Fresh off its IPO, Vonage appears to be casting about for ways to make itself profitable. The VoIP provider’s latest idea comes in the form of the V-phone, a USB drive with a Vonage softphone preinstalled. The premise is simple: keep the USB device on your keychain, briefcase, or in your laptop bag. When you need to make a call away from the house or office, plug it into a nearby computer and call anywhere in the world using your Vonage account.
It’s not a new idea by any stretch of the imagination. At this year’s CES, SanDisk showed off a new version of its SanDisk Cruzer USB flash drive with Skype preinstalled. Other VoIP providers offer similar products. Nevertheless, Vonage Chairman Jeffrey Citron touted it as a device that would revolutionize the market, predicting that it would "fundamentally alter the way people do business," at a conference earlier this week.
How it would do so is unclear. Alternatives like Skype are free (and Skype recently decided to make all calls placed within North America free for the rest of the year). Most, if not all, business travelers have mobile phones, which are a lot easier to use than a laptop with a USB dongle. Of course, the V-phone could be used in areas where cell phones can’t pick up a signal. But again, there are cheaper alternatives. As one Wall Street analyst remarked, "we’re trying to understand the primary advantage of a product like this."
Me too. Offer a dual-mode WiFi and cellular phone, and then we’ll talk.
Vonage has been struggling lately with extremely high customer churn, lawsuits, and a falling share price since the IPO. When Ars looked at the company’s prospects in advance of the IPO, we didn’t find much to be optimistic about. Vonage’s calling plans and features are fantastic and well-priced, but the company has—at best—an uncertain road to profitability, and me-too products like the V-phone won’t help much.
The new V-phone is expected to launch this week for US$40, although a discount may be offered to current Vonage users.