Wednesday, October 03, 2007

VoIP - Is There a Business Case?

SunRocket, Vonage, and now Skype.

Skype never emerged as the cash cow eBay had hoped for when it paid a jaw-dropping $2.6 billion to acquire the Internet phone startup in 2005. Now eBay's announcement Monday that it will write off $1.4 billion in charges related to Skype has analysts and investors questioning whether the Internet phone business - known as voice over Internet Protocol (VoIP) - has any commercial potential at all. [cnn]

It seems that while there is plenty of buzz about VoIP, the paying public doesn't want to spend enough to actually make it profitable.

The number of people paying to use Internet phone services in the U.S. has nearly quadrupled to 16.3 million since 2005, but revenue per subscriber has dropped from $42 a month to $29, according to research firm IDC.[cnn]
Says Cohen: "This market isn't going away, but providers will need to do more to provide a compelling experience to move consumers away from the traditional idea of a phone."[cnn]

No kidding. POTS Replacement for Less Money does NOT equal success.

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