http://www.markevanstech.com/2005/05/25/8x8s-losses-grow/ Insight and Analysis from North of the Border Mon, 01 Dec 2008 16:32:20 +0000 http://wordpress.org/?v=2.6.1 http://www.markevanstech.com/2005/05/25/8x8s-losses-grow/#comment-288 Anonymous Wed, 25 May 2005 23:00:17 +0000 http://markevanstech.com/?p=594#comment-288 The analysis seems to assume that VoIP is a full-fledged industry, like cable television, and that if you can't be profitable quick, something is very wrong. In fact, VoIP is **just starting** as an industry. The industry will **begin** to mature when 75 percent of households have broadband connections to the Internet. VoIP is expected to take off beginning in 2006. It certainly is very minor now. A company needs to invest heavily at the start, just like in any new industry. The analyst belittles the 17,000 new subscribers. At $15 per month, that's an additional revenue of $255,000 per month, or $3,060,000 per year. That's real cash. 8X8 had a total of 57,000 subscribers at the end of March. That's $855,000 per month, or $10,260,000 per year, at $15 per subscriber. Note that at the end of 2004, AT&T, with all its name recognition and clout, had but 53,000 CallVantage customers. 8X8 is just starting a marketing campaign, so expect many additional customers in coming months. By the way, another public company, deltathree (DDDC) is doing very well, just about reaching breakeven in the quarter ended March 31 and expected to be very profitable in 2006. Finally, it is sad to read so much junk analysis by supposed experts on the Internet. Opinions are worthless unless backed by thought and intelligence. The analysis seems to assume that VoIP is a full-fledged industry, like cable television, and that if you can't be profitable quick, something is very wrong. In fact, VoIP is **just starting** as an industry. The industry will **begin** to mature when 75 percent of households have broadband connections to the Internet. VoIP is expected to take off beginning in 2006. It certainly is very minor now. A company needs to invest heavily at the start, just like in any new industry.
The analyst belittles the 17,000 new subscribers. At $15 per month, that's an additional revenue of $255,000 per month, or $3,060,000 per year. That's real cash.
8X8 had a total of 57,000 subscribers at the end of March. That's $855,000 per month, or $10,260,000 per year, at $15 per subscriber.
Note that at the end of 2004, AT&T, with all its name recognition and clout, had but 53,000 CallVantage customers.
8X8 is just starting a marketing campaign, so expect many additional customers in coming months.
By the way, another public company, deltathree (DDDC) is doing very well, just about reaching breakeven in the quarter ended March 31 and expected to be very profitable in 2006.
Finally, it is sad to read so much junk analysis by supposed experts on the Internet. Opinions are worthless unless backed by thought and intelligence.

]]> http://www.markevanstech.com/2005/05/25/8x8s-losses-grow/#comment-287 Anonymous Wed, 25 May 2005 16:28:13 +0000 http://markevanstech.com/?p=594#comment-287 We shouldn't be too critical of 8x8 because we don't know how quickly Vonage is burning through their funds. That's one of the challenges when a company is publicly traded -- they're under scrutiny, which is well-deserved because they are public. Maybe instead of tracking the number of subscribers we should be tracking the cash burn rate per customer (which relates in some manner to the customer acquisition cost). Frank We shouldn't be too critical of 8×8 because we don't know how quickly Vonage is burning through their funds. That's one of the challenges when a company is publicly traded — they're under scrutiny, which is well-deserved because they are public.
Maybe instead of tracking the number of subscribers we should be tracking the cash burn rate per customer (which relates in some manner to the customer acquisition cost).
Frank

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