Sally M. Cohen Analyst Forrester Research

TeleconferenceVoIP: Price And Features Slowly Win Over ConsumersSally M. Cohen

Analyst

Forrester Research

April 2, 2007. Call in at 12:55 p.m. Eastern Time

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Theme

To win, VoIP marketers must market their services closer to the phone, while

calling out features

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Agenda

• Consumers haven’t warmed up to VoIP.

• Survey says: Who needs VoIP when PSTN is good enough?

• Drive penetration with customer segmentation and feature marketing.

• VoIP will change the voice market with better services and bundling.

4Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Agenda

• Consumers haven’t warmed up to VoIP.

• Survey says: Who needs VoIP when PSTN is good enough?

• Drive penetration with customer segmentation and feature marketing.

• VoIP will change the voice market with better services and bundling.

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Fierce competition puts the squeeze on VoIP

• Incumbent telcos retain the majority of the residential voice market.

• Home use of mobile service threatens residential landlines.

• Cable’s digital voice makes a strong leap into the market.

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Traditional telephony and mobile dominate the residential voice market

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Even among online households, VoIP adoption remains low

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Agenda

• Consumers haven’t warmed up to VoIP.

• Survey says: Who needs VoIP when PSTN is good enough?

• Drive penetration with customer segmentation and feature marketing.

• VoIP will change the voice market with better services and bundling.

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Despite desire for lower-cost telephony, most consumers won’t switch

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Consumers are satisfied with cost, reliability

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A frugal consumer does not a VoIP user make

Consumers who plan to switch home voice service:

• Want more than lower prices.

• Are most likely to switch to another traditional telco . . .

• . . . but are also open to emerging voice providers.

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Cost is not the sole driver of home voice churn

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VoIP is low on voice churners’ lists

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VoIP doesn’t conform to expectations about voice

• Consumers want a handset, not a headset.

• Legacy features like directory assistance are important.

• Above all else, reliability and quality of service matter.

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Agenda

• Consumers haven’t warmed up to VoIP.

• Survey says: Who needs VoIP when PSTN is good enough?

• Drive penetration with customer segmentation and feature marketing.

• VoIP will change the voice market with better services and bundling.

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Today’s VoIP users are typically early adopters

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Long-distance calling habits illuminate VoIP’s market opportunity

• Chatters will use VoIP to make hours of long-distance calls from home.

• Distance Dialers will value VoIP’s cheap international rates.

• Stop Gappers will adopt VoIP when VoIM is no longer an adequate solution.

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Chatters spend hours calling long distance from home

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Distance Dialers call internationally

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Stop Gappers use VoIM to save money

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Theme

To win, VoIP marketers must market their services closer to the phone, while

calling out features

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Focus on features to inject interest into the mainstream

• Consumers want — established premium features included in a monthly flat fee.

• Consumers show interest in — mobile and landline interoperability.

• Consumers respond to — what they are already familiar and comfortable with.

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VoIP offers features that consumers want

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Agenda

• Consumers haven’t warmed up to VoIP.

• Survey says: Who needs VoIP when PSTN is good enough?

• Drive penetration with customer segmentation and feature marketing.

• VoIP will change the voice market with better services and bundling.

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Leaders will market VoIP close to the phone

Increased awareness and adoption of VoIP will:

• Drive desire for landline-mobile interoperability.

• Force hardware-makers to improve product usability.

• Encourage partnerships to drive new service bundles.

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Sally M. Cohen

+1 617/613-6127

scohen@forrester.com

www.forrester.com

Thank you