Vonage V-Phone baits buyers with ‘cool’ message

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Internet service provider (ISP) Vonage Inc. is offering a mashup of a USB memory stick and a pre-loaded softphone as yet another way of enticing mobile users to sign up for the company’s Web-based long distance calling service.

Vonage’s hot orange V-Phone is as handy as a keychain, comes with a wired earpiece and attaches to a laptop’s USB port, allowing users to make Voice over Internet Protocol (VoIP) calls via a high-speed Internet connection or WiFi network.

The phone masquerading as a memory stick actually has an additional 250 MB of free space for data storage.

Selling for $29.99 after a $20 instant rebate, the V-Phone certainly baits potential buyers with its low cost and hip associations, according to at least two experts.

The V-Phone’s launch last week followed the roll out of Vonage’s Starcom F1000 WiFi -enabled mobile phone.

“It’s convenient and cool,” said Jon Arnold, principal of telecom consultancy J Arnold & Associates in Toronto.

Another Canadian analyst agrees.

“It’s a clever and imaginative idea. Your phone and data all on one stick,” said Lawrence Surtees, director of telecommunication and principal analyst for Toronto-based IDC Canada Ltd.

Both analysts, however, also see the V-Phone’s launch as part of Vonage’s attempt to be heard above the din of an increasingly competitive market.

“The V-Phone is ideal for traveling business people, but it will also possibly appeal to students on the lookout for cool useful gadgets,” said Bill Rainey, president of Vonage Canada.

The V-Phone can be used on Windows PCs but does not work with the Mac OS X or Linux yet. Rainey said future models will come with one and two gigabytes of memory. “This phone does more than save you money on hotel phone bills and cell phone roaming fees. It can store contact lists, business documents, and even travel photos.”

He said the device provides “unparalleled portability” because users can keep their phone number wherever they travel and receive or make calls without incurring charges. Vonage’s launch of two new products in quick succession stems, in part, from a need to make its presence felt in an increasingly competitive market, analysts say.

“Vonage was a trailblazer when it first came into the market, but other players have entered the field. Now they need to make some noise to get noticed,” said Surtees.

Arnold said the company is trying to broaden the reach of its revenue source especially given the negative momentum brought on by the dismal outcome of its initial public offering last March.

He said Vonage’s original VoIP service – targeted at homebound consumers, while doing pretty well, has come under a great deal of pressure from competing companies. “They have to keep on being innovative, because it’s getting harder to wring out more dollars from the original business model.”

Rainey has a bit of a different take. He said Vonage is a “device agnostic” company that is offering consumers different products such as the V-Phone and the F1000 that provide varied ways of accessing VoIP service. “These are well-planned product launches that fit into the IP world.”

He said V-Phone users can also choose from three types of Vonage service plans; the Basic 500 offers free 500 minutes for calls anywhere in Canada and the United States (U.S.) for $19.99 a month, Premium Unlimited provides unlimited free calls in Canada and the U.S. for $39. 99 and Entrepreneur Unlimited offers unlimited free calls in the U.S and Canada plus a free fax line.

Using a hybrid cell network/VoIP calling setup means you can make and receive calls almost anywhere on the planet without significant costs or difficulty, said Rainey.”Compared with the $80 to $100 a month long distance charges incurred by the average user, our plans provide great savings.”

Aside from rival VoIP provider Primus Canada, Vonage now has to worry about larger telecoms like Bell Canada and Rogers who want a piece of the Web-based phone service pie.

The V-Phone’s apparent target market is the small business arena and traveling executives. It plays well into the market’s increasing need for mobile devices that allow users to go back and fort between IP and WiFi applications, said Arnold.

Surtees also sees the device becoming popular with students. Parents, he said, could give one to their son or daughter going off to university as a cheap way of staying connected.

If the product does take off and attains ubiquity status, there are other marketing potentials for it.

“The phone would also make a great corporate give away. It lends itself to marketing techniques such as that,” said Surtees.

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