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Strategy Charting

Strategy Charting . Strategy Canvas of voice service provides. High. Skype. Vonage. Comcast Phone. Cell Phones. Offerings. Low. Cost. Customer Service. Voice Quality. Ease of use. Features. Accessibility. Brand Equity. Scenario Planning.

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Strategy Charting

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  1. Strategy Charting

  2. Strategy Canvas of voice service provides High Skype Vonage Comcast Phone Cell Phones Offerings Low Cost Customer Service Voice Quality Ease of use Features Accessibility Brand Equity

  3. Scenario Planning • First a business idea is generated, to identify the current position of the company

  4. Business Idea Agreements with Hotspot Owners like EarthLink VoIP Software Scalable Servers Advertisements Increase in revenue Features: fax-line, three way calling Cost Effective Phone Service Customer Base Brand Name

  5. Market Share Source: Telephia

  6. Churn Factors

  7. Current Scenario The top seven consumer VoIP providers in the United States at the end of mid-2007 included the five largest cable operators in the country. Source: TeleGeography

  8. Perils of Pure-play VoIP Provider • Low barriers to Entry • High Customer Acquisition Costs • Lack of bundled service • Expanding scope of PC-Centric VoIP providers • Skype based phones • New Game-changers • IP-PBXs

  9. Scenario Planning Changes in Market ? Minor Profound Scenario A: Cost Cutters Scenario B: United We Stand Gradual Impact of Technology ? Scenario C: Divide and Rule Scenario D: Jungle Rule Radical

  10. Impact of Technology • Merging of Cellular and Wi-Fi • Abundance of hotspots • Ubiquitous Internet availability • Arrival of WiFi enabled phones • T-Mobile, iPhone • Open Source Phone platform, Google’s Android

  11. Change of Market • Planned management of hotspots • Links or deals between ISPs and VoIP applications like Skype • Emergence of major players in Wireless VoIP • Emphasis more on Wireless or Wired VoIP • Market capital of Vonage and its competitors • Strategic deals with competitors or complementary service providers

  12. Scenario A: Cost Cutters (1) • Snapshot • No major tech breakthrough, and the market remains stable • Hotspots don’t catch up and Wi-Fi enable phones are not hot • No proper low-cost solution exists for switching from cellular to Wi-Fi • No major deals between VoIP provides and hotspot managers • In a nutshell, wireless VoIP doesn’t catch up, both in its availability and usability

  13. Scenario A: Cost Cutters (2) • Indicators • AT&T, Comcast continue their focus on bundling VoIP with cable services • Vonage’s customers still prefer it as a cost effective solution with features • Subscription rate of Vonage does not grow due to static market deadlocks and lack of technology

  14. Scenario A: Cost Cutters (2) • Implications • Vonage’s growth slows down due to stiff competition from bundled services • Vonage’s only stronghold, “cost effectiveness”, is being challenged by bundled service which also become cost effective • Due to stagnant growth, the company cannot spend as much in advertising and other companies like AT&T, with surplus money start advertising more • Overall, the market becomes sluggish and the technology fails to stay hot.

  15. Scenario B: United We Stand (1) • Snapshot • No major technological changes, but the market undergoes radical changes • Many new VoIP providers come up, many of them tied to or backed by traditional cable and phone companies • Customer becomes the real player with not much differentiation between VoIP services • Brand name becomes the key differentiator • Hotspot providers unify to provide a single standard entity, although hotspots are still very scattered

  16. Scenario B: United We Stand (2) • Indicators • Boingo, WiFire, T-Mobile become members of Hotspot Alliance, that provides seamless hotspot service at 99% hotspots in USA • Skype inks a deal with the unified hotspot providers to extend Skype’s accessibility to hotspots nationwide • Other VoIP companies like myphonecompany (with AT&T) gain prominence due to the backing of phone companies • Some VoIP providers also come up with wireless handset (Netgear with Skype) that works in hotspots and WiFi covered areas

  17. Scenario B: United We Stand (3) • Implications • Skype becomes more popular with common people • Vonage loses it’s market share in residential plans • Other VoIP provider’s market shares also surge (like myphonecompany with AT&T) • Vonage loses its cost effective competitive edge with residential people leaning toward Skype phone and small businesses also having more options. • Brand name can carry Vonage’s sale in small business, but will need to improve its voice quality and customer service to maintain edge.

