Two of my esteemed colleagues weighed in on Vonage and since I haven’t been quiet about my thoughts, I figured I’d weigh back in again as well.
Garrett Smith says We All Owe Vonage A Thanks
I have been thinking a lot lately about the torch that Vonage carried for the VoIP industry and how much of what they did that has landed them in so much financial trouble (marketing and advertising) has enabled many a company in the industry to thrive. To the mainstream public, Vonage is VoIP. I can’t tell you how many times I have told John Q. Public where I worked and had to mention Vonage just to give them a frame of reference.
Sure Vonage has not done much lately to drive innovation, and maybe their service is nothing more then voice 1.0 service delivered through over and Internet connection, but they paved the way. I am as guilty as anyone when comes to being critical of Vonage, but I am done bashing them. As the pioneer, the veteran, the old man, they deserve to be held in a better light.
Then David Beckmeyer countered with Thanks, but no thanks
Garrett Smith over at Smith on VoIP says We All Owe Vonage A Thanks. In many ways he is right and his post is worth a read. It’s something that needs to be said.
However, that said, I have another perspective (surprise, surprise). While much of what Garret says is true, the net result of Vonage on the industry and on consumers has been overwhelmingly negative.
Four Things I Hate About You
First, Vonage contaminated the VoIP investment pool back in 2003. Once Vonage succeeded in selling their bogus story of “disruption” and became the darling of VoIP, any models contrary to the Vonage approach (technically or business-wise) were summarily rejected. Many well known giants of industry hailed Vonage as a miraculous revolution. Investors were infatuated. The press followed. Nobody seemed to stop and look a little deeper to see what road we were really taking.
Second, Vonage ruined the retail environment for VoIP. They tainted the supply chain by entering into unsupportable (and downright silly) deals, essentially buying shelf space at far above market rates. VoIP got tagged as suckers and now the retail giants assumed they could make the same one-sided deals with every Tom, Dick, and Harry VoIP service provider. Of course, the products never sold very well at retail - but that’s not important to the retailers when the manufacturer is paying those kind of fees just for the box sitting on the shelf. Vonage overpaid for everything in the value chain, and must have been the butt of countless jokes among hardware manufacturers, distributors, and retailers.
Third, Vonage defined VoIP in a very anti-consumer and anti-Internet way. The vast amounts of money they have spent educating the market, the press, analysts etc. have caused incredible damage to the industry. Parrots like bloggers, analysts, and other “experts” added credibility to Vonage’s tales of erroneous information, because they in fact have no clue, especially technically. They were all fooled, even the well-respected ones, so don’t feel too bad if you were too.
Finally, once Vonage started to struggle and fell from grace, they ruined the investment environment for a second time. When their flawed ideas and business economics turned out to be, guess what, flawed, just as we knew they were - VoIP at large suffers. As goes Vonage, so goes VoIP.
I like and respect both these guys. Probably more than they know. They’re bright lights in an industry I’ve watched closely for ten years. Keen minds, with a clarity of thought that often eludes me.
I have to disagree with Garrett and weigh in on David’s side of the conversation. In truth, I’m more volatile and harsh than David. That’s often then case, even when he and I agree.
Vonage didn’t innovate. I don’t think they ever innovated really. In today’s parlance we talk about companies that are minute stealers, shaving a profit off of the cost of minutes. These companies leave a sour taste in my mouth for a number of reasons. Less because they are simply profiteers, scavenging revenue off a declining market (getting the last bit of skin, as it were) than because they seem to be shortsighted business people who aren’t building a business for the long haul. They have no vision and don’t build something to last. Rather they’re in it for the interim, with no large strategy for sustainability.
I think Vonage has had weak leadership for years. They’ve never innovated. They never did anything but capitalize on cheap minutes in their own right. Sure, they’ve had moments, but the truth is that David’s points 1-3 all say they same thing. Vonage poisoned the well. If Vonage were a cat, the peed in their own food dish. And they did it repeatedly over the course of their life.
I have nothing to thank Vonage for. I never believed they had a model for success. Never believed they were led by a vision. And now, I feel bad for everyone who bought into the whole idea. But the worst part is, as David points out, the entire industry has to suffer because of them.
Praise Vonage? Thank Vonage? Not I. I’ve said for a long time, it’s time to bury them and place a tombstone where that particular logo lives. They peed in their own food dish. Maybe what’s appropriate now is to burn them in effigy and pee on the ashes. It will leave a marker for others who bring no vision and simply chase profit without a real plan.
Technorati Tags: Vonage, Garrett Smith, David Beckemeyer
Filed by Ken at 6:52 pm under 
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