry when they lay out good money for breakthrough phones like the N95, only to find out the operators don't want them using some of the best features. Truphone is one of the mobile VoIP operators being affected by this, and there's a nice video on their blog that explains this in more detail.
Looks like this is a case where it doesn't pay to be ahead of the market, and maybe the N95 is here too soon. I would say the opposite, actually. WiFi is here today, and the sooner handset vendors bring these types of devices to market, the more consumers will realize that carriers aren't playing fair ball. It will take more than a few early adopters from the blogosphere to get the carriers to cry Uncle, so the sooner the better, I'd say.
Speaking of the Nokia N95, colleague Alec Saunders posted his review earlier today. He's a tecchie par excellence, and his review is really great, covering all the cool things you'd want to know about this fabulous phone. Can't wait to get mine, and will share my thoughts ASAP.
Technorati tags: Nokia N95, Jon Arnold, Andy Abramson, Alec Saunders
Canadian IP Thought Leaders Series - Kate Morgan - Business Uses for Podcasts
For my current podcast, we talked about... podcasting. Never done one like this before, but why not. My guest was Kate Morgan. She's a Toronto-based entrepreneur, and her company, Podwise Social Media, is all about helping companies use new media tools like podcasts and blogs to build their businesses.
Kate and I talked about various facets of blogging - what works, what doesn't work, how best to use them, etc. She also provided good examples of how she's using them with her clients, especially in helping personalize their business for their customers. If you want to learn more about this and how Kate is building a business around this, you'll find this podcast of interest.
You can download the podcast here, as well as read more about Kate.
Technorati tags: Kate Morgan, Jon Arnold, VoIP podcasts, social media
Kate and I talked about various facets of blogging - what works, what doesn't work, how best to use them, etc. She also provided good examples of how she's using them with her clients, especially in helping personalize their business for their customers. If you want to learn more about this and how Kate is building a business around this, you'll find this podcast of interest.
You can download the podcast here, as well as read more about Kate.
Technorati tags: Kate Morgan, Jon Arnold, VoIP podcasts, social media
Thursday, April 12, 2007
Vonage Speaks - Want to be Their CEO?
How's that for an opening to this morning's investor call???
Vonage had three spokespeople this morning - CEO - then Chairman - now interim CEO Jeff Citron, Sharon O'Leary and John Rego.
Jeff did most of the talking - no surprise there - and the first order of business was to announce that effective yesterday, Mike Snyder has stepped down as their CEO, and a replacement search is underway immediately. Any takers? Talk about an opportunity for a turnaround artist... or perhaps someone more aligned with where Jeff Citron wants to take the company.
It's not clear to me if this was Mr. Snyder's decision or the board's, but Jeff explained it was in the best interests of the company to do this. Until a replacment is found, Jeff will be the interim CEO.
Of course, by law, Jeff Citron can no longer be the CEO of a public company, so "interim" is the operative word here. Vonage may be his baby, but for now, he probably doesn't have much choice.
The call was barely 30 minutes, and there were 2 other key takeaways of note, and I'll also comment on some of the secondary items.
- Vonage will be doing internal restructuring and consolidating, both operationally, and on its marketing activities. No surprise there, but Jeff said this would include Canada and international operations, and would result in a $30 G&A reduction. No details were provided, but I could see that translating into closing down these operations, which would be bad news for Canada, and maybe even my Vonage line. Hmmm. Would they continue to provide service outside the U.S.? I hope so - and not just for my sake. Building Vonage into a global brand - "the world's broadband telephone company" - so to speak - is certainly one path they could take going forward, but I don't know if they're thinking that way. Doesn't look like it.
Operationally, it's mostly about cutting back on the marketing spend. Jeff said the 2007 spend will be down by $110 million from last year, and will come in at $310 million. That's still almost $1 million a day, but it is coming down. In short, he said they will have fewer new customers, but they'll come at a lower cost.
