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VoIP Provider Vonage Planning IPO?

Posted by ryuzaki0 on from the wild-conjecture dept.

SixDimensionalArray writes "The rumor mill is exploding with stories that large voice-over-ip (VoIP) provider Vonage is planning an initial public offering to raise nearly $600 million. This information is interesting coming out not long after Google's recent release of Google Talk, which overs instant messaging/VoIP services PC-to-PC as well as a surge in marketing by VoIP providers such as Covad and Skype. Could this be yet another bubble?"

31 of 143 comments (clear)

  1. Is VoIP Reall That Big? by TheComputerMutt.ca · · Score: 4, Interesting

    I know that it's a growing market, but with the afforability of cell phones and free PC versions, is there really a large enough market to sustain all of this?

    1. Re:Is VoIP Reall That Big? by w98 · · Score: 5, Interesting

      I use Vonage and love it ... I have a virtual phone number based in Toronto that my family can call and it forwards to Los Angeles at no extra charge. On top of that, the feature to forward to another phone number (ie: my cell phone) for free if I'm not home to answer it there, is well worth the price. Between the cell phone and Vonage, I have no need for a land-based phone line any more to talk to my family up north. Cingular charges me $0.69/minute to call Canada, so I just call my family and say "hey, call me back on my Toronto number" and wait for my cell phone to ring.

      --
      my geeklog
    2. Re:Is VoIP Reall That Big? by evildogeye · · Score: 2, Insightful

      There is a large enough market to sustain the growing VOIP market because this is essentially the same market that supports dozens of cell phone and local and long distance companies.

      As a small business owner, I can say that Skype and other VOIP services have been a godsend and I welcome Google to the game.

      We have employees in China, Australia, England, and the United States, who all talk for free on Skype. In addition, I have 3 SkypeIn phone numbers: One in China, one in England, and one in the United States (Total cost: $15 per line per 3 months). Someone in England can dial a local number to reach us, and it's free for me and free for them. On top of that, they don't even know that I'm not in England. I had to have a 3rd party company forward my Australian phone calls, because SkypeIn doesn't work in Australia yet. At a rate of about $1 per hour (.017 Euros per minute), I can call Chinese, Australian, British, or American Customers.

      The signal quality can be a little low. I have one customer who refers to us as the "bad reception guys." Some days are worse than others.

      As much as I like Skype, I'm looking forward to jumping on the Google Talk bandwagon because I'm certain they will offer superior service to Skype.

    3. Re:Is VoIP Reall That Big? by timeOday · · Score: 2, Informative
      Vonage has one big problem, which is they don't allow direct VOIP calls - you can only make and get calls from the POTS.

      In a way this make sense for them, as there really is no need for a middleman like Vonage for direct VOIP calls, but as more people get VOIP they are going to want to make VOIP calls without paying a middleman. I already do.

    4. Re:Is VoIP Reall That Big? by JPriest · · Score: 2, Interesting

      The problem with this is that it opens a huge security hole. If any random SIP client can make a calls directly to your phone adapter then what is to prevent abuse?

      --
      Saying Java is nice because it works on all OS's is like saying that anal sex is nice because it works on all genders.
    5. Re:Is VoIP Reall That Big? by larry+bagina · · Score: 2, Interesting

      take a look at your phone habits. If you're on the low-end of the phone usage scale, a prepaid plan (like virgin or tmobile) can be a very good deal (and a lot cheaper than POTS).

      --
      Do you even lift?

      These aren't the 'roids you're looking for.

    6. Re:Is VoIP Reall That Big? by NardofDoom · · Score: 2, Interesting
      One word: PhoneGnome.

      It's VoIP for people who don't want VoIP. It plugs in between your phone and the POTS line, with an Ethernet cord shoved in another port. When you dial a number it checks to see if that number is SIP or PSTN. If it's SIP, it sends the call over the Internet for free. If not, it goes over the traditional phone line. It works when the power's off, 911 is still the same, and you can set it to route all long distance calls over a VoIP long distance provider for 1.5/min.

      There's a referral program, and the box only costs $120 with no monthly fees. The more people who have them, the less calls get routed over the PSTN and the cheaper your phone bill gets.

      --
      You have two hands and one brain, so always code twice as much as you think!
    7. Re:Is VoIP Reall That Big? by turtled · · Score: 2, Insightful

      I have had Vonage for over 1 year now, and I love it. I pay $26 a month for unlimited everything, long distance in the US, voice mail, caller id, everything just like a real land line. I had Verizon telephone, and their monthly bill was $87 for the same exact package. SBC/Ameritec was $72 at my previous house. Vonage VoIP uses your existing phones. I don't want to get up and go to my computer everytime I want to make a Gtalk call. I know it's no cell phone, either, but, your normal house line is not a cell phone, either.

      If anyone wants a Vonage invite, which is like 2 months free or something, email me (dmannjr AT gmail D0T com) =)

      --
      "I cannot think of any need in childhood as strong as the need for a father's protection." -- Sigmund Freud
  2. Lots of money to be made by Eightyford · · Score: 4, Insightful

    The telecommunications industry is huge, and there is a ton of money to be made. That being said though, it's so easy (comparitively) to get into this business that it would be foolish to invest in a single company. I think it will be just like what happened to AOL. People will go with the cheaper provider eventually, and there is just too many competitors (there will be many).

    --
    Religion for nerds. Stuff that really matters
  3. I wuv vonage by Anonymous Coward · · Score: 2, Funny

    With vonage you can call anyone, anywhere free. With most other VoIP systems like google talk, etc, the receiver needs special software. I'd me more interested in Vonage stock than google stock at this time.

    --
    http://stoopidme.org/
    Bringing the world together through our common bond: our stupidity

  4. I hope it is true by Anonymous Coward · · Score: 4, Funny

    so that the holders of the common stock can vote on removing that FUCKING ANNOYING noise they have on their tv commercials.

  5. Exploding Rumor Mill? by richdun · · Score: 2, Funny

    So, wait, does this mean we don't have to put up with ridiculously speculative stories about things that "might" happen in someone's mind but have absolutely no business being called "news" now that the rumor mill has exploded?

    What's that you say? Oh, this is Slashdot?

    Ah, never mind then. Nothing for you to see here, please move along.

  6. TechCom and the future by LordKazan · · Score: 4, Interesting

    I heard a story on NPR about VoIP just this week and they talked to a guy from a company that specializes in tech investments - specifical in figuring out what is a good investment.

    He said they refer to technologies like VoIP as "TechCom" and fully expect it to replace Telecom as time goes on - and the market of incompatable technologies is just because the technology is in it's infancy [VHS vs Beta, Laserdisk, VCD, DVD, Blu-ray vs HD-DVD would make a string of good examples] and that overtime they'll eventually all become cross-compatable.

    He pointed out previous advances in communications technology anymore - specifical AT&T - anyone remember what the second T is? American Telephone and Telegraph - who uses a Telegraph anymore? Exactly: NOBODY.

    VoIP is the infancy of the next generation of communications technology - not a bubble.

    --
    If you cannot keep politics out of your moderation remove yourself from the Mod Lottery.. NOW!
    1. Re:TechCom and the future by strider44 · · Score: 2, Insightful

      But this isn't a totally new revolution, like being able to literally talk instead of just type, it's actually giving the same service albeit at a cheaper cost and perhaps a higher quality. Chances are the users of VoIP won't even know it's happening; do you realise that most long distance conversations using a normal telephone are actually done using VoIP simply because it's cheaper for the telephone company?

      I wouldn't get out the doomsday hats for the telecom companies yet, they'll adapt as always.

    2. Re:TechCom and the future by ninjamonkey · · Score: 4, Insightful
      He pointed out previous advances in communications technology anymore - specifical AT&T - anyone remember what the second T is? American Telephone and Telegraph - who uses a Telegraph anymore? Exactly: NOBODY. VoIP is the infancy of the next generation of communications technology - not a bubble.

      When people speculate on whether VOIP will become a bubble in this context, I think it's referring more to the over-valuation of the stock at IPO.

      I don't think anyone argues that VOIP technology isn't the future of communications, though, and may be worthy of long-term investment.
  7. Certainly a bubble by jaredmauch · · Score: 3, Insightful
    It's the same as the DSL rush in the late 90's, the ILECs will win.

    They can easily convert everyone to unlimited plans and put the domestic LD carriers out of the voice business. There's just so much profit to be milked out of $.25/min in-state calling that it's hard to justify dropping the prices since people are willing to pay it.

    Vonage and others will face the same challenge others have seen when fighting the ILECs.

  8. They want to raise too much, overpriced by John+Seminal · · Score: 5, Interesting
    Vonage wants to raise $600,000,000? But they only have 800,000 customers. That is $750 per current customer? Can Vonage even make that much per customer? What growth do they expect?

    To date, the company has raised more than $400 in venture capital

    They way I understand, VC will own most of the company. How much of a % ownership did the $400 million buy, and how much of a % ownership will the $600 million have? Are the VC cashing out? This is the stage of the game where they normally do. And I would like to know how much influance the VC has, did they strike a deal with the original investment that the VC has control of when the company goes IPO?

