Vonage cops to "no workaround": which means they could be totally screwed if...
Vonage now says they have no "workaround" that could be deployed if a U.S. Appeals Court does not grant a stay in its patent infringement dispute with Verizon.
That appeal for a stay will be heard a week from tomorrow.
"Vonage currently has no workarounds that moot the need for a stay," the company said in a statement cited by USAToday and also mentioned by BroadbandReports and on Alex Saunders blog.
"While Vonage has studied methods for designing around the patents," the company says, "removal of the allegedly infringing technology, if even feasible, could take many months to fully study and implement."
Me: If Vonage doesn't obtain a stay they are so totally screwed.
Karl on Broadband Reports.com is a bit less edgy. "As it stands, Vonage is simply hoping the appeals process works for them," he writes.
Alex adds:
The crows have come home to roost for Vonage. The company has admitted that it has no workaround to navigate past Verizon's patents, and that such a workaround may not even be feasible. Interim CEO Jeffrey Citron has declared that one of the first belt-tightening moves will be to axe former CEO Mike Snyder's dot-com era marketing programs. Customer acquisition costs have ballooned to $306 per subscriber in the most recent quarter.
Old-style telecom business model + new technology = incremental improvement, not disruption.
Reading this article makes it very clear that it's going to be all or nothing with this Verizon patent claims issue. The language they're using indicates that if it all goes Verizon's way, Vonage simply does not have a future.
This just shows you how much their backs are to the wall. At this point, without a workaround, they have to convince the judge and jury that these broad, sweeping patent claims are indefensible, and that in essence, Verizon didn't invent and doesn't own VoIP. I think they have to bet the farm on it, and my guess is they will win.
Admitting they have no workaround may in fact, be true, but the way it's positioned now, this seems like a gambit to raise the stakes and show how one-sided this thing really is. If the ruling totally favors Verizon, then Vonage's days are numbered. And once that happens, they'll be emboldened to go after the cablecos. They could go after the other VoIP pureplays, but that won't be necessary, since once Vonage is vanquished, the others will simply go away on their own (mind you, 8x8 is rightly making a lot noise lately about all of its patents, so they may be spared).
The potential domino effect here is ominous, and while I don't think it will all come to pass, the possibility alone should be enough for the judge/jury to see things in a more balanced light. If Verizon gets all the spoils, competition would be crushed, the price of VoIP will surely increase, and consumers would have less choice and less innovation.
The plot thickens...
I agree with these observations, but I sort of sense that a week from tomorrow, Vonage will be granted a stay for both their ongoing services and new-signups.
What's your prediction?