VoIP is one of the hottest technologies out there today. VoIP phone card business has been rewarding for early movers such as Vonage and Skype. But like any other growing market, the threat of new entrants is high in this market. As a rule in economics, companies will enter this market until there is a profit to be earned. Microsoft, Google, and AOL are just a few companies that are planning to compete in the VoIP market. But there is more to come, and the battle for the VoIP phone card market supremacy is going to heat up in the next couple of years. The VoIP telephony business is intriguing since it allows the VoIP service providers to keep their costs low and pass on their savings to their customers. Vonage and Skype are the two most famous names in the VoIP phone card business. Vonage recently had its IPO, and the investors are optimistic about the future of this company. Vonage is planning to spend heavily in the next quarters to bolster its position in the VoIP market. Skype, now an asset of eBay, has other plans in mind. Skype understands that the next couple of years are critical for all VoIP service providers. The market is expanding fast, and a small mistake can lead to a disaster for a VoIP market leader. Skype has decided to take matters in its own hands, and it has planned out a very aggressive strategy to take market share away from Vonage and other VoIP service providers. Skype has decided to offer free calls to the U.S and Canada to its service users for a limited time. This strategy will allow Skype to solidify its position in the VoIP market. Moreover, this move will strengthen the VoIP phone card business' barriers to entry. In other words, small companies which are thinking of entering this market are now unlikely to do so because of the difficult task of matching or bettering Skype's newest offer. In addition, this will be a huge blow for Vonage since it charges $25 a month for a similar service. Vonage is the leader in the hard VoIP" market. It provides its customers with a piece of hardware that allows them to use its services. Vonage has been losing money for quite some time now due to its high marketing costs. With the introduction of SkypeOut, Vonage has to spend even more money to save its VoIP phone card business. Besides, Vonage will have to convince its investors that it is not helpless against the eBay's newest wave of attacks. So eBay has certainly taken the upper hand in the fight for the supremacy of the VoIP market. AOL and Google are also planning to add VoIP technology to their messenger services. So, Vonage's position the VoIP market is expected to come even under more pressure in the upcoming quarters. Whether Vonage can come up with its own knocking out punch against its rivals is remain to be soon. But, the VoIP market wars are bound to get even more interesting in the upcoming months.
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