Vonage: the new AOL?

A few days before Jason Calacanis confirmed that he’s leaving AOL (the company that owns Engadget, where I write my weekly Switched On column) — and after trumpeting the “samurai” revolution he helped Jonathan Miller foment changing the online giant from a subscriptions-based service to an advertising-driven one – CNet’s Crave called the subsidization of  Circuit City’s impending $99 Black Friday Compaq notebook by a Vonage subscription a “novel twist.” Crave notes that such offers came from AOL years ago. It is a bit of an interesting ploy for a company that doesn’t have many (ok, at least one) direct ties to the PC.

It’s no wonder that Wall Street continues to have concerns about Vonage’s marketing expenditures. As AOL (of the dial-up subscription business model) and TiVo know, it is difficult to move the needle when you’re competing with entrenched service providers. At least TiVo had a significant head start and a great brand with customers who loved the product and AOL had a huge ease-of-use advantage in its best growth years.

Unfortunately for Vonage, though, VoIP rates are racing to the bottom even faster than circuit-switched calling plans are, and there’s the bigger problem of cell phone calling plans with enough minutes to satisfy most long-distance consumers. That leaves international calling, the bailiwick of Skype, There are ever-more options for extending that beyond the PC as well as other options for making it more convenient from the PC.

Vonage should probably start experimenting with alternative revenue streams as well. The VPhone would be a good place to start as it’s PC-based and requires a separate phone number anyway.

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