Strategy Charting

Strategy Canvas of voice service provides

Low

High

Offerings

Cost Customer Service

Voice Quality

Ease of use

Brand Equity

FeaturesAccessibility

SkypeVonage

Comcast Phone

Cell Phones

Scenario Planning

First a business idea is generated, to identify the current position of the company

Business Idea

VoIP SoftwareScalable Servers

Cost Effective Phone Service

Features: fax-line,three way calling

Agreements withHotspot Owners

like EarthLink

Customer Base Brand Name

Increase in revenue

Advertisements

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

Low barriers to Entry High Customer Acquisition Costs Lack of bundled service Expanding scope of PC-Centric

VoIP providers Skype based phones

New Game-changers IP-PBXs

Scenario Planning

Impact of Technology

?

Changes in Market ?

Gradual

Radical

Minor Profound

Scenario A:Cost Cutters

Scenario B:United We Stand

Scenario C:Divide and Rule

Scenario D:Jungle Rule

Impact of Technology

Merging of Cellular and Wi-Fi Abundance of hotspots

Ubiquitous Internet availability Arrival of WiFi enabled phones

T-Mobile, iPhone Open Source Phone platform,

Google’s Android

Change of Market 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 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 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 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

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) Indicators

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

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 share2003 2005

(projected)

Traditional TelcosAlternative ProvidersCable MSOs

Source: Yankee Group

Strategy 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

Focus on specialized customer needs

Three pronged approach Wireless VoIP Virtual Numbers International Calling

Wireless VoIP

Join Android alliance Should have wireless VoIP software

ready on android platform Provide the wireless VoIP service

for nominal extra fee

Virtual Number

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 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

Low

High

Offerings

Cost Customer Service

Voice Quality

Ease of use

Brand Equity

FeaturesAccessibility

After

Before