November 28, 2006
Show Me The Money In VoIP - Small Business Services
With all the innovative VoIP companies popping up, it's hard to keep track of them all, let alone the ones getting venture capital. One such company is the Canadian-based Natural Convergence, who recently acquired US$10M in Series "C" funds. They've been in business five years, serving SMBs (Small and Medium Businesses) in North America, parts of Europe and the Caribbean. [Light Reading].
Though Natural Convergence has only 10,000 active users, they're catering to a VoIP niche that many other companies have been ignoring: the SMB market. And the "Long Tail" theory applied to IP communications suggests that in terms of enterprise sales, the money might just be in the SMBs. This is simply a numbers game: take the sheer volume of SMBs, multiply by the high expected conversion ratio. Even inexpensive IP PBXes (i.e., under US$5,000) will generate a profit by volume.
On the other hand, the conversion rate of larger businesses and enterprises will likely be smaller, as they have more invested in traditional communications. Thus a per head cost of conversion may be much higher, especially in lost productivity if the implementation is stalled or runs into problems.
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