This week, AOL (NYSE: AOL - news) marked the beginning of its foray into the Voice over Internet Protocol (VoIP) market with the launch of TotalTalk.
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With monthly fees ranging from $19 to $35 and an installment fee of roughly $50, the service offers a bevy of options, from unified voice, e-mail and instant messaging to voicemail, call waiting and three-way calling.
TotalTalk is a refurbished version of AOL's first try at a VoIP service five years ago and is a shot across the bow of other big-name players in the space, such as Yahoo (Nasdaq: YHOO - news) and Microsoft (Nasdaq: MSFT - news).
Yahoo recently relaunched its own VoIP service after a bit of tinkering. The Yahoo Messenger with Voice service offers free PC-to-PC calling, free voicemail, real-time photo-sharing and interactive gaming.
Meanwhile, Microsoft announced a VoIP partnership in September with Qwest Communications (NYSE: Q - news) that will target small and midsize business customers. The announcement follows on the heels of Microsoft's acquisition of Teleo last August
Staking Their Claim
The advantage for AOL, Microsoft and Yahoo is that they are already established players with large customer bases and can bundle their Internet telephony services with other offerings, unlike Vonage, Skype and other current market leaders, said Lynda Starr, principal analyst at Frost & Sullivan.
The entry of companies such as AOL, which already has a strong customer base through its dial-up and broadband services, will create strong competition for a company such as Vonage, which is generating its user base from scratch.
"I think that the bigger players will spur the market, but Vonage will start to lose out because they don't have these other services," said Starr.
"People are looking for bundling," she said. "AOL has the access and content pieces, and now the voice piece with a possible video piece [as part of Time Warner], and Vonage doesn't have any of that."
Finding a Niche
Starr believes that with the increase in competition, all players will attempt to differentiate their services from traditional phone services. "They have a lot of features such as unified messaging and easier conferencing that they have not done a good job of taking to consumers." Starr said.
Microsoft already is carving out a home in the small to midsize business arena, while Yahoo and AOL are vying for mass-market consumers. "Without a target market, the outlook is not good for Vonage and other smaller players," Starr warned.
That doesn't mean that Vonage will fold up shop next week or disappear, but the coming months will be difficult for the company as it struggles to maintain a customer base amid the growing competition.
http://news.yahoo.com/s/nf/20051007/tc_nf/38519;_ylt=AsplqJ3mmRxTAzrvDT8J9ksjtBAF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl
ADVERTISEMENT
With monthly fees ranging from $19 to $35 and an installment fee of roughly $50, the service offers a bevy of options, from unified voice, e-mail and instant messaging to voicemail, call waiting and three-way calling.
TotalTalk is a refurbished version of AOL's first try at a VoIP service five years ago and is a shot across the bow of other big-name players in the space, such as Yahoo (Nasdaq: YHOO - news) and Microsoft (Nasdaq: MSFT - news).
Yahoo recently relaunched its own VoIP service after a bit of tinkering. The Yahoo Messenger with Voice service offers free PC-to-PC calling, free voicemail, real-time photo-sharing and interactive gaming.
Meanwhile, Microsoft announced a VoIP partnership in September with Qwest Communications (NYSE: Q - news) that will target small and midsize business customers. The announcement follows on the heels of Microsoft's acquisition of Teleo last August
Staking Their Claim
The advantage for AOL, Microsoft and Yahoo is that they are already established players with large customer bases and can bundle their Internet telephony services with other offerings, unlike Vonage, Skype and other current market leaders, said Lynda Starr, principal analyst at Frost & Sullivan.
The entry of companies such as AOL, which already has a strong customer base through its dial-up and broadband services, will create strong competition for a company such as Vonage, which is generating its user base from scratch.
"I think that the bigger players will spur the market, but Vonage will start to lose out because they don't have these other services," said Starr.
"People are looking for bundling," she said. "AOL has the access and content pieces, and now the voice piece with a possible video piece [as part of Time Warner], and Vonage doesn't have any of that."
Finding a Niche
Starr believes that with the increase in competition, all players will attempt to differentiate their services from traditional phone services. "They have a lot of features such as unified messaging and easier conferencing that they have not done a good job of taking to consumers." Starr said.
Microsoft already is carving out a home in the small to midsize business arena, while Yahoo and AOL are vying for mass-market consumers. "Without a target market, the outlook is not good for Vonage and other smaller players," Starr warned.
That doesn't mean that Vonage will fold up shop next week or disappear, but the coming months will be difficult for the company as it struggles to maintain a customer base amid the growing competition.
http://news.yahoo.com/s/nf/20051007/tc_nf/38519;_ylt=AsplqJ3mmRxTAzrvDT8J9ksjtBAF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl
