Vonage seems to be singing a new tune and it's not the same song they sang when they got their two hundred million. That money was supposed to go largely to marketing and growing their subscriber base here in the USA and around the globe.
How efficiently they were porting numbers before was widely documented on sites like DSLreports so this moves means they are trying to fix their ability to port numbers. My guess is this also supports the DSLreports community's viewpoint that the Vonage way wasn't working.
Vonage, with this move, also appears to be spending more of its cash horde to fix its previously unrecognized or undisclosed shortcomings and deficiencies.
Vonage is also starting to find out and admit in veiled ways that becoming a REAL phone company is quite expensive if they really want to deliver the same phone services and offer the same capabilities that the incumbents already do. How this and other steps (E-911 at a cost of 60 million or more) that they will be taking to fix their internal needs (like a network) clearly impacts burn rate in my mind.
I wonder what the VC's who gave them their last round of cash are thinking now versus what will likely be said.
Euro VoN still has another day to go and James Enck has a great recap of what's transpired so far that matters. Be sure and read all the way through as he's got lots of tidbits that hopefully as VoN Blur subsides he can expand upon.
While 8 x 8 is clearly trying, I don't think they have come close to turning the corner. Their burn rate is increasing, and while subscribers are growing, one has to wonder about the costs that they will start incurring to deliver E-911 service to their customers.
They also have some R&D going on for new products and offerings, including a softphone for video. While they need to do that in order to drive more adoption of the video phone, they also have to start cutting their losses and stop floating on the cushion from their stock sale.
The only real way they can do that is to start seeing massive adoption and that means all the MLM and reseller deals they are doing have to start showing results. According to a few resellers who have messaged me privately, they are rather upset with Packet 8's new direction and may be looking to take their customers elsewhere as their contracts expire.
They also issued a report on how much people are paying. So right now VoIP appears to be a "cheaper" way to go, but I don't expect that to last. While I do forsee the day of $9.95 plans, I believe that pricing of VoIP will eventually mirror the current pricing of PSTN, and will have a downward pricing pressure on PSTN. That said, as more advanced services are rolled out with VoIP, that history will repeat itself and the add-ons will cost more money, the same way Voice Mail, Three Way Calling and Call Waiting are charged for.
Now if they would only break out VoIP numbers in their report it would be interesting to see the demographics and segmentation figures.
Being private has it's advantage, one of which you can make statements like this without all the strings that limit public companies. But still, one has to wonder a lot. For example, how much in the way of stock are founders and employees getting and how does that impact the actual balance sheet.
Also, with the current FCC regulations looming how will that impact Skype in the USA, or will the VC's who are USA based all of a sudden find them in the middle of something that they never dreamed of, that being the route of the money and possible FCC sanctions. I mean, everyone always says follow the money.
I'm rooting for Skype but the financial world is a dangerous place and people remember what you say, and forget what is unimportant. This claim is a big, bold statement, and one everyone will be watching to see if it comes true.
So you get an affiliate deal with Skype and your friends and customer start yelling about bad connections on Skype Out and Skype In....who you gonna call?
What one insider close to the P2P company told me was that Skype is having success selling numbers (largely for voicemail) but that many people try SkypeOut and have marginal success or don't like the quality. As such the money sits there. Skype earns interest, but the cash on hand has to be treated as a liability....OUCH.
I love Skype, but from day one I have never said it's a replacement for my phone.
That said, I do consider CallVantage and Vonage phone line replacements, and thus they need to behave the same way as PSTN, not just deliver the best of PSTN and leave out the expensive parts. Seems OM and Martin are both on the same page....