Jeff also explained that much of their marketing spend is "highly variable", and to get this down, they will cut channels and programs that are bringing in "marginal" customers. Sounds like a plan to me.
-Sharon provided a high level summary of the litigation issues and their take on things. At face value, she explained how they feel Verizon's allegations are too broad and not directly related to the technologies Vonage is using. She noted how Verizon's blanket allegations were pushed through and accepted wholesale by the judge in far less time - an hour - than the norm, and the technology was not reviewed or explained in enough detail to make a fair assessment. Well, if she's right, and if after a more balanced consideration is given to the case, and the jury sees it this way, then there's hope for Vonage. That would sure change things, at least for Vonage.
Being based in Canada, I can't help but notice the parallels here to the Conrad Black trial going on Chicago. That's another post in itself, but not today.
Some other items and dates of note she shared....
- 3 of 5 claims from VZ were upheld - 2 for address translation and 1 for wireless - the other 2 claims were rejected
- VZ has until Friday to file for a permanent injunction on VG
- VG has until the 17th to reply to this application
- court will decide at 10am on April 24
- she expects the appeals process to take 1.5 to 2 years
Otherwise, there some basic facts and figures worth passing on...
- Q1 revenues were $195M - up 63% from a year ago
- ARPU is expected to stay flat - that's not what I wanted to hear
- Q1 reported 2.39 million lines, with 332,00 adds
- Q1 marketing spend was $91M - down from $96M in Q4
- Q1 customer acquistion cost was $275 - wow! - but down $31 from Q4
- Q1 churn has stabilized at 2.4%
- Q1 cash balance was $420 million
- full earnings release coming in May
- expect $140 million in savings coming from these new initiatives
Jeff summed up by saying it's business as usual for now, but results have not been meeting expectations, so these changes are needed. They will also continue on finding workarounds to VZ, and he would only say that "these will take time". Your guess is as good as mine as to whether they are hot or cold in terms of having anything here.
There was some interesting dialog during the Q&A, but mostly cautious commentary. When asked about a profitability timetable, Jeff said it was too early to say how the 5.5% royalty scenario will impact earnings. Fair enough. I don't think profitability is Vonage's biggest problem right now, but this is what financial analysts want to know, and they were asking almost all the questions.
I tried repeatedly to get in the queue for questions, but never got the go ahead, which is too bad. Especially toward the end when they asked if there were any other questions out there, and then quickly said there were none, so it was time go. Arghh. Maybe they don't want to hear from Canada - or maybe Canadian area codes don't get picked up at their end. I'm reaching here, I know - and for the record, I was dialing in on a Vonage line. Needless to say, I wanted to ask Jeff what "consolidation" will mean for Vonage Canada. Guess we'll know soon.
Oh, two other Q&A items of note...
- good question about how the VZ claims differ from Sprint. They explained that Sprint's were more specific to Vonage's technology, whereas VZ's was a blanket claim and very general. Sharon also commented that the motivations behind each claim were different, but didn't elaborate other than saying with Sprint, a business arrangement is a more likely outcome than a legal settlement. Hmmm. Could that be a clue about Vonage's future???
- finally, the best question - I thought - came from fellow analyst, Daniel Berninger. Figures - the best questions come from the industry analysts, right? :-)) Anyhow, Daniel asked what I wanted to ask as well - why Vonage? To understand behavior and root cause you have to start with a motive. Why did VZ go after VG, and not someone else? I've said my piece on this already, but since you've got Jeff on the phone, you have ask, right? Well, we got nada on this one from Mr. Citron - "you'll have to ask Verizon". Maybe I should, but I suspect they'll tell me to go ask Vonage.
Back to work...
Technorati tags: Vonage, Jon Arnold, Verizon, VoIP
Vonage had three spokespeople this morning - CEO - then Chairman - now interim CEO Jeff Citron, Sharon O'Leary and John Rego.
