Gadgetell | Tech News, Reviews, and Interesting Things

Evan will be filling in as The Water Cooler contributor while Bryan continues his plot to take over the world, for the next few weeks, across the pond in London .

Nobody understands the commercials for VoIP juggernaut Vonage. Why is there a man in a lobster suit trying to get through a revolving door, or a middle aged tool of a husband doing his best “robot” dance? But that’s for another article.  The market share leader in North American VoIP technology is getting closer and closer to its initial public offering, supposedly set at $16-$18 per share, in efforts to raise upwards of $250 million.  The deal should happen sometime before the end of the year led by underwriters Citigroup, but what does this mean? Hopefully, to you nothing, but if you have an uncle you don’t like tell him to invest and laugh later.

I don’t see a future for this company as its own entity; it would have been better off going to Skype route and selling to another company to deal with.  Many liken Vonage’s situation to TiVo’s a few years ago, it provides a service to be used on a much larger company’s infrastructure. Vonage uses the cable lines of Comcast, TimeWarner, Insight or whatever cable company is in your area, just as TiVo does.  What happened after TiVo went public? (P.S. TiVo is currently trading at about a 75% loss from it’s IPO, but they’ve come back a little, I still like them at their current price)...

All the cable companies began to provide similar services bundled into their services for much cheaper and they are beginning to do it again with VoIP services. Why deal with two companies when you can get one bill? These cable giants are offering bundles which may or may not save you money, but the average American is too stupid to figure that out and would rather one bill and one tech support number.  So Vonage will continue its trend of lost market share before we get into regulatory concerns.  If you think for a second the cable giants won’t work on technology or even, worse legislation that stops Vonage and other VoIP companies from using their infrastructure to take money from them, I’ve got a nice bridge in Brooklyn to sell you.

To be honest at home I used Vonage and besides the fact its cheaper, there is nothing special about it. It goes out often and there’s no legitimate technical support. Why this company is going to IPO is beyond me. They would’ve been better off selling to Google who conveniently plans to roll out similar services later this year, taken their cash and ran. Five years from now I’m going to bet that stupid red lobster suit will be hanging out with the sock puppet from Pets.com in IPO hell, but follow closely who knows what happens with IPOs, Google was too high at $80 per share according to my stock broker.

• Pizza gets TiVo’d
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Every Monday, Bryan Glanzberg contributes The Water Cooler, a column that bridges the gap between technology and business.

No, no, no. I am not going to break out into the Prince song and put on my best leopard skin outfit (save us all if I actually had to do that). Vonage is filing for an IPO; one of the pieces of news in the now noisy telephone and VOIP market. What is intriguing about this situation is that Vonage is one of the fastest growing VOIP companies. They more than tripled their subscriber base in 2005 which is leading to expansion and growth or is it?

“In the first nine months of 2005, Vonage lost $189.6 million against $170 million in sales. It cost the company $213 in marketing dollars to acquire every customer“up from $137 per subscriber the year before. That means, based on Vonage’s most popular, $24.99 monthly residential subscription, it would take roughly nine months to break even on marketing costs for each new subscriber

Not only does it cost that much to develop the relationship with the customer, but the profit per customer has declined from $31 to approximately $26. It will be very interesting to see where this IPO takes the company; we are no longer in the 1990’s folks, and although the market has been around its 5-year high, tech investors are still sore from the *insert obscene remark* they faced in the late 90’s to early 2000’s after the bubble burst.

Consistent revenue streams and above average returns are what attract long term investors. Many companies are looking for a quick and easy buck in order to sell their ideas, but by the time they raise the capital, it seems as if there ideas are obsolete I may be very wrong here, but time will tell.

Read [News.com]

• Vonage offers new Vonage Pro VoIP calling plan
• Marc Lefar from AT&T joins Vonage as new CEO
• Vonage continues to struggle, proves new customers are hard to find