Today will prove a milestone for the VOIP market and may well domonstrate that Internet telephony has gone comfortably beyond the tipping point. For Vonage looks set to offer up to 31.25 million shares priced at $16 to $18 each in an initial public offering, according to a regulatory filing today - and Skype has just announced that they now have over 100M users.
Vonage's IPO would value them at $2.6bn will be led by Citigroup, Deutsche and UBS. They have 1.8M customers almost entirely in the US. All of their customers are paying - whereas the majority of Skype's customers are free. Interestingly the valuation of Vonage would be similar to the up front payment Ebay made for Skype.
But, when Ebay bought Skype they had just over 50M customers - and they have nearly doubled them over the last 6 months. Which proves the value of their more international approach, for Vonage site that analysts believe that the US consumer market will reach around 15M by end 2007.
Vonage expects to have the lion share of them - but will face increasingly tough competition from the cable operators offering VOIP, including Comcast, Time Warner and Cablevision.
Mind you, if Internet phone users reaches 500M by 2010 - which we believe could even happen - then there's room for all of them. Vonage should do well - even though they will have to spend hard to stay ahead.