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Deeper analysis of VoIP

Who will buy out Vonage?

Posted by tggokul on March 16, 2007

Andy believes Vonage will be bought out soon and he thinks the likely suitors are Earthlink, Cisco and Vodafone.

I would never question Andy’s judgement normally, but I disagree with him on two of his choices. First Vodafone; Yes, Vodafone is increasingly getting into VoIP and there has been news that they have been experimenting with Skype as their VoIP client. From a technology point of view and even to some extent business point of view, it makes a lot of sense for Vodafone to acquire Vonage. But they are currently in a big soup. They have acquired an Indian mobile operator Hutchinson recently for nearly 17 billion and sources say that the board of Vodafone has been very concerned with this acquisition. And even before this acquisition, there were concerns about M & A policies of Vodafone which in turn led to strict rules being laid by the Board of Directors. So, I really don’t think Vodafone will go for an acquisition any time soon.

Cisco – What definitely is in favour of Cisco buying out Vonage, is the new philosophy of Cisco that preaches being more consumer-facing ( Human Networks et al). But trying to go the service provider route would mean changing their very essence of business. They would never want to antagonize the other telcos who are their major customers.

Earthlink – I agree with Andy on this pick. Lot of synergies between the two, and it would be a good match.

But I personally believe that another company is a serious contender. Verizon!!! I believe the whole Vonage-Verizon legal battle is just Verizon’s way of getting Vonage under its fold. Sounds conspiratorial but plausible. It might not be too bad for either parties if this happens.

Having said these, funnier things have happened in the M&A world ( The latest being Cisco buying Tribe.net). Andy probably has information that I am not privy to and I could be totally wrong in my analysis. But hey, greater ones have got it wrong before!!!

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5 Responses to “Who will buy out Vonage?”

  1. […] post by tggokul and software by Elliott […]

  2. anonymous said

    Vonage is a money pit. Plus the Verizon-Vonage legal battle make it lose more money.

    Verizon is a long standing Cisco customer. So are AT&T, Cingular, SBC, Comcast etc.

    Its in Cisco’s best interest to see Vonage die a slow death. That will be an entry point for using the above carriers as channels to sell Linksys and LinksysOne gear and do VoIP the right way.

    If you look at the string of Cisco acquisitions they have all been revenue generating companies.

  3. vic said

    Well, Vonage and Motorola just announced that they’re working together to bring a router exclusively for Vonage’s features. Vonage may be a money pit, but they’re still doing crazy things over there. I really think that they’ll ride it out if they’re managed right, but it doesn’t seem like management knows what to do. Offering minutes for pennies was a bad move, in my opinion. I wouldn’t be surprised if Earthlink was to buy them out. Totally agree with you. Folding in a VoIP division or something would be good business for Earthlink, who are working on huge contracts for city-wide WiFI anyway.

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  4. anonymous said

    Earthlink (ISP) strategy is good and eventually Earthlink buying Vonage out is perfect.

    Consumers need bundled services, thats the reason Comcast triple play and Verizon/ATT quad play makes sense and is catching on big time.

    What about Google or Yahoo? Wouldn’t they be interested?
    I would think somebody out there in these companies are talking about this.

  5. peter341 said

    I finded information about approved and good VoIP companies in directory of VoIP, Maybe somebody need to read more and discover which company in country where living is best!

    Author thanks for article!

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