Mark Evans

Jeff Citron Strikes Again

According to BusinessWeek's Justin Hibbard, Vonage is poised to raise another US$100-million. The deal would value the company at US$980- million - which seems about right given based on 8×8 Inc.'s market capitalization, which has dropped by more than 50% this year. The question is why more private equity as opposed to an IPO? Certainly, it's an easier way to raise money, and staying private lets you aggressively grow the business (a.k.a. lose money) without too much shareholder and media scrutiny. Then there's the cost of being public in the Sarbanes-Oxley era - a situation that may be complicated by Vonage CEO Jeff Citron's previous troubles with the SEC.
Vonage's timing is interesting. As Om Malik points out, the new FCC chair Kevin Martin may not be as VOIP-friendly as Michael Powell. Vonage has also had some technical probably, highlighted by a lawsuit in Texas where a girl was unable to call 911 during an armed robbery. As well, you have to know Vonage realizes the VOIP market will become a lot more crowded this year as the cablecos rumble into the game with services that will be carrier-class.
Perhaps Vonage figures it should strike while the iron is hot, which means doing something quickly that doesn't involve marketing and a road show. It reminds me in some ways of Research in Motion, which has shown a knack for raising lots of cash when interest is at a peak

Related Posts

• More $$$$ for Vonage
• Another VC Round for Vonage?
• Fodder for Vonage's IPO Prospectus

Canada's P2P Music Market Doomed?

The “freedom” to use P2P services to “legally” download music in Canada could soon be a distant memory as the federal government plans to introduce amendments to Canada's copyright law. As it now stands following a Federal Court of Canada ruling last year, Canadians can download music but it's illegal to share it with others - figure that out if you can!
Naturally, the music industry is ecstatic. In a Canadian Recording Industry Association press release, The Orange Record Label president Steve Ehrlick dramatically says, “There wasn't a bank or a venture capitalist that would touch us — despite a business plan that was warmly received. It was because they considered the music industry to be the Wild West — no laws, no marshals and most importantly to them, no profits. I hear the opinion that copyright reform will stifle innovation. That's ludicrous. Proper laws encourage investment.”
(Addendum: University of Ottawa professor Michael Geist said it will still be legal to download music, and that the music industry is not getting anything near what it wanted from Ottawa despite the upbeat content of the CRIA press release.)
It will be interesting to see if proper laws encourage better music. The music industry's focus on driving sales by appealing to the mass market has inundated us with too many Avril Lavignes and not enough Ron Sexsmiths - in my humble opinion. Too often, labels pursue high volume projects rather than high quality initiatives. Of course, that's a huge generalization that doesn't take into consideration the reality that Avril Lavigne CDs help labels pay the bills, but give me more Arcade Fire and Wilco and less Jimmy Eat World and Nickelback.
The music industry biggest challenge isn't copyright or shutting down P2P services but figuring out how it can take advantage of technology to drive sales in new and different ways. It's been six years since Napster appeared on the scene, and the music industry is still scrambling to find a business model for the 21st century.

Related Posts

• Canada's Still a P2P Banana Republic
• Confusion Over P2P in Canada
• Is P2P Downloading Still Legal in Canada?

Quality of Service Credits

This is difficult to believe but the CRTC - Canada's telecom regulator - has unveiled a new regime that will give consumers credits on their bills if their telephone carrier provides sub-standard service. The QoS system, which will be retro-active to 2002, is based on 13 criteria, including whether repair appointments were met and whether out-of-service trouble reports were cleared within 24 hours. The CRTC said from 1998 to 200, ILECs provided sub-standard service, and it is not “convinced pressure was sufficient to ensure telephone companies would meet the approved Q of S standards.”
You can bet Bell, Telus, Aliant, etc. are going to be royally pissed. It's hard enough being an ILEC these days - what with the emergence of VOIP and competitors piggybacking on high-speed networks - without having to worry about regulators dinging yor for late repairmen, business offices that close five minutes early and complaints that take longer than a day to address. This is just another example of the CRTC taking too much of a hands-on approach to cater to the whims of consumers. Without a doubt, it's an anti-carrier, anti-business decision that makes you question the regulator's role/relevance in a fast-changing industry.

Related Posts

• Economics of VOIP
• Less Regulation in Canada; Less Competition
• CRTC: To Regulate VOIP or Not

Cheap VOIP Phones

Russell Shaw raises the issue of lower VOIP phones within the corporate market. He believes costs could come by 60% by the end of this year, and that larger, better-capitalized companies such as Cisco and Avaya could play a key role as they drive for market share. It will be interesting see how features and form factor factors play in the sales/marketing mix. So far, the residential VOIP market has been focused on price rather than features, which I believe has undermined VOIP's growth. Do not under-estimate Cisco's determination in the VOIP market. From what I understand, Cisco has literally been giving away VOIP phones as part of router and switch sales - a sort of razor blade/razor exercise. This perhaps explains why Cisco is able to tout the hundreds of thousands of VOIP phones it has “shipped”, and its market leadership.

Related Posts

• 5M IP Phones and Counting
• New VOIP Growth Forecast
• Cisco's IP Progress

My New Blog

Clearly, I have far too much time on my hands because I have decided to write a second blog. This one is mainly focused on what's happening on Toronto - looking at issues such as municipal politics, services, urban planning, recycling, taxation, business and population growth. It will be interesting to see how much traffic the new blog generates given it is not related to what I do professionallly and it will receive little “publicity” through the National Post. In a sense, it's a mini-experiment on how a blog can grow organically based mostly on word of mouth. Even if it doesn't receive much traffic, it will give me an opportunity to rant, discuss and talk about all the things that interest, bother and excite me about Toronto. If you're curious about city politics, urban planning or Toronto, check it out.

