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
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