Yankee Group: Vonage Share to Tumble

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Vonage, your days are numbered.

So said a Yankee Group report released Monday that argued that Web-based voice-over-Internet-protocol providers like Vonage Holdings Corp. don’t stand a chance of retaining their lead as cable companies, AT&T Corp. and Verizon Communications enter the market.

“Alternative VoIP providers lose market share every day to the major players. MSOs, [long-distance] and [local phone] companies are joining the VoIP game, and their available resources dwarf even the largest of the alternative VoIP providers,” Yankee Group analyst Kate Griffin concluded.

At the end of 2003, Vonage and other Web-based VoIP providers controlled 66% of the VoIP market, with Vonage controlling 90% of the segment. Griffin expects the non-facilities-based VoIP providers to lose 47% market share over the next 13 months.

Vonage has 300,000 subscribers, and it just announced plans to hire 600 workers over the next six months.

Vonage spokeswoman Brooke Schulz dismissed the Yankee Group report as incomplete and speculative.

“It's difficult for Yankee Group to make any assertions on market share considering [the fact that] two major players -- Time Warner [Cable] and AT&T -- haven't released their numbers. So we find the underlying data dubious in that regard, because we truly don't know what share anyone has,” she said.

“And if we would've been listening to Yankee Group reports all along, we'd have been out of business already,” Schulz added.