Vonage: New apps and a bid to become internationally relevant

Vonage: New apps and a bid to become internationally relevant

Summary: It remains to be seen whether Vonage can make much traction against Skype's installed base, but the opportunities abroad are huge.

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TOPICS: Banking
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Vonage on Wednesday rolled out Vonage Mobile, new iPhone and Android apps, that allow for texts and calls while undercutting Skype rates.

It remains to be seen whether Vonage can make much traction against Skype's installed base. Vonage's international calling rates are 30 percent less than Skype.

But that's only part of the story. The larger tale here goes well beyond a mobile app. Just a few years ago, Vonage was on financial death watch. The company has rebuilt a balance sheet that looked like it wasn't worth the paper it was printed on. Mark Lefar, CEO of Vonage, talked last month about how the company refinanced its debt twice in the last 13 months, cut those liabilities in half and trimmed interest rates in the 20 percent range to less than 4 percent.

In other words, Vonage is poised to report positive earnings growth on Feb. 15. Today, Vonage is known for more than its quirky commercials. So what's the strategy? Can Vonage really grow beyond its U.S. base?

The answers to those questions were outlined during Lefar's talk a month ago. Here's the short version of Vonage's strategy.

Grow international. Fifty percent of Vonage customers are on the Vonage World plan and 35 percent regularly make international calls. Vonage has opened three bilingual sales and services sites. Hispanic callers are the primary target. Lefar said that the consumer communications market outside North America tops $300 billion.

Snatch share in the U.S. In the U.S., Vonage research shows there are more than 20 million households that are looking to switch carriers.

Mobile growth. Lefar said there are free VoIP players that have invested as much in mobile. Vonage's new apps use the phone's established contact list. The plan is also to add feature phone software and a low-cost international roaming service.

For Lefar, Vonage's mobile efforts at the very least will bring in more active users. "What we are finding is that those who download the applications do become active users. The issue becomes one of frequency of use, pricing structure, and simply getting penetration of those downloads," said Lefar.

Topic: Banking

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  • RE: Vonage: New apps and a bid to become internationally relevant

    Finally.

    I've been a Vonage customer for almost as long as they've been a company and even before the mobile app explosion I always wondered why they didn't kick IP Telephony into high-gear. They could have had online web-apps and tools and graphs, etc that put all other offerings to shame. Instead they've just sat complacently and watched the cable/dsl providers stomp all over them with their triple-plays and Google Voice knock them down with incredible features.

    This is almost too little too late. They had their chance and they blew it.
    wendellgee2
    • RE: Vonage: New apps and a bid to become internationally relevant

      @wendellgee@...
      My gripe about Video Phones is that there is no standard. Skype video phone can only call Skype video phone. Now where do you think cell phones would be if a T-Mobile phone could only call a T-Moble phone or Verison could only call another Verison phone. Video Phone makers need to standardize if video phones are ever to become main stream.
      mocnarf
  • RE: Vonage: New apps and a bid to become internationally relevant

    Vonage T&Cs have always said you can take your adapter anywhere. Mind has been in the UK since 2005. It does a pile of things GV can't do, starting with offering me in the UK any sort of service (GV is US only). But I do things you can't do with GV anyway, like divert to my UK mobile. Vonage have an offering in the UK too but I wanted a US phone with a US number.
    anonymous