Vonage won't make it past 2008

Vonage is unveiling its new V-Portal gadget at the CES show in the hopes of staving off company bankruptcy, but it's a case of too little, too late. The company is heading down the tubes, and big customer defections may mean the company will be gone sooner rather than later -- possibly in 2008.

V-Portal is a single-port router for Vonage phones, that includes an LCD, and adds group calling, voice-activated dialing, and other features. It's also designed to cut Vonage customer care costs because its LCD is supposed to help with troubleshooting.

That's all very nice. But who really cares? Those looking for cheap phone service don't need gadgets or flashing LCDs. All they want are cheap phone calls. And for that, they're turning to cable companies, Skype, and other low-cost services, not Vonage.

Making things worse for Vonage is that customers are leaving Vonage in droves. Business Week reports that "the pace of customer losses reached 3% of the subscriber base per month during the third quarter." That's an astounding number. As the magazine points out, "If that rate of customer defections were to persist for an entire year, Vonage would lose a third of its 2.5 million customers."

The newspaper also maintains that the company needs to find $250 million in new funding if it wants to stay in operation beyond 2008.

My bet is that they won't get the cash. I think that 2008 will be the year that the company finally bites the dust, or gets bought out cheap.