2008: The Year that VoIP died
It seems highly likely to me that at some point in the future we’ll all look back and say that 2008 was the year that the VoIP industry finally died. With all due respect to my very good friends Jon Arnold, and Andy Abramson, it’s about time.
Voice over IP is just a transport and signalling technology. It’s plumbing. It may come as a surprise to some of you to know that in the late 1980’s and early 1990’s there was a TCP/IP industry as well. TCP/IP is inarguably plumbing. As the IP stack became common on all computing devices, TCP/IP went from being a differentiator to a commodity. The short lived TCP/IP industry was a footnote in the events that spawned the global web. The fact that a VoIP industry has existed is a similar historical footnote to the transformation of the communications industry as a whole. The VoIP industry was a necessary phase in that transformation; John in the wilderness announcing that the real action is still to come.
And what is the evidence that the VoIP industry is at that turning point?
Where have all the pure play VoIP companies gone? The last of any consequence still standing is Vonage. The S&P is down about 40% for the year, and Vonage a whopping 70% save for a miraculous gasp in November at the point of the announcement of their debt having been refinanced. The fact of the matter is that Vonage is in an impossible place. Phone calls are cheap enough, Vonage is undifferentiated from any other phone service, and … the cable guys have television.
Will this be the Vonage’s last year for the zombie shuffle? Or can they pull it off again, and come back from the dead once more?
VoIP events are suffocating too. VON was a spectacular flameout, despite the best efforts of Jeff Pulver and his band of merry men to transform it from a voice only show into a voice, video and more show. At least the Pulverites understood where the future was, even if unable to craft a profitable event around those varied interests. There’ll be more of the same next year, I fear. Initial reports from this fall were that VoiceCon was an understated and quiet affair. Lawn bowling anyone?
Another sure sign of the ill health of the VoIP industry is that the feature companies are heading to the deadpool, as well. 2008 started as a year full of VoIP companies trying to make their mark with free “products” that were features in disguise. Needing to find a revenue model, many turned to advertising and cheap minutes and ran smack into the same wall that Vonage is heading toward at light speed. Bye bye TalkPlus, Jangl, and so many more. And suddenly, late in the year, Jaxtr lurched back from the dead with another free calling service…
The smart vendors have learned that consumers don’t want another telephone company built around a complicated piece of technology in their lives and those vendors have done one of three things – they have transformed themselves into a platform play (think Mobivox), into a wholesale player (think Jajah) or into a full-on competitor in the traditional telecom space (think TruPhone and the build-out of their global network). Taking their cue from BT’s $105 million buyout of Ribbit, these companies are positioning themselves as players that are part of the communications ecosystem, rather than apart from the ecosystem.
Why? Well, the big VoIP stories this year were that ecosystem of applications, and platforms.
- Irv Shapiro’s IfByPhone ingeniously connected IVR and Google Analytics, allowing deep measurement and statistical analysis of call center traffic.
- Mashup king Thomas Howe demonstrated over and over that with the right tools, building communications applications can be as simple as building web sites. Tom stood on stages in front of audiences, built applications and won contests and plaudits by concretely showing that voice is now just software. The subtext? The magic of software lets you embed voice into any application that you like.
- Like Tom, we at iotum used modern platforms to release Calliflower in record time. We can turn around code on a two week cycle not because we’re smarter than everyone else, but because of the tools we use to do the job.
Building communications applications with today’s infrastructure compared to what was available even five years ago is comparable to digging a ditch with a backhoe instead of a pickaxe.
Most interesting, perhaps, is the fact that the service provider and the equipment manufacturer seem to be blurring at the moment. As the equipment industry has become mired in the complexities of defining and delivering a common application standard (think IMS), carriers are starting to go their own way – BT’s acquisition of Ribbit is an obvious case, but what of Orange’s developer camps (now in their third year) and the way in which the mobile industry has rushed to imitate Apple’s success with iPhone, both platform and store. These moves betray an understanding that the future is in software, in applications, and in building products that deliver end user value rather than shaving the corners off pennies.
And what of the companies that are failing to make that transformation? Pity the Nortel shareholder as Nortel has seen over $250 billion in market cap erased in the last five years.
Ding dong, VoIP is dead. Let’s dance on its grave and get on with the business of transforming communications in the twenty-first century.
December 30th, 2008 at 8:46 pm
Great that magicJack has an ad on this blog. I love it that they have their “own network.” I doubt that they own a cable more than 20 feet long. That is the whole point. This is all commodity infrastructure. Stick a fork in all these imagined claims of invention. And the real point, as you observe, who wants another phone company. We barely need what we have. Just do the plumbing and connect us to the cloud.
December 30th, 2008 at 8:50 pm
There’s a certain amount of irony in it :) I don’t control where majicJack puts their ads… I just get paid when people click ‘em!