Jeff did most of the talking - no surprise there - and the first order of business was to announce that effective yesterday, Mike Snyder has stepped down as their CEO, and a replacement search is underway immediately. Any takers? Talk about an opportunity for a turnaround artist... or perhaps someone more aligned with where Jeff Citron wants to take the company.
It's not clear to me if this was Mr. Snyder's decision or the board's, but Jeff explained it was in the best interests of the company to do this. Until a replacment is found, Jeff will be the interim CEO.
Of course, by law, Jeff Citron can no longer be the CEO of a public company, so "interim" is the operative word here. Vonage may be his baby, but for now, he probably doesn't have much choice.
The call was barely 30 minutes, and there were 2 other key takeaways of note, and I'll also comment on some of the secondary items.
- Vonage will be doing internal restructuring and consolidating, both operationally, and on its marketing activities. No surprise there, but Jeff said this would include Canada and international operations, and would result in a $30 G&A reduction. No details were provided, but I could see that translating into closing down these operations, which would be bad news for Canada, and maybe even my Vonage line. Hmmm. Would they continue to provide service outside the U.S.? I hope so - and not just for my sake. Building Vonage into a global brand - "the world's broadband telephone company" - so to speak - is certainly one path they could take going forward, but I don't know if they're thinking that way. Doesn't look like it.
Operationally, it's mostly about cutting back on the marketing spend. Jeff said the 2007 spend will be down by $110 million from last year, and will come in at $310 million. That's still almost $1 million a day, but it is coming down. In short, he said they will have fewer new customers, but they'll come at a lower cost.
Jeff also explained that much of their marketing spend is "highly variable", and to get this down, they will cut channels and programs that are bringing in "marginal" customers. Sounds like a plan to me.
-Sharon provided a high level summary of the litigation issues and their take on things. At face value, she explained how they feel Verizon's allegations are too broad and not directly related to the technologies Vonage is using. She noted how Verizon's blanket allegations were pushed through and accepted wholesale by the judge in far less time - an hour - than the norm, and the technology was not reviewed or explained in enough detail to make a fair assessment. Well, if she's right, and if after a more balanced consideration is given to the case, and the jury sees it this way, then there's hope for Vonage. That would sure change things, at least for Vonage.
Being based in Canada, I can't help but notice the parallels here to the Conrad Black trial going on Chicago. That's another post in itself, but not today.
Some other items and dates of note she shared....
- 3 of 5 claims from VZ were upheld - 2 for address translation and 1 for wireless - the other 2 claims were rejected
- VZ has until Friday to file for a permanent injunction on VG
- VG has until the 17th to reply to this application
- court will decide at 10am on April 24
- she expects the appeals process to take 1.5 to 2 years
Otherwise, there some basic facts and figures worth passing on...
- Q1 revenues were $195M - up 63% from a year ago
- ARPU is expected to stay flat - that's not what I wanted to hear
- Q1 reported 2.39 million lines, with 332,00 adds
- Q1 marketing spend was $91M - down from $96M in Q4
- Q1 customer acquistion cost was $275 - wow! - but down $31 from Q4
- Q1 churn has stabilized at 2.4%
- Q1 cash balance was $420 million
- full earnings release coming in May
- expect $140 million in savings coming from these new initiatives
Jeff summed up by saying it's business as usual for now, but results have not been meeting expectations, so these changes are needed. They will also continue on finding workarounds to VZ, and he would only say that "these will take time". Your guess is as good as mine as to whether they are hot or cold in terms of having anything here.
There was some interesting dialog during the Q&A, but mostly cautious commentary. When asked about a profitability timetable, Jeff said it was too early to say how the 5.5% royalty scenario will impact earnings. Fair enough. I don't think profitability is Vonage's biggest problem right now, but this is what financial analysts want to know, and they were asking almost all the questions.
