Strategy Charting
Strategy Canvas of voice service provides
High
Skype
Vonage
Comcast Phone
Cell Phones
Offerings
Low
Cost
Customer Voice
Ease of Brand Features Accessibility
Service
Quality use
Equity
Scenario Planning

First a business idea is generated, to
identify the current position of the
company
Business Idea
Agreements with
Hotspot Owners
like EarthLink
VoIP Software
Scalable Servers
Features: fax-line,
three way calling
Cost Effective
Phone Service
Customer Base
Advertisements
Increase in
revenue
Brand Name
Market Share
Source: Telephia
Churn Factors
Current Scenario
The top seven consumer VoIP providers in the United States at the end of
mid-2007 included the five largest cable operators in the country.
Source: TeleGeography
Perils of Pure-play VoIP Provider
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Low barriers to Entry
High Customer Acquisition Costs
Lack of bundled service
Expanding scope of PC-Centric VoIP
providers
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Skype based phones
New Game-changers

IP-PBXs
Scenario Planning
Minor
Changes in
Market ?
Profound
Gradual
Impact of
Technology ?
Radical
Scenario A:
Cost Cutters
Scenario B:
United We Stand
Scenario C:
Divide and Rule
Scenario D:
Jungle Rule
Impact of Technology
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Merging of Cellular and Wi-Fi
Abundance of hotspots
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Arrival of WiFi enabled phones
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Ubiquitous Internet availability
T-Mobile, iPhone
Open Source Phone platform, Google’s
Android
Change of Market
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Planned management of hotspots
Links or deals between ISPs and VoIP
applications like Skype
Emergence of major players in Wireless VoIP
Emphasis more on Wireless or Wired VoIP
Market capital of Vonage and its competitors
Strategic deals with competitors or
complementary service providers
Scenario A: Cost Cutters (1)

Snapshot
 No major tech breakthrough, and the market
remains stable
 Hotspots don’t catch up and Wi-Fi enable phones
are not hot
 No proper low-cost solution exists for switching
from cellular to Wi-Fi
 No major deals between VoIP provides and
hotspot managers
 In a nutshell, wireless VoIP doesn’t catch up, both
in its availability and usability
Scenario A: Cost Cutters (2)

Indicators
 AT&T, Comcast continue their focus on bundling
VoIP with cable services
 Vonage’s customers still prefer it as a cost
effective solution with features
 Subscription rate of Vonage does not grow due to
static market deadlocks and lack of technology
Scenario A: Cost Cutters (2)

Implications
 Vonage’s growth slows down due to stiff
competition from bundled services
 Vonage’s only stronghold, “cost effectiveness”, is
being challenged by bundled service which also
become cost effective
 Due to stagnant growth, the company cannot
spend as much in advertising and other companies
like AT&T, with surplus money start advertising
more
 Overall, the market becomes sluggish and the
technology fails to stay hot.
Scenario B: United We Stand (1)

Snapshot

No major technological changes, but the market undergoes radical
changes

Many new VoIP providers come up, many of them tied to or backed
by traditional cable and phone companies

Customer becomes the real player with not much differentiation
between VoIP services

Brand name becomes the key differentiator

Hotspot providers unify to provide a single standard entity,
although hotspots are still very scattered
Scenario B: United We Stand (2)

Indicators

Boingo, WiFire, T-Mobile become members of Hotspot Alliance, that
provides seamless hotspot service at 99% hotspots in USA

Skype inks a deal with the unified hotspot providers to extend
Skype’s accessibility to hotspots nationwide

Other VoIP companies like myphonecompany (with AT&T) gain
prominence due to the backing of phone companies

Some VoIP providers also come up with wireless handset (Netgear
with Skype) that works in hotspots and WiFi covered areas
Scenario B: United We Stand (3)

Implications

Skype becomes more popular with common people

Vonage loses it’s market share in residential plans

Other VoIP provider’s market shares also surge (like myphonecompany with
AT&T)

Vonage loses its cost effective competitive edge with residential people
leaning toward Skype phone and small businesses also having more
options.

