Vonage, which has established the best retail distribution to date of the new wave of telephone companies has adjusted their pricing to $29.99 via their list of retail partners after a $50.00 mail in rebate is applied.
Basically this means they are almost giving away the ATA and associated accessories in exchange for generating new customers. The way I see it, this is a good offense against the other carriers like AT&T’s CallVantage who likely will announce a retail strategy in the near term as well against other carriers who have already made in roads with the big box stores.
For Vonage, getting new subscribers also mitigates churn (losing customers while adding new ones) in a time where they are working towards an IPO. For every customer on the books some multiple will be applied. Since either cellular, ISP and cable tv subscriber values per account are already established benchmarks, but VoIP network carriers value per user are not really in place, the more customers Vonage has on the books at the time they file their S-1 and go public, the better terms they will get. Thus, almost giving the hardware away is much akin to the razor blade strategy found in marketing 101 text books. Give them the razors and let them buy the blades. Vonage’s no contract service plans makes their service offering an almost no risk deal for many home users looking to migrate to VoIP and for Vonage it gives them a way to increase users, and ratchet up their book value very quickly before the competition takes a bite out of them.