Lack of Product Stickiness in the Mobile VoIP Space
Written by dean on Apr 27, 2009 - 12:08 PM
VoIPium has joined the now 12 iPhone VoIP centric applications that are available from the iTunes app store.
It was enough to win them the Frost & Sullivan 2009 European Mobile VoIP Award
But this is becoming a heavily diluted space. What will be happening within the market is users simply churning from one to the other looking for the free start deal. We've seen it all before with fixed line offerings of 3-4 years ago.
VoIPium will probably churn a truck load of customers away from the other WiFi VoIP iPhone plays in return for their 30 minutes free offering. But they then need to retain those customers, otherwise iPhone VoIP number 13 comes along and it's all over (or all begins again, depending on your point of view).
A "me-too" product isn't enough on its own to secure that customer retention. There are several problems.
First, there's no operator billing relationship. That means that the customer has no fixed ties to you. Pay As You Go also allows Go And Don't Pay Anymore. At least O2, AT&T etc have a Unique Selling Point - the device itself.
Second is actually the hardest one to address. Lack of Stickiness. Whilst Stickiness can be defined as the thing that ensures users keep coming back to you, it typically comes from one of two places : critical mass (large active subscriber base in the millions - eg, "all my friends are on this") and Unique Selling Points which create a customer tie. The value add that you bring and no-one else brings.
I do not see any Unique Selling Points in any of the mobile applications out there (iPhone or otherwise) that cannot simply be copied by NextMobileVoIP Inc at very low cost and very quickly (a decent iPhone SIP based application can be built in a couple of weeks).
There is one exception.
Skype.
Skype achieved critical mass on the desktop and was extremely intelligent in not launching on the iPhone early. It let every other company do the hard work for them and clear the way. Concept proven, in it comes 2 years after everyone else and cleans up. Skype is currently the #4 Free application on the App Store (and that includes games - the big market on iPhone).
Skypes USP is the promise that it "just works", has great audio quality and all your friends are on it. The new 3 Hutchison deal makes this even sweeter - free calls to other Skype users forever, without topping up.
Where does this leave the rest? Well, in a nutshell, screwed without that USP. You won't churn a user away from Skype and you can't compete with them on their own turf now that they have an iPhone client and are fully mobilised via the 3 Hutchison deal.
What are the viable USP's for the mobile VoIP plays? I have some ideas but I wouldn't give them away for free. And you shouldn't either - if you have one, put together your iPhone SIP application and get it out to market quickly together with that value add (you can always use VoIP User to test it). I would at this point concentrate strongly on the billing relationship too - there are clever ways of piggy-backing existing ones without having to do a direct deal with the mobile operators. That's something that you need - whatever your billing mechanism, it needs to be one-click for the user, otherwise you won't get them to top up.
The alternative is to exit that market and niche yourself into a value driven one rather than a cost-cutting one. The latter is heading towards zero anyway, and now more rapidly than ever.
There are also different approaches to the same thing. Zer01 for example have recognised that actually the real value lies in the data channel and are attacking the market from that direction.
| Quote: |
| As a promotional incentive to get iPhone users to download the app from Apple's App store, Vopium is offering 30 minutes of free calls and 30 SMS text messages to "get started" says the press release, and then users drop into the usual and all-too-familiar world of pre-paying for credits, free call through WiFi when available, and redirecting calls along the cheapest routes via VoIP. |
It was enough to win them the Frost & Sullivan 2009 European Mobile VoIP Award
But this is becoming a heavily diluted space. What will be happening within the market is users simply churning from one to the other looking for the free start deal. We've seen it all before with fixed line offerings of 3-4 years ago.
VoIPium will probably churn a truck load of customers away from the other WiFi VoIP iPhone plays in return for their 30 minutes free offering. But they then need to retain those customers, otherwise iPhone VoIP number 13 comes along and it's all over (or all begins again, depending on your point of view).
A "me-too" product isn't enough on its own to secure that customer retention. There are several problems.
First, there's no operator billing relationship. That means that the customer has no fixed ties to you. Pay As You Go also allows Go And Don't Pay Anymore. At least O2, AT&T etc have a Unique Selling Point - the device itself.
Second is actually the hardest one to address. Lack of Stickiness. Whilst Stickiness can be defined as the thing that ensures users keep coming back to you, it typically comes from one of two places : critical mass (large active subscriber base in the millions - eg, "all my friends are on this") and Unique Selling Points which create a customer tie. The value add that you bring and no-one else brings.
I do not see any Unique Selling Points in any of the mobile applications out there (iPhone or otherwise) that cannot simply be copied by NextMobileVoIP Inc at very low cost and very quickly (a decent iPhone SIP based application can be built in a couple of weeks).
There is one exception.
Skype.
Skype achieved critical mass on the desktop and was extremely intelligent in not launching on the iPhone early. It let every other company do the hard work for them and clear the way. Concept proven, in it comes 2 years after everyone else and cleans up. Skype is currently the #4 Free application on the App Store (and that includes games - the big market on iPhone).
Skypes USP is the promise that it "just works", has great audio quality and all your friends are on it. The new 3 Hutchison deal makes this even sweeter - free calls to other Skype users forever, without topping up.
Where does this leave the rest? Well, in a nutshell, screwed without that USP. You won't churn a user away from Skype and you can't compete with them on their own turf now that they have an iPhone client and are fully mobilised via the 3 Hutchison deal.
What are the viable USP's for the mobile VoIP plays? I have some ideas but I wouldn't give them away for free. And you shouldn't either - if you have one, put together your iPhone SIP application and get it out to market quickly together with that value add (you can always use VoIP User to test it). I would at this point concentrate strongly on the billing relationship too - there are clever ways of piggy-backing existing ones without having to do a direct deal with the mobile operators. That's something that you need - whatever your billing mechanism, it needs to be one-click for the user, otherwise you won't get them to top up.
The alternative is to exit that market and niche yourself into a value driven one rather than a cost-cutting one. The latter is heading towards zero anyway, and now more rapidly than ever.
There are also different approaches to the same thing. Zer01 for example have recognised that actually the real value lies in the data channel and are attacking the market from that direction.
Reply from tref on Apr 28, 2009 - 08:29 PM
Comms providers will then bill businesses for every single service on the same bill - mobile, ip connectivity, voip, PBX support, Blackberry etc etc.
This is the point at which it becomes very sticky.
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