    There was a great movie about how VC ruined a company, the DVD is called startup.com. Some very smart guys came up with a great idea. They did all the work, but needed funding. They found VC, and had a big party, they took all their employees on a vacation. Then they realized how much control the VC had. The VC ran the show. The VC fired one of the founders, the guy who was the technical mastermind. It was a nightmare what they did. And the company eventually went bankrupt.

    This seems like a bad deal to me. As others have pointed out, cell phones are getting cheaper all the time, and now there are free VoIP services available.

    I just can't see how this kind of company could get a billion dollars. It is like we are living in 1999.

    --

    Rosco: "If brains were gunpowder, Enos couldn't blow his nose."

    1. Re:They want to raise too much, overpriced by WhiteWolf666 · · Score: 2, Insightful

      $750 per customer.

      That's assuming they develop *no more customers*, which this IPO is most likely predicated on them not doing.

      The idea behind an IPO is to fuel explosive growth; an IPO is most definitely *not* a sale of company assets, and current income is only roughly related to how much money you want to raise.

      Far more important is business plan; and these IPO rumors are indicative of Vonage planning to build out extensively, or to acquire customers, or both.

      $750 a customer? You're thinking wrong.

      800,000 customers. Target over 7 years? 9 million customers. 10 fold increase.

      Raise 600 million, use that to acquire customers? A $75 per customer acquistion cost is not unreasonable, and 9 million VoIP users is what, ~4% of the telephony market?

      You say cell phones are getting cheaper, and there are free VoIP services avaliable, but they just aren't the same, or as convenient. It's pretty easy to sell people on something that requires no configuration and acts exactly like a normal phone company telephone.

      And the baby bells are a nice, fat target.

      It's not an unreasonable goal, nor an unreasonable amount of money to raise. And given that their average plan goes for $20 a month, a $75 per customer acquisition cost will cover itself in 4 months.

      That's *great* business. This, of course, depends on their business plan, on whether or not providers cut them out of the market (though the FCC loves Vonage) and whether or not these 911 lawsuits put them out of business (looks like this threat is passing).

      I say this as someone who has switched his home phones and some business phones to vonage, 9 lines in total.

      --
      WhiteWolf666 an exBush supporter. All you new-school,compassionate,save the children Republicans can rot in hell
  9. Will pretentious questions be the end of Slashdot? by Anonymous Coward · · Score: 5, Funny
    Jesus fucking Christ! STOP SUBMITTING STORIES WITH FUCKING STUPID "QUESTIONS" AT THE END.

    "Will this be the death of X?"

    "Uh oh, is X's dominance in the market place over?"

    You won't phrase shit like this as a statement because you know it is retarded given the unimportant news announcement preceding it. Instead you write it as a question because then you can just claim to be "provocative" instead of a "fucking moron."

  10. Criminal CEO? by DoctorHibbert · · Score: 2, Informative

    http://damienkatz.net/2005/04/fuck_vonage.html

    --
    Arbitrary sig
    1. Re:Criminal CEO? by radtea · · Score: 2, Informative


      My dealings with Vonage were not dissimilar. They've still never paid me what they owe me, although my credit card company successfully challenged the "cancelation fee" they charged me when I found that they didn't have local numbers in my area (despite the fact that I checked on that specifically when signing up.)

      So I kinda do hope they go public--it'll be an opportunity to make more than the amount they owe me, as this has all the makings of a great short-term investment: a rapidly-growing company that's the leader in the "next big thing", where no one wants to get left behind even though no one knows how to make money at it.

      --
      Blasphemy is a human right. Blasphemophobia kills.
  11. Public IPO would do more than bring capitol to Von by amichalo · · Score: 4, Informative

    An IPO would do more than just give Vonage capital to reinvest in infrastructure and R&D, it would bring a tone of legitimacy to the VoIP industry and Vonage as a company.

    I replaced my Bell land line with Vonage almost two years ago. The service has been similar to cell phones as far as a few growing pains in the first months with packet dropping (due to my cable modem I found ou t- a replacement fixed the issues!)

    But in the past year, the only complaint has been one time when I happen to be downloading some large torrents and the wife was unhappy about her phone conversation quality.

    Plus it is far less expensive than a land line, and portable which allows me to vacation six states away and be reachable on my home phone line...and even better...make calls from it too.

    --
    I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
  12. Pop by Doc+Ruby · · Score: 2, Informative

    The rise in any one stock, even if it's a stupendous rise, is not a "Bubble". A Bubble is when any stock is inflated in price: it's a market bubble, not a company bubble. People saying a Vonage IPO is a bubble are squandering the chance to learn something from the lesson-filled Bubble of the late-1990s market. And making it harder for others to learn from it. What, do you want a return to worthless corporate paper costing a real fortune that badly that you see it lurking in every equity offering rumor?

