September 05, 2006
Avoiding The Fate of Dixon's Freetalk VoIP Service
The Dixons Store Group (DSG) recently pulled the plug [VNUNet] on their Freetalk VoIP service, after barely a year. Oddly enough, they told existing customers they'd be switched over to Vonage, an obvious competitor. The company feels the VoIP market hasn't "lived up to its expectations".
Sure there's a lot of competition, and sure some providers won't survive long. But if they have such a short term view as this, their failure is guaranteed. They can't expect to make money on VoIP in just one year. The revenue potential in VoIP is not in service but in hardware (phones, adapters, IP PBXes), consulting, and enterprise integration. There is also a great deal of potential in voice data applications.
For those companies focused on only a residential market, it's the hardware where you'll make any real money. If you sell only service, you might as well just hand your customer list over to your nearest competitor. Of course, cable providers do have the advantage of being able to offer the triple-play services - TV, internet, telephone. Other types of VoIP providers better be innovative if they want to live long enough in the market to compete.
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