Investment down the drain? Vonage gets Time booby prize

Vonage was the Voice over IP provider that was going to take on the world's telephone companies and win.

In the event it didn't take on the world's telephone companies and, with continuing losses and seemingly no get out of jail card, seems unlikely to survive much less win.

As such it clearly falls within Time's definition of being "a product or new company that had the possibility of bringing in billions of dollars in revenue... [but had failed to live]... up to the potential that its creators expected, and that the public and press were lead to believe was possible."

The charge sheet is fairly clear. It raised US$531 million in a 2006 IPO but fairly soon its share price dropped through the floor - from $17 to $1 - when investors realised that its competitor telcos (the ones it was going to beat up with its superior technology and cheaper service) were also deploying cheap telephone services (only some of them VoIP) and that the Vonage business model was actually holed below the waterline before it was even launched.

Vonage's entire history has involved overshot spending (much of it on failed marketing and advertising) and undershot subscriber and revenue growth, year after year. In revenue terms it is running at break even on around $200 million a year and an apparently eroding customer base.

In the meantime Skype (which has also suffered brickbats because of poor financial performance) has more than 400 million registered users (not equivalent to Vonage because Skype users can be in- or barely active) and is making clear and rising revenue and profits.