I think it’s safe to say that the VoIP industry is collectively watching the stock market today with an eye on the widely anticipated Vonage IPO. There’s been a lot of analysis and opinion expressed on how this offering will fare in the blogosphere, and I’d especially reccomend recent posts by Jon Arnold, Mark Evans, and Om Malik for those looking for some insider takes on the situation.
I’ve been holding back on posting about the Vonage IPO, but I share many of the same concerns that have been expressed both in the VoIP and financial communities about the viability of Vonage’s business model and the extreme amounts they have needed to spend on marketing to get the user penetration they have achieved. But I’m also a Vonage customer, and a pretty happy one, as I have generally been impressed both with the voice quality of the service and the customer support. Though with the cost of voice traffic continuing to plummet, and players like Skype offering free outbound calling in the U.S. and Canada, and AOL offering free incoming PSTN phone numbers, it’s hard to imagine that Vonage will be able to succeed in the long run by focusing on price as the main driver to their service.
As I write this post, the Vonage share price appears to be dropping from the initial $17 it opened up at (trading under the symbol “VG”). It will be interesting to watch this one unfold during the coming days, some smart people like Mark Evans and Jon Arnold are predicting the stock will go up, but I will be surprised if the stock value ends up at market close today above the $17 mark.
Update: I wrote this post first thing this morning but some server problems kept it from going live then. As of later this morning the Vonage share price has contnued to drop, and is now hovering around $15 (at 11:00 am PDT ).
Update 2: Vonage closed today at $14.85, a 12.65% drop from the target price of $17.