    --

    --
    make install -not war

  13. All I can say is... by Anonymous Coward · · Score: 2, Funny

    ... they can do whatever they want, as long as they shut the hell up. Every second TV commercial is "Vuh-Vuh-VOOOONAAGE", half the sites I go to now have that stupid Vonage astronaut guy.

    For God's sake, just shut the hell up!!!

  14. Phones that can crash? No thanks by Bin+Naden · · Score: 4, Interesting

    Who seriously wants a phone system that can crash? Damn, I'm trying to call 911 for that heart attack but my phone does not work. I'd wait before joining VOIP service.

    --
    There should be a "-1:Groupthink"
  15. Re:Use VOIP as the back end to cell phones... by BlakeOPS · · Score: 4, Informative

    They're called packet switches and Verizon is migrating their TDM network to them. http://www.networkworld.com/edge/news/2002/0710ver izon.html

  16. Vonage has been a success for me by marlinSpike · · Score: 3, Interesting
    I'm a very happy Vonage customer, and have been for about two years now. I have never had a problem and have never experienced any issues at all. Now, my parents in India have taken a Vonage box home, and I call them on a 'local' Boston number, and hear them as crisply as I would my neighbor... and for free (well, for $24.99/mo)!!

    When I switched over to Vonage, I went the porting-my-number way, which took about three weeks, which I think as industry standard at the time, and there wasn't anything that Vonage could really do about it anyway, because the ball was in Verizon's court to 'release' my number.

    I really don't know what's keeping more people from switching over to VoIP. I know my enthusiasm for new technologies often gets me in a bit of a bind (as my less than pleasant experience with early-adopter Bell Atlantic DSL), but VoIP has been all plusses for me.

    I'm glad Vonage is going public finally -- in these times, it's the sign of a company growing up (after all, this is the post 90s age). While I'm happy with their product, there is one more feature they could provide which would really thrill me -- allowing me to use my mobile phone to make calls over my VoIP line... make sense?

    1. Re:Vonage has been a success for me by joelleo · · Score: 2, Interesting

      While I'm happy with their product, there is one more feature they could provide which would really thrill me -- allowing me to use my mobile phone to make calls over my VoIP line... make sense? Hmmm a voip gateway? Might be useful. I know there are voip over 802.11{b,g,n} "cell" handsets being developed, maybe it would be an interesting bridge from wired voip to wireless voip...

      --
      "In the end, there is simply no weapon more devastating than the truth, delivered in just the right way." - tnk1
  17. Re:Will pretentious questions be the end of Slashd by Matt+-+Duke+'05 · · Score: 2, Funny

    A-MEN.

    It makes me sick how formulaic most of these stories are:

    [insert unimportant story here]. [Make an absolutely outlandish jump to conclusions and ask a ridiculous rhetorical question that bears absolutely no logical connection whatsoever to either a.) the story in question or b.) any sane person's version of reality].

    Example: Blah blah blah some anime company using Bittorent for distribution blah blah blah. The question is will other distributors and studios follow ADV's example or stick to their current distribution models?"

    Are you fucking kidding me? Yeah -- Dreamworks is going to start distributing all of their blockbusters over BitTorrent without any DRM starting, uhm, NEVER?

    Dear Slashdot:
    This morning Microsoft's stock fell 3/10ths of a cent.... Is this the beginning of the end of the evil empire?

    Dear Slashdot:
    Google recently announced a beta of some new program they're making... Will they cure cancer and AIDS next?

    Dear Slashdot:
    Hollywood just announced another round of lawsuits for people illegally distributing copyrighted works online.... What's next? Is an elite team of Navy Seals and Green Berets going to storm my apartment (read: my mother's basement) the next time I download and install the latest Debian torrent?

    Stop asking idiotic questions at the end of stories. You know the answers to them. This is _not_ a sign of "good" writing. It is fucking hackneyed and makes you look like a goddamned idiot.

    Yah think I've got some strong feelings on the topic? ;-)

    --
    -Matt
    Duke '05
  18. Better Call... by Ranger · · Score: 2, Funny

    ...911. Oh, wait. I can't! #?@%*!

    --
    "You'll get nothing, and you'll like it!"
  19. Tell it like it is: Listen to the blogs by kamikaze-Tech · · Score: 2, Informative

    The OP mentioned the main-stream press. The following blogs all give different angles on the same story, all worth viewing: ZDNet Russ Shaw Om at Gigaom Jeff Pulver Mark Evens and the Vonage Forum