Are VoIP Providers Living on Borrowed Time?

VoIPMany wannabe Internet and technology entrepreneurs think this new phenomenon called VoIP is a guarantee to make money – well think again – at least 85 VoIP services have shutdown in the past 15 months. The VoIP industry has been growing exponentially since 2003 and especially 2006 saw significant growth with new services launching around the world on a weekly basis. Fuelled by the success of Skype in Europe and Vonage in the USA many startups have decided to jump on the VoIP bandwagon and try their luck. Without a significant differentiator or very deep pockets for marketing to create an online and offline presence it will be very difficult to survive in this extremely competitive market with call termination costs dropping rapidly and squeezing margins. So what?…you may ask… Well, almost as quick as the VoIP providers are launching they are also disappearing again from the market. Even big names with plenty of cash have had to admit defeat, such as AOL with their Total Talk service. This AOL product lasted not even 12 months. Over the past 15 months (August 2005 – October 2006) a small project was carried out by to determine the extent of VoIP services starting up around the world and how many of these providers actually last for more than one year. To view the chart click here. Source: My VoIP Provider

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Rich Gates

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