re: Vonage Raises Another $200MIs it fair to extrapolate from this that the cost for Vonage to acquire a VoIP customer is something like $208M/500,000 = $416 per customer? If memory serves, I heard some data from a UNE-P voice competitor where their customer acquisition costs were in the neighborhood of $175 per customer. Reducing this was seen as an important and difficult challenge to their business. Also, how do these numbers compare to TIVO's customer acquisition costs?
Can somebody with real information comment on these numbers? Thanks in advance.
re: Vonage Raises Another $200Mat $400 million invest, with 500k customers, that's like $800 per, just for equipment and marketing? what happens to the $20/mo they get for each customer? that should be $120 mill a year. i thought their model was supposed to be capex + opex cheap. i guess they'll need a lot more than 500k customers.
i'm actually surprised they only have 500k. how many does skype have?
re: Vonage Raises Another $200MI think we posted about the same time. Something about great minds thinking alike...;-)
at $400 million invest, with 500k customers, that's like $800 per, just for equipment and marketing?
According to this article, they current investment for 500K+ customers is $408-$200=$208.
what happens to the $20/mo they get for each customer? that should be $120 mill a year. i thought their model was supposed to be capex + opex cheap.
The article didn't break down the numbers. It's hard to tell what is capex and what is opex. It's also hard to tell how much is spent on marketing which, by my guess, is probably what the majority of investor money is going towards.
i guess they'll need a lot more than 500k customers.
I'm not sure more customers helps unless the same customers buy into a Wall Street IPO. (I guess that's one indirect way of achieving a "customer owned last mile")
i'm actually surprised they only have 500k. how many does skype have?
It suggests how hard it is to build a business that looks backwards instead of one that looks forward.
re: Vonage Raises Another $200MI don't think this will impact your calculations or conclusions very much, but FYI, Vonage has announced they have 600,000 customers.
re: Vonage Raises Another $200MI suspect that Vonage's subscriber claims also include their promotional/trial subscribers, which I believe are 30-day trials.
re: Vonage Raises Another $200MI know that set up costs are big drivers. If the customer has a problem setting up the service, and as the number of early adopters (and presumably more tech-savvy customers) taking the service dwindle, you are left with people who have issues with set up. So those customers call tech support and that increases costs.
Then if the customer is dissatisfied with the service, then (and I'm not sure of Vonage's policy but this is true at some providers) they will switch them back to their old service. That's another cost.
As to the UNE marketing issue, AT&T announced dramatic margin improvements in its 1Q05 earnings (from 17.6 to 34.1%) which in the statement is attributable to lower marketing and sales expense. Operating income rose $204M attributable primarily to ceasing marketing. With an announced base of customers of over 3 million, This is significant savings per customer.
To sum up, acquiring customers is expensive and I should imagine that a lot of the money is going to just that. I wish I had some inside information to share on Vonage but I do not. Hopefully someone else will share some better insight into that.
re: Vonage Raises Another $200MTo sum up, acquiring customers is expensive
Agreed that acquiring and supporting customers can be expensive. I was told that it takes seven years before Brinks Home Security makes any profit from a new residential alarm system.
Can somebody with real information comment on these numbers? Thanks in advance.