Alec Saunders SquawkBox

The Vonage (VG) earnings are out.  Losses have increased by 17%, churn is up 9.5%, marketing expense is up 50%, and revenue fell below Wall Street’s consensus.  The stock price, however, is off just 30 cents, or about 4%.  Among this past quarter’s expenses: $18 million to indemnify their underwriters for IPO stock orders that were cancelled. Clearly the market has already contemplated the possibility of bad news.  As Rich Tehrani observed:

For Vonage critics this is the exact news they wanted to hear and for Vonage advocates I feel this is also the news they wanted to hear. I think the bears probably won out though. We will see how this plays out next quarter.

Jon C. Ogg, on the 24/7 Wall Street Blog wrote an extensive piece concluding with:

… if you are evaluating the actual feasibility of the company as a going concern or as a surviving entity, you have your answer as to why the shares aren’t trading much worse. The verdict on their financial survival is not yet out, but the notion that you can actually start to make calculations and can start to at least try to quantify the odds of their survival is keeping the stock from falling off a cliff.

Very true.  There is no need to speculate anymore.  The durability of their business model is on display for all. 

Apparently the latest rage in India is background tones.  The moral equivalent of the desktop wallpaper on your PC, these are background sounds played while you’re having a telephone conversation with another person.  They’re one of a whole class of new services which are implemented using media handling in the network. Other services like background tones might include:

• whispered announcements of callers.  Instead of the call waiting tone, how about an announcement of who’s calling, which only you can hear?
• in-call digit detection.  Many conference bridges allow you to use handset digits to control the call — mute channels, create sidebar conferences and the like.  New in-call services could also be created for consumers. How about a special key combination to query the switch, and ask how long the call has been in progress?

The problem with all of these is that they require the media portion of the call to pass through a media server.  SIP proxies are cheap and can handle many many callers because they do not handle media.  Like air traffic controllers, they simply tell the planes, or in this case the bits, where to go.  In comparison,  media servers are not cheap. Media servers are like the airports — processing the passengers, refueling the aircraft, handling border control and so on. This is where the expense in air travel is.  And, on a telecom network, the most expensive call handling component is the media server.

Passing every call through a media server, which is what happens with background tones, therefore drives the cost of the call up.  Hopefully, the revenue from the background tone service is enough to make up the difference.

Nicholas Lehmann’s Amateur Hour is a rigorous dissection of the blogging versus journalism debate.  Published in the New Yorker, it’s a deep and serious examination of the blogging phenomenon.  Lehmann observes that blogging “conflates several distinct categories of material that are widely available online and didn’t use to be. One is pure opinion, especially political opinion, which the Internet has made infinitely easy to purvey. Another is information originally published in other media—everything from Chilean newspaper stories and entries in German encyclopedias to papers presented at Micronesian conferences on accounting methods—which one can find instantly on search and aggregation sites.“ 

Throughout the piece, Lehmann makes the case that most blogging isn’t journalism.  I agree, although there are definite exceptions like Om Malik’s GigaOm, and Mike Arrington’s TechCrunch, which are news oriented sites. I’ve often compared what I do on this blog to what the pamphleteers of another age did in their time; a comparison which Lehmann also makes.  Lehmann also compares the many very local blogs, and personal sites to old style church and community newsletters.

Is blogging creating new content, or just a new medium for content?  And will it, over time, mature into many categories and styles, as journalism ultimately did?

Worth a read.