Tuesday, July 17, 2007

SunRocket c'est fini

According to CNN, Om and Andy - the end is here for SunRocket. Yesterday was their last day in business, and I think with it goes the dreams of a VoIP generation. The consensus opinion is that the triple play offerings from the Cable companies are too competitive for players like Vonage and SunRocket, but I have a hunch that the answer is a bit more direct and simple : there's simply not enough unique value for a VoIP carrier to establish good margins.

It's not unique enough because the cost to establish a carrier is effectively zero, and the flip side of being able to offer the service to anyone is that all your competitors can too. Other than price, I have yet to see any land-line or VoIP carrier truly differentiate a service. These days, and IMHO, only GrandCentral, Iotum and the new iPhone actually make telephony services that are differentiated and valuable in a mass market. And none of those is a carrier, per se. If you were to measure brand loyalty for VoIP services, you would not need all the numbers on your keyboard, since it's practically zero. Number portability is the only sticking power of a telephone service these days, and that has nothing to do with brand.

I remember reading a book about entrepreneurship a long time ago, and I think the first or second rule was to methodically grow from a profitable base business. Exactly what was the profitable base business of SunRocket? Do a little test, and pick a handful of long term, substantial companies on your favorite stock market. Can you identify what their small, profitable base business was? I bet you can find it out. They nearly all have it. Is it all surprising when you see a company fail when it tried to make up with high volume what they couldn't make in margin? And unfortunately, this is the lot of VoIP carriers, and from where I sit, forever will be.


Rohit Patel said...

mpingi, a sunrocket rival is offering special offers for exisiting sun rocket customers who can no longer access the sunrocket service because of the company failure. if you are a sunrocket customer, i suggest you check out their offers... check out http://www.1800-info.com/sunrocket/index2.php ive filled the form, waiting for them to get in touch with me...offers seem rather interesting!

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