December 30th, 2008 at 11:36 pm
The real point is VoIP is not part of Telecom, and it is mainstream…
December 30th, 2008 at 11:37 pm
oops..fired too fast
The real point is VOIP is NOW part of Telecom and it is now Mainstream
December 31st, 2008 at 12:28 am
yes, Andy, and so are web services, cloud computing and… but that’s a topic for tomorrow’s post.
December 31st, 2008 at 11:37 am
[...] Alec Saunders. Alec’s in the trenches daily as a VoIP visionary (he declared VoIP dead this morning) and [...]
December 31st, 2008 at 11:59 am
Not really Alec, we are almost set for next announcement – very interesting, I promise :)
December 31st, 2008 at 8:34 pm
[...] nokia n97 Free Online Class for Facebook Biz Users FREE Conference Calls OnSIP Hosted PBX This work is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License. 2008: The Year that VoIP died [...]
January 1st, 2009 at 4:03 pm
[...] [...]
January 1st, 2009 at 8:01 pm
[...] 2008, The Year That VOIP Died [...]
January 1st, 2009 at 10:53 pm
[...] is VoIP dead? To pragmatists such as Alec Saunders the answer is yes. In his well reasoned polemic, 2008: the year VoIP died, Alec succinctly writes, “Voice over IP is just a transport and signaling technology. It’s plumbing.” Harsh, [...]
January 2nd, 2009 at 2:59 pm
[...] Saunders of the “VoIP is dead” side of the conversation wrote 2008: The Year that VoIP died, which he then followed up with VoIP: “If you hadn’t nailed its feet to the perch, it’d [...]
January 2nd, 2009 at 4:46 pm
[...] Phil’s list is a clear illustration of the reason for my writing 2008: The Year that VoIP died. [...]
January 3rd, 2009 at 4:21 pm
I appreciate your perspective, but am not sure whether that is correct. VoIP is far from dead, it is a platform waiting to be exploited. Read more on
http://truvoip.blogspot.com/2009/01/voip-20-voip-is-far-from-dead-opinion.html
January 4th, 2009 at 1:11 am
[...] was alive, dead, or on life support. Former Microsoft manager Alec Saunders declared that VoIP was dead. Jeff Pulver, co-founder of Vonage and founder of Free World Dial Up insists that VoIP is far from [...]
January 5th, 2009 at 1:04 am
And it couldn’t die fast enough. I know I’m a dinosaur, providing copper dial tone for over 30 years, and my company is now urging customers to bundle their television services with VOIP, but the inherent fact is….. the quality sucks! Believe me, I’ve monitored many thousands of circuits, and the fact that consumers are settling for this crap blows me away.
Of course much of this is due to the backlash against Ma Bell, and probably some of this is warranted. However, they are like teenagers rebelling against their parents, cutting off their noses to spite their faces. Constantly changing providers, hoping for better service, when in reality they, like some other obnoxious ISP advertises; are all connecting to the same Internet.
I must be getting older, because I’m coming to realize that just because something is technologically feasible, doesn’t mean that is better, or even a good thing.
I feel better, now.
January 5th, 2009 at 11:43 am
[...] is percolating throughout the VoIP/communications part of the blogosphere. Alec Saunders says it is (and said so again). Jon Arnold says “it’s not dead yet“. Andy Abramson agrees [...]
January 5th, 2009 at 1:26 pm
[...] the very deliberate italicization, which was in the original (you can read it at 2008: The Year that VoIP died.) You could make the points in that piece in another way – businesses which define [...]
January 6th, 2009 at 2:02 pm
[...] dead” debate continuing to rage across the VoIP/communications part of the blogosphere (see Alec Saunders part 1 and part 2, Jon Arnold, Andy Abramson, Ken Camp, Jeff Pulver part 1 and part 2, Om Malik, Shidan [...]
January 8th, 2009 at 4:00 pm
[...] “VoIP is dead.” A great many have weighed in with opinion on the matter, including; Alec Saunders, Andy Abramson, Dan York*, Ken Camp, Jon Arnold, Irwin Lazar, Om Malik, Tom Keating, amongst [...]
January 8th, 2009 at 7:09 pm
We tried them all Vonage, Skype, etc., the quality sucked and faxing became a nightmare. Our company switched to http://www.compoint.com for direct dial long distance at very low rates, with true one second billing, which surprisingly saves another 10%. There is no connect fee or monthly fee. We’re done with VOIP until someone offers a truly integrated universal solution that’s affordable.
January 19th, 2009 at 5:51 pm
[...] blogosphere has been buzzing about whether VoIP is dead, ever since Alec Saunders posted 2008: The Year that VoIP died on his blog, which lead to other posts, including a post by Om Malik on his GigaOM blog. Each has [...]
January 21st, 2009 at 6:08 pm
[...] Steve Parrott made lots of good points in his blog entry about the VoIP-is-Dead Debate, but I’d like to focus on one comment in Om Malik’s original GigaOM posting quoting Alec Saunders on VoIP. Saunders characterized VoIP this way: “Voice over IP is just a transport and signaling technology. It’s plumbing.” [...]