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Here's another example of Vonage's delusionality

Not a word, I know, but maybe it'll catch on and become one. Like Stephen Colbert's "truthiness.
Written by Russell Shaw, Contributor
Not a word, I know, but maybe it'll catch on and become one. Like Stephen Colbert's "truthiness."


GigaOM's Paul Kaputska is so spot on with his erudite points about why Vonage has not become a more serious player in the SMB (Small and Medium Business) segment.

"While Vonage still does offer a Small Business Premium service, it looks like something more for single-person offices or telecommuters rather than a true SMB offering," Paul writes. Paul adds that he's been told by a Vonage spokesperson that this is a "serious decision."

Still, he wonders, why is Vonage not moving more aggressively in this area when everyone from cable companies and telcos to hungry players such as Digium, Covad, and Fonality are moving aggressively to court SMB business.

Paul zeroes in on one big honkin' reason why.

Whether it’s a casualty of strategy or lack of infrastructure is unclear, but what is apparent is the total absence of any mention of SMB subscriber numbers in the company’s latest fiscal report, for Q4 and year-end 2006.

I think Paul is right about the strategic and infrastructure limitations that seem to be holding Vonage back from a firmer effort to woo SMB. You go to the main page for that offering, and most of the content seems to be a recitation of rates.

There could be a bigger issue at play as well. Vonage could be so deluded that consumer subscriber growth has so much further potential, that they consign other types of market pursuits to comparatively low-priority initiatives.

Vonage execs keep on talking about how their 2.2 million plus subscriber base is still a a small portion of the potential broadband subscriber universe.

What they fail to admit is that with subscriber additions falling and churn rising, they are running out of steam with residentially based early adopters and are starting to show major limitations in terms of crossing the chasm to mainstream adopters.

Mainstream adopters either aren't going with VoIP, but to either headset-based, IM-rooted VoIP or to bundled offerings from those same cable or telephony providers they are already used to.

SMB's (think companies and agencies with many dozens of employees, who already are VoIP users) are showing mainstream adopter receptivity to VoIP. The aggressive service providers I mentioned are only a few that get this and have a major marketing push to get those larger SMBs. Many a time I have personally asked the CEOs of these companies if they think Vonage is a competitive threat to their business and I have never seen a frown.

Why? It is because most SMBs care about specific targeted offerings with differentiation and a marketing effort aimed at their needs.

Vonage, It'll take more than press releases and consumer-themed ads to compete for this crowd. 

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