Related Posts

• What If Jane Jacobs Had a Blog?
• “Blog” Must Go!
• A Google Maps Blog

Zoomin In On You

The Washington Post's Robert MacMillan has a fascinating story about a search engine called ZoomInfo that provides information about more than 25 million people and 1.5 million companies. The results are generated using technology which goes through Web sites, press releases, news services, SEC filings and other information. While far from perfect, ZoomInfo offers a quick and broad snapshot of people - a particularly useful tool for students, journalists and researchers. I tried it out on Nortel's Bill Owens, and said to myself, “Now, that's a cool tool”. ZoomInfo is funded by Microsoft co-founder Paul Allen, which means the privately-owned company is probably getting all kinds of financing.

Related Posts

• Can You Say EchoBox?
• Nortel Talks
• Nortel's CEO Largesse

Hyundai Adopts XM

There’s quite the buzz today about XM Satellite after Hyundai said it will make XM standard equipment on all its U.S. models by 2007. What people seem to be forgetting is car owners – be they Hyundai customers or a rival – still have to be willing to pay for a monthly satellite radio subscription. I tried XM out for a couple months, and while I enjoyed the commercial-free aspect, the variety didn’t blow me away. Of the 100 XM channels offered, I switched between five or six – which is not unlike what I do with commercial radio. What I would have really liked was more micro-programming. For example, I’m a big fan of Wilco and the Jayhawks, so an alt-country station would be have been ideal. Another issue is price. At $5 or $10 a month, satellite radio strikes me as a fair proposition. At $15 or $20, it loses its luster. Then again, higher prices are important to XM and Sirius because they are publicly-owned companies that have spent billions of dollars to get into the business. So what does the Hyundai announcement mean? Not as much as investors would have you think.

Related Posts

• Canada's Satellite-Radio Decision Coming Soon
• The XM-Sirius Deal Can’t Save Satellite-Radio
• Can Satellite Radio Survive?

New & Improved Skype

Hey, new and improved Skype!
Hot on the heels of SkypeIn, which gives Skype users a telephone number for the first time, the company has launched version 1.2 for Windows. So what’s different? For newbies, a “Getting Started Wizard” simplifies the launch process, while experienced users get some new bells and whistles such as the ability to remotely access contact lists, and tools to import contact lists from other desktop applications.
With 31.4 million registered users and a growing number of features when will Skype start to be taken serious by carriers – if, in fact, it isn’t already. I still get the feeling Skype is seen as disruptive, but somewhat harmless, because it has yet to find the killer business app to shed its free roots. Maybe Skype will never find a single app but, instead, hope to create a big, low-cost business by earning a small amount of money from millions of customers. The ironic thing is Skype’s move into the mainstream and new revenue sources such as SkypeIn are being driven by its move into PSTNs. This, however, increases its costs, which goes counters to its business model. Call me a skeptic but the jury is still out on one of the world’s most popular free services.

Related Posts

• Skype's Push for Cash
• Skype: More Data, Please
• Ascalade-Skype Do A Deal

Yahoo Beefs Up E-mail

Nothing like a little healthy competition to convince companies they need to be nicer to customers. Exhibit #1 is Yahoo's decision to quadruple the amount of storage space on Yahoo Mail to 1GB from 250MB. The official line is “we want to meet the needs of our customers”. The unofficial reason is Google's Gmail already offering 1GB so Yahoo can't be content to stick at a piddly 250MB. Meanwhile, Microsoft's Hotmail operates in Never Never Land by continuing to provide 2MBs of storage. You wonder why anyone would stay with Hotmail, which used to rule the Web-based e-mail market?
It's interesting while Yahoo feels compelled to offer more to convince people to keep using a free service, Plaxo Inc. is trying to get people to actually pay for its online address book service - you know, the one where a friend or colleague makes you fill out your information before Plaxo tries to convince you to sign up as well. Anyway, Plaxo is deperately trying to find a way to get its five million users to pay a whopping $2 a month for the service, while launching a $29.95 a year premium service. It's a nice, pragmatic plan but it likely won't work too well. Once people get something for free, its pric point has been established. The question facing Plaxo is how many premium subscribers does it need to make itself a real business? If it gets 100K subscribers, that's $3-million a year - probably enough for 20 employees and a small sales and marketing budget but not enough satisfy its VCs. A better business proposition would be 1M subscribers, or $30-million in annual sales. Chances of doing that? Probably next to nil.

Related Posts

• Googles Gets into Storage
• The XM-Sirius Deal Can’t Save Satellite-Radio
• Gmail: Caveat Emptor

8M Blogs & Counting

Technorati.com reports it is tracking more than eight million blogs so we must be onto something good. Then again, Mary Meeker, who was once known as the “Queen as the Internet” believes blogs are huge business opportunity. This should doom blogs given Meeker's dubious record during the dot-com boom. Meeker never met a dot-com she didn't like even if it was burning through venture capital and had no prospects of success. She made a valiant attempt to get her street cred back by jumping on the Chinese dot-com sector but what does a New York-based analyst really know about China. Mary, if you're really into blogs, start one up and show us your “wisdom”. But please stay away from touting the blogosphere as the next big investment opportunity. We've drank the Kool-Aid before and, hopefully, learned out lessons.

Related Posts

• Henry Blodget - Back into the Spotlight
• The Resurrection of Henry Blodget
• Now, Web 2.0 is Done Like Dinner..or Gone to the Dogs