Friday, May 12, 2006

Vonage is hard-selling their IPO

Wow, Vonage is really hard-selling their IPO. In the past week, I've received two emails, a voicemail (on my Vonage line) and a piece of postal mail from Vonage advertising the customer IPO purchase plan. I also saw the IPO mentioned on slashdot.org. They've set aside a pretty significant portion of their IPO shares, something like 15%, for purchase by current customers. It seems that customers are an important part of Vonage generating demand for their IPO. I wonder how they did with their roadshow and with other more sophisticated investors.

I'm personally not that excited about Vonage's long-term prospects because of the competition that is and will be there in the voice over IP space. Yes, they've grown at an incredible rate, have spent tons of money on marketing (for several quarters, they were identified as the #1 advertiser on the Internet, according to the IPO prospectus) and are a well-known brand. But I don't think they have the differentiation or the DNA, at least not at this point, that they'll need to survive the onslaught of competition they're going to face.

I've studied this public offering closer than any other in the past so it will be interesting to watch it play out next week.

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