I tried repeatedly to get in the queue for questions, but never got the go ahead, which is too bad. Especially toward the end when they asked if there were any other questions out there, and then quickly said there were none, so it was time go. Arghh. Maybe they don't want to hear from Canada - or maybe Canadian area codes don't get picked up at their end. I'm reaching here, I know - and for the record, I was dialing in on a Vonage line. Needless to say, I wanted to ask Jeff what "consolidation" will mean for Vonage Canada. Guess we'll know soon.
Oh, two other Q&A items of note...
- good question about how the VZ claims differ from Sprint. They explained that Sprint's were more specific to Vonage's technology, whereas VZ's was a blanket claim and very general. Sharon also commented that the motivations behind each claim were different, but didn't elaborate other than saying with Sprint, a business arrangement is a more likely outcome than a legal settlement. Hmmm. Could that be a clue about Vonage's future???
- finally, the best question - I thought - came from fellow analyst, Daniel Berninger. Figures - the best questions come from the industry analysts, right? :-)) Anyhow, Daniel asked what I wanted to ask as well - why Vonage? To understand behavior and root cause you have to start with a motive. Why did VZ go after VG, and not someone else? I've said my piece on this already, but since you've got Jeff on the phone, you have ask, right? Well, we got nada on this one from Mr. Citron - "you'll have to ask Verizon". Maybe I should, but I suspect they'll tell me to go ask Vonage.
Back to work...
Technorati tags: Vonage, Jon Arnold, Verizon, VoIP
Tuesday, April 10, 2007
Unified Communications Podcast - MetaSwitch
I've had a number of posts recently regarding the Unified Communications Strategies portal, and some of the content I've contributed there. Most recently was a podcast done by Blair Pleasant, interviewing me about Unified Communications.
Since then, I did a podcast of my own with Andy Randall of MetaSwitch, where we talked about their UC9000 conference server, and how applications related to UC figure into their product mix. Pretty interesting stuff, and it was just posted to the UCS portal the other day. I'm still in catch-up from last week's Cisco event, so I'm just getting around to posting about it now. Hope you like it.
Technorati tags: MetaSwitch, Jon Arnold, VoIP podcasts, Unified Communications Strategies
Since then, I did a podcast of my own with Andy Randall of MetaSwitch, where we talked about their UC9000 conference server, and how applications related to UC figure into their product mix. Pretty interesting stuff, and it was just posted to the UCS portal the other day. I'm still in catch-up from last week's Cisco event, so I'm just getting around to posting about it now. Hope you like it.
Technorati tags: MetaSwitch, Jon Arnold, VoIP podcasts, Unified Communications Strategies
What Will Vonage Do Next? Find Out Thursday...
Anyone following the Vonage/Verizon saga knows there's a lot of uncertainty right now, but clearly, Vonage is under siege, and they're going to have to come up with a solid game plan. Not only do they need to figure out an alternative to Verizon's patents, but they have to keep their customers in-house, and create a reasonable degree of comfort with shareholders and investors that they have a plan and that the house isn't falling down.
In short, for better or worse, the patent issue is catching up to them, and they've lost their mojo in terms of being a cool, innovative disruptor. It's very hard to see how they - or just about anybody - can make a go of things in today's VoIP market as a landline replacement service.
VoIP has SO MUCH more to offer, and while they've gotten the low hanging fruit, getting the rest is going to take a bit more, and the only thing getting in the way of that is innovation and creativity - either with the basic voice offering, or the cool IP services/apps you can build around that.
So, what is Vonage going to do? We're all dying to know, so here's your chance. They're holding an investor call this Thursday at 8am, EST. This could be the most important public statement they'll ever make, and is a classic scenario for their PR firm - WeberShandwick - to earn their keep. Let's see how it goes.
Here's what you need to know to get on the call...
"Vonage announced it will hold an investor update conference call on Thursday, April 12, 2007 at 8:00 AM ET. To participate, please dial (800) 289-0533 approximately ten minutes prior to the call. International callers should dial (913) 981-5525. The call will be simultaneously webcast and accessible via Vonage's Investor Relations website at http://ir.vonage.com. A replay of the call will be available on Vonage's Investor Relations website shortly following the webcast for two weeks."
