Comments on: Finally a patent settlement where Vonage doesn’t shell out money http://TechUntangled.com/finally-a-patent-settlement-where-vonage-doesnt-shell-out-money Commentary on Technology and Business Sat, 22 Nov 2008 13:57:51 +0000 http://wordpress.org/?v=2.2 By: Ike Elliott http://TechUntangled.com/finally-a-patent-settlement-where-vonage-doesnt-shell-out-money#comment-2695 Ike Elliott Thu, 10 Jan 2008 01:08:43 +0000 http://TechUntangled.com/finally-a-patent-settlement-where-vonage-doesnt-shell-out-money#comment-2695 Senaka, I see your point, that there may be more patent suits to come. I'm not too concerned, though, that future suits might come from the vendor community, because vendors would generally prefer not to alienate potential customers by suing them. My post on Verizon's motivations for suing Vonage goes through the logic behind most patent lawsuits in this sector: http://ikeelliott.typepad.com/telecosm/2007/11/why-doesnt-veri.html And, most of the patents out there are from the vendor community, so that reduces Vonage's risk, somewhat...see my post on the VoIP patent landscape here: http://ikeelliott.typepad.com/telecosm/2007/11/the-voip-patent.html Still, Vonage's patent infringement risk is not zero. Point taken. They have, however, already taken hits from the most likely attackers. Senaka, I see your point, that there may be more patent suits to come. I’m not too concerned, though, that future suits might come from the vendor community, because vendors would generally prefer not to alienate potential customers by suing them. My post on Verizon’s motivations for suing Vonage goes through the logic behind most patent lawsuits in this sector: http://ikeelliott.typepad.com/telecosm/2007/11/why-doesnt-veri.html

And, most of the patents out there are from the vendor community, so that reduces Vonage’s risk, somewhat…see my post on the VoIP patent landscape here: http://ikeelliott.typepad.com/telecosm/2007/11/the-voip-patent.html

Still, Vonage’s patent infringement risk is not zero. Point taken. They have, however, already taken hits from the most likely attackers.

]]> By: Senaka Balasuriya http://TechUntangled.com/finally-a-patent-settlement-where-vonage-doesnt-shell-out-money#comment-2694 Senaka Balasuriya Wed, 09 Jan 2008 23:42:11 +0000 http://TechUntangled.com/finally-a-patent-settlement-where-vonage-doesnt-shell-out-money#comment-2694 Ike - I agree that Vonage will likely run out of money without additional sources of funding. Customer acquisition costs are very high and this is what I meant by "OK marketing/advertising costs has always been an issue". In fact, this is exactly one of the reasons that many VoIP providers will go bust (see "5 reasons why VoIP providers will go Bust" at http://techuntangled.com/5-reasons-why-voip-providers-will-go-bust) The high customer acquisition costs are a huge problem, but this is a known risk and it has been known for a long time. That's why I don't consider it the biggest problem. On the other hand, the risk of intellectual property infringement has been and is currently largely unknown. It is the 'unknown' component that makes it the biggest risk (on the principle that once a risk is identified, steps can be taken to mitigate it). VoIP was a patent-rich area way before Vonage got in the game and many companies will have patents that Vonage is likely infringing upon (having been involved in patent innovation and patent infringement analysis, I know this area quite well). Vonage has been sued for patent infringment by more than 5 patent holders. It is quite possible that additional patent holders will sue vonage for patent infringment - but noone knows the number of suits and the size of the infringment claims. This is why it is an unknown and the biggest risk facing Vonage. Ike - I agree that Vonage will likely run out of money without additional sources of funding. Customer acquisition costs are very high and this is what I meant by “OK marketing/advertising costs has always been an issue”. In fact, this is exactly one of the reasons that many VoIP providers will go bust (see “5 reasons why VoIP providers will go Bust” at http://techuntangled.com/5-reasons-why-voip-providers-will-go-bust)

The high customer acquisition costs are a huge problem, but this is a known risk and it has been known for a long time. That’s why I don’t consider it the biggest problem.

On the other hand, the risk of intellectual property infringement has been and is currently largely unknown. It is the ‘unknown’ component that makes it the biggest risk (on the principle that once a risk is identified, steps can be taken to mitigate it). VoIP was a patent-rich area way before Vonage got in the game and many companies will have patents that Vonage is likely infringing upon (having been involved in patent innovation and patent infringement analysis, I know this area quite well).

Vonage has been sued for patent infringment by more than 5 patent holders. It is quite possible that additional patent holders will sue vonage for patent infringment - but noone knows the number of suits and the size of the infringment claims. This is why it is an unknown and the biggest risk facing Vonage.

]]> By: Ike Elliott http://TechUntangled.com/finally-a-patent-settlement-where-vonage-doesnt-shell-out-money#comment-2658 Ike Elliott Mon, 07 Jan 2008 15:34:45 +0000 http://TechUntangled.com/finally-a-patent-settlement-where-vonage-doesnt-shell-out-money#comment-2658 No, actually, Om had it right. Vonage's biggest risk is its business model, which will have them run out of money this summer unless they raise more cash. If the patent suits hadn't happened, Vonage would have run out of money two quarters later, but it would just have delayed the same result. More on my blog at http://ikeelliott.typepad.com/telecosm/2008/01/vonages-biggest.html No, actually, Om had it right. Vonage’s biggest risk is its business model, which will have them run out of money this summer unless they raise more cash. If the patent suits hadn’t happened, Vonage would have run out of money two quarters later, but it would just have delayed the same result. More on my blog at http://ikeelliott.typepad.com/telecosm/2008/01/vonages-biggest.html

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