  18. Scenario C: Divide and Rule (1) • Snapshot • Technology becomes advanced, market changes slowly • Hotspots completely proliferate all US cities • Wi-Fi enabled cell phones become popular, and is provided by all cellular operators • No agreement is reached between hotspot providers to provide any unified standard service • Software for switching between cellular and Wi-Fi is in place, but due to lack of unified internet access schemes, is not used much useful • People start realizing the savings of making cell phone calls on WiFi and lead to demand of WiFi enabled phones

  19. Scenario C: Divide and Rule (2) • Indicators • Samsung, Nokia, Motorola come up with WiFi enable cell phones that work well and are reasonably priced • T-Mobile starts supporting WiFi based phone calls when in WiFi coverage or T-Mobile hotspot • AT&T also rolls out a plan for supporting WiFi based coverage in their service plans • Earthlink, Boingo etc fail to reach an agreement to provide unified hotspot services.

  20. Scenario C: Divide and Rule (3) • Implications • Vonage faces extremely stiff competition in residential segment, as people can just use their cell phone to make calls for free at home • Loss of revenue and sudden decrease in subscription rates for residential segment • Might have to introduce some new features like Vonage Wireless Device, that will allow people to be more mobile and use it in limited hotspots. • Loss in revenue can trigger a liquidated brand image due to reduced marketing expenditures • Pure play VoIP providers will report heavy losses with cellular giants providing dual capacity in the cell phones

  21. Scenario D: Jungle Rule (1) • Snapshot • Technology changes radically, and the market also changes rapidly with new mergers and deals • Dual mode cell phone, with minimal charged Wi-Fi calls become norm • Hotspot providers unify to provide standard services • Customer has better cheaper options • Integration is the keyword

  22. Scenario D: Jungle Rule (2) • Indicators • Boingo, EarthLink etc ink a deal that allows third party business to access internet in all the hotspots in a seamless fashion. • Google comes up with open source platform for Cell phones, that can run third party software • An Android Alliance is formed, that incorporates cell phone manufactures, service providers and software businesses. • AT&T backed VoIP services become popular because of seamless use in WiFi and cellular • Many new companies come up with VoIP applications for Android platform • Skype joins the alliance to put its VoIP application on cell phones

  23. Scenario D: Jungle Rule (3) • Implications • VoIP becomes even easier market to enter • Cable companies erode Vonage’s market share in traditional wired landline sector • Wireless VoIP becomes the hot thing for residential segment • Vonage must join the Android alliance and try to strike deals with Hotspot provides to allow its customers to make free calls on the go

  24. Most Likely Scenario: D VoIP Market Shakeout Alternate providers lose market share 2003 2005 (projected) Traditional Telcos Alternative Providers Source: Yankee Group Cable MSOs

  25. Strategy • Look at implications in all scenarios • Clear that only wired VoIP based Vonage not sustainable • Need to introduce new features, like wireless VoIP • Absolute need to improve customer service, accounts for 15% of the churn • Make a push towards software and infrastructure for wireless VoIP • Make Vonage available anywhere there is Internet • Skype will be main competitor in wireless VoIP • Focus on International Calling and Virtual Numbers

  26. Implementation • Focus on specialized customer needs • Three pronged approach • Wireless VoIP • Virtual Numbers • International Calling

  27. Wireless VoIP • Join Android alliance • Should have wireless VoIP software ready on android platform • Provide the wireless VoIP service for nominal extra fee

  28. Virtual Number • Provide this facility not usually available with cable • Advertise it more – make it your USP • Customize the plans on a per client basis

  29. International Calling

  30. International Calling • Emerging as a big market • Take a lead in customizing plans on a per country basis • Move fast to international markets to gain early movers advantage

  31. Exit Strategy • Align Vonage with some bigger cable company, that needs a head start into VoIP business • Wireless services can also be started jointly with some cellular operator

  32. Strategy Canvas of voice service provides High After Offerings Before Low Cost Customer Service Voice Quality Ease of use Features Accessibility Brand Equity

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