To set the stage, here's a quote from a recent press release that I think says a lot about how they're positioning this....
"Vonage also continues to believe that this case is an attempt to do in the court room what Verizon could not succeed in doing in the marketplace -- which is to put Vonage out of business."
Can't be any more in your face than that. The gloves are off, and let's see what David can do against Goliath....
Technorati tags: Vonage, Jon Arnold, Verizon, VoIP
In short, for better or worse, the patent issue is catching up to them, and they've lost their mojo in terms of being a cool, innovative disruptor. It's very hard to see how they - or just about anybody - can make a go of things in today's VoIP market as a landline replacement service.
VoIP has SO MUCH more to offer, and while they've gotten the low hanging fruit, getting the rest is going to take a bit more, and the only thing getting in the way of that is innovation and creativity - either with the basic voice offering, or the cool IP services/apps you can build around that.
So, what is Vonage going to do? We're all dying to know, so here's your chance. They're holding an investor call this Thursday at 8am, EST. This could be the most important public statement they'll ever make, and is a classic scenario for their PR firm - WeberShandwick - to earn their keep. Let's see how it goes.
Here's what you need to know to get on the call...
"Vonage announced it will hold an investor update conference call on Thursday, April 12, 2007 at 8:00 AM ET. To participate, please dial (800) 289-0533 approximately ten minutes prior to the call. International callers should dial (913) 981-5525. The call will be simultaneously webcast and accessible via Vonage's Investor Relations website at http://ir.vonage.com. A replay of the call will be available on Vonage's Investor Relations website shortly following the webcast for two weeks."
To set the stage, here's a quote from a recent press release that I think says a lot about how they're positioning this....
"Vonage also continues to believe that this case is an attempt to do in the court room what Verizon could not succeed in doing in the marketplace -- which is to put Vonage out of business."
Can't be any more in your face than that. The gloves are off, and let's see what David can do against Goliath....
Technorati tags: Vonage, Jon Arnold, Verizon, VoIP
Monday, April 9, 2007
Verizon Boxing Vonage into a Corner
Friday's news about the Verizon injunction on Vonage is not good news unless you don't like competition. I was in transit most of Friday, and haven't been able to comment about it directly until now, and I'm sure you've already followed as much of the story as you care to.
That said, the media did find me Friday morning, and before leaving for the airport, I managed to do one print story for Business Week and a radio spot for CBS Radio about the news.
I don't have a clip of the CBS Radio segment, but it would have played nationally throughout the day. If you caught it, please let me know - I'd love to know how it turned out.
The Business Week story did run on Friday, so that will give you a sense of my initial reaction to the news.
Finally, the week before, I was interviewed about the Verizon/Vonage situation by IT Business Edge, and you can read it here from their website. Michael Lindenberger, one of their writers, referred to the interview in his blog post on Friday, so he's added an update to my perspective.
All of this coverage took place before news of the reprieve on this injunction later on Friday, so it looks like Vonage has a bit of breathing room. But not much.
Taking all this into account, though, it's still not clear to me just how restrictive this injunction is - or could be.
- Can Vonage pursue new customers in the business/SOHO market, where Verizon isn't really selling VoIP?
- Can Vonage pursue new customers outside of Verizon's geographic footprint?
- Can Vonage pursue new business outside the U.S.? Of course, I'm thinking in particular about Canada. What are the implications here?
I suspect that all of these are/could be off limits to Vonage, and that's a pretty tough spot to be in. Ultimately, if the courts rule in Verizon's favor - regardless of how real or frivolous these patent claims really are (and that looks to be very debatable) - Vonage will likely be the author of its own demise. In that event, you could conclude one of three things - i) they underestimated Verizon's claims, ii)they didn't see this coming at all, or iii) they were aware of its potential, but gambled Verizon would never make a case of it - or never thought they would be able to make a case of it. You could also argue they never would have expected Verizon to take such an anti-competitive stance and use this as a basis to put them out of business. But that sure looks like what's happening.
Maybe I'm the eternal optimist, and maybe I'm the only one holding out hope for Vonage, but they do have one thing going for them that could come into play if they can somehow devise a workaround and keep going independent of Verizon. Being a virtual operator, they can do business wherever they can get last mile access, and are not limited by the footprint of a wireline network.
As mobility continues its ascendancy, this factor becomes less important, but still, I think this can be a virtue for Vonage. I may be grasping at straws, and lacking a network is the true Achilles Heel of any virtual operator --- but if they can somehow extract themselves from this mess, they certainly have many options to do business and steer very clear of Verizon.
I realize network access is a different issue from this litigation, but ultimately, Verizon is trying to bury Vonage, and this is the only way they can really go after them. If Vonage can survive this, I'm sure they'll find ways to do business with anybody but Verizon. And if they can't, Verizon will only succeed in hurting the biggest VoIP pureplay. They don't have a monopoly on VoIP, and everyone else in the game will find ways to do business without them.
Technorati tags: Vonage, Jon Arnold, Verizon, VoIP
That said, the media did find me Friday morning, and before leaving for the airport, I managed to do one print story for Business Week and a radio spot for CBS Radio about the news.
I don't have a clip of the CBS Radio segment, but it would have played nationally throughout the day. If you caught it, please let me know - I'd love to know how it turned out.
The Business Week story did run on Friday, so that will give you a sense of my initial reaction to the news.
Finally, the week before, I was interviewed about the Verizon/Vonage situation by IT Business Edge, and you can read it here from their website. Michael Lindenberger, one of their writers, referred to the interview in his blog post on Friday, so he's added an update to my perspective.
All of this coverage took place before news of the reprieve on this injunction later on Friday, so it looks like Vonage has a bit of breathing room. But not much.
Taking all this into account, though, it's still not clear to me just how restrictive this injunction is - or could be.
- Can Vonage pursue new customers in the business/SOHO market, where Verizon isn't really selling VoIP?
- Can Vonage pursue new customers outside of Verizon's geographic footprint?
- Can Vonage pursue new business outside the U.S.? Of course, I'm thinking in particular about Canada. What are the implications here?
I suspect that all of these are/could be off limits to Vonage, and that's a pretty tough spot to be in. Ultimately, if the courts rule in Verizon's favor - regardless of how real or frivolous these patent claims really are (and that looks to be very debatable) - Vonage will likely be the author of its own demise. In that event, you could conclude one of three things - i) they underestimated Verizon's claims, ii)they didn't see this coming at all, or iii) they were aware of its potential, but gambled Verizon would never make a case of it - or never thought they would be able to make a case of it. You could also argue they never would have expected Verizon to take such an anti-competitive stance and use this as a basis to put them out of business. But that sure looks like what's happening.
Maybe I'm the eternal optimist, and maybe I'm the only one holding out hope for Vonage, but they do have one thing going for them that could come into play if they can somehow devise a workaround and keep going independent of Verizon. Being a virtual operator, they can do business wherever they can get last mile access, and are not limited by the footprint of a wireline network.
As mobility continues its ascendancy, this factor becomes less important, but still, I think this can be a virtue for Vonage. I may be grasping at straws, and lacking a network is the true Achilles Heel of any virtual operator --- but if they can somehow extract themselves from this mess, they certainly have many options to do business and steer very clear of Verizon.
I realize network access is a different issue from this litigation, but ultimately, Verizon is trying to bury Vonage, and this is the only way they can really go after them. If Vonage can survive this, I'm sure they'll find ways to do business with anybody but Verizon. And if they can't, Verizon will only succeed in hurting the biggest VoIP pureplay. They don't have a monopoly on VoIP, and everyone else in the game will find ways to do business without them.
Technorati tags: Vonage, Jon Arnold, Verizon, VoIP
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