Can the Skype or Vonage juggernaut continue?

What is the first thing that comes to your mind when you hear VoIP? If you think of Skype or Vonage, you are not alone. For millions of people around the globe, VoIP is synonymous to Skype or Vonage. A Google search on skype returns 243,000,000 results. Companies like these have done a great job in spreading the benefits of technology to the masses and making VoIP a household name.

But will they continue to roll as they have in the past? Probably not. Standalone VoIP providers like Vonage or Skype are facing competition from all corners.

• On one hand there are cable companies like Comcast that are bundling telephony services with cable. Since Comcast digital voice runs on a separate channel, they can assure a good quality of service. Skype or other pure VoIP providers rely on the consumers' bandwidth and hence cannot guarantee quality.
• Moreover, consumers would not like to deal with multiple companies for various services. With services such as Comcast Triple Play, consumers get all the services like cable, internet and telephony from one company.
• On the other hand, there are other VoIP service providers providing low cost calling as compared to Skype or Vonage, e.g. Rebtel, TPad, Jajah, etc.

So, companies like Skype and Vonage are neither extremely competitive in terms of price nor can they beat cable companies in terms of quality and reliability. Further, savvy consumers are moving away from all these to a more complex setup (read very cheap and flexible). Results are already showing up, Vonage just added 2000 net customers this quarter as compared to Comcast which added 555,000 net telephony customers.

So unless these companies reinvent themselves, the future is not likely to be as rosy for them.

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