The Sunrocket Explosion

It was sad to see Sunrocket go under. But realistically, it was probably inevitable regardless of how well they did or didn’t execute. Those who know me have heard me say a thousand times that there really isn’t a long term market for consumer VoIP as a standalone product.  Realistically, why do you even need a home number? In my case we keep one partly because of inertia and the desire to allow calls to our location rather than us as individuals, and mainly to have a power-independent backup and access to 911 in case of some sort of dire emergency. The latter requires us to keep the POTS line, and so we do.

 

So is consumer VoIP dead? No. Not exactly anyway.  While offering a cheaper alternative to POTS wirelines has limited appeal and lifespan (and the appeal shrinks every day), the market is massive enough and the angst for the phone and cable companies massive enough that many millions of households will happily make the move. The problem is that there’s a paradox – on the one hand, delivering VoIP is one of the more trivial applications there is. Until you have to touch the PSTN; then on the other hand it becomes incredibly operationally intense and all-consuming.

 

In Apocalypse Now, at the end of his famous “napalm” soliloquy, Robert Duvall says “Some day this war’s gonna end.” And so it is with consumer voice. Someday, Ma Bell will have exhausted all the regulation, litigation and obfuscation that have conspired to sap the ability to innovate from companies that dare to tread in the space. When that happens, there will still be an opportunity in delivering innovative voice-centric products to consumers. And we all know they’re not going to come from Ma Bell or the cable companies, nor from the wireless providers.

 

The question is when and who. It didn’t work out this way, but the Sunrocket (and Vonage) updated LD arbitrage model could and maybe should have been an excellent “loss leader” transition product – the thin edge of a wedge that lets you establish a customer base that you can start moving up the value chain with, or as an alternate medium to attract eyeballs to leverage via other business models. Obviously Sunrocket is out of the game, which leaves only Vonage. Thus chances are this opportunity won’t be captured by a “VoIP” provider, but rather by Google, Yahoo, eBay, Amazon, and other large web -centric companies that can extend their relationships into the voice space rather than the other way around. The good news for innovators is that each of these firms has historically embraced entrepreneurial third party innovators to create a vibrant value added ecosystem around their core offerings. So yes there will be opportunities. The VoIP market didn’t die with Sunrocket. The LD arbitrage probably did, and that was inevitable and overdue anyway.