Brand name can carry Vonage’s sale in small business, but will need to
improve its voice quality and customer service to maintain edge.
Scenario C: Divide and Rule (1)

Snapshot

Technology becomes advanced, market changes slowly

Hotspots completely proliferate all US cities

Wi-Fi enabled cell phones become popular, and is provided by all cellular
operators
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No agreement is reached between hotspot providers to provide any unified
standard service

Software for switching between cellular and Wi-Fi is in place, but due to
lack of unified internet access schemes, is not used much useful

People start realizing the savings of making cell phone calls on WiFi and
lead to demand of WiFi enabled phones
Scenario C: Divide and Rule (2)

Indicators
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Samsung, Nokia, Motorola come up with WiFi enable cell phones that work
well and are reasonably priced
T-Mobile starts supporting WiFi based phone calls when in WiFi coverage or
T-Mobile hotspot
AT&T also rolls out a plan for supporting WiFi based coverage in their
service plans
Earthlink, Boingo etc fail to reach an agreement to provide unified hotspot
services.
Scenario C: Divide and Rule (3)

Implications
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Vonage faces extremely stiff competition in residential segment, as people
can just use their cell phone to make calls for free at home
Loss of revenue and sudden decrease in subscription rates for residential
segment
Might have to introduce some new features like Vonage Wireless Device,
that will allow people to be more mobile and use it in limited hotspots.
Loss in revenue can trigger a liquidated brand image due to reduced
marketing expenditures
Pure play VoIP providers will report heavy losses with cellular giants
providing dual capacity in the cell phones
Scenario D: Jungle Rule (1)

Snapshot
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Technology changes radically, and the market also
changes rapidly with new mergers and deals
Dual mode cell phone, with minimal charged Wi-Fi
calls become norm
Hotspot providers unify to provide standard
services
Customer has better cheaper options
Integration is the keyword
Scenario D: Jungle Rule (2)
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Indicators
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Boingo, EarthLink etc ink a deal that allows third party
business to access internet in all the hotspots in a seamless
fashion.
Google comes up with open source platform for Cell phones,
that can run third party software
An Android Alliance is formed, that incorporates cell phone
manufactures, service providers and software businesses.
AT&T backed VoIP services become popular because of
seamless use in WiFi and cellular
Many new companies come up with VoIP applications for
Android platform
Skype joins the alliance to put its VoIP application on cell
phones
Scenario D: Jungle Rule (3)

Implications

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VoIP becomes even easier market to enter
Cable companies erode Vonage’s market share in
traditional wired landline sector
Wireless VoIP becomes the hot thing for
residential segment
Vonage must join the Android alliance and try to
strike deals with Hotspot provides to allow its
customers to make free calls on the go
Most Likely Scenario: D
VoIP Market Shakeout
Alternate providers lose market share
2005
(projected)
2003
Traditional Telcos
Alternative Providers
Cable MSOs
Source: Yankee Group
Strategy
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Look at implications in all scenarios
Clear that only wired VoIP based Vonage not
sustainable
Need to introduce new features, like wireless VoIP
Absolute need to improve customer service, accounts
for 15% of the churn
Make a push towards software and infrastructure for
wireless VoIP
Make Vonage available anywhere there is Internet
Skype will be main competitor in wireless VoIP
Focus on International Calling and Virtual Numbers
Implementation
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Focus on specialized customer needs
Three pronged approach
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Wireless VoIP
Virtual Numbers
International Calling
Wireless VoIP
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Join Android alliance
Should have wireless VoIP software
ready on android platform
Provide the wireless VoIP service for
nominal extra fee
Virtual Number
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Provide this facility not usually available
with cable
Advertise it more – make it your USP
Customize the plans on a per client
basis
International Calling
International Calling

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Emerging as a big market
Take a lead in customizing plans on a per
country basis
Move fast to international markets to gain
early movers advantage
Exit Strategy


Align Vonage with some bigger cable
company, that needs a head start into
VoIP business
Wireless services can also be started
jointly with some cellular operator
Strategy Canvas of voice service provides
High
After
Offerings
Before
Low
Cost
Customer Voice
Ease of Brand Features Accessibility
Service
Quality use
Equity