With its shares touching an all-time low earlier this month, and competitive pressures showing few signs of abating, Internet telephony provider Vonage Holdings Corp. may need to turn to acquisitions in order to differentiate itself from its rivals, according to The Deal's David Shabelman.
The problem is that its service has become a commodity. Shabelman speculates that rivals SunRocket, with 200,000 subscribers, and 8x8, which now focuses on the business market, are potential targets if Vonage goes the consolidation route.
While a consolidation play may be the only way a target will accept its falling stock as payment, it doesn't resolve Vonage's commodity problem. A much smarter strategy for Vonage would be to purchase a technology company that could help it eke out more money from each of its subscribers with enhanced service. Potential targets include:
1) Iotum, which makes a web-based application that assesses the relevance of a phone call and routes it to a land line, voice mail or cell phone. Its Talk-Now product allows BlackBerry users to show their availability to preferred contacts so people know when to reach them. The company is seeking investors.
2) Talkster offers technology that bridges mobile and VoIP services, allowing users to place calls from mobile phones to VoIP networks. The technology would help people who make international calls save money since the calls would be routed through the Internet. It launched its product in October.
3) SightSpeed makes software that lets businesses and consumers make high-quality video and voice calls and send video mail over the Internet. Its backed by The Roda Group.
Whatever it decides to do, Vonage must do something to repel the phone and cable companies penetrating its market.
Technorati tags: vonage, voip, m&a, vc, venture+capital
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