To: RocketMan who wrote (4736 ) 5/10/1998 10:00:00 AM From: Lazarus Long Read Replies (2) | Respond to of 50264
I would like to piggyback off what Rocketman said... The reason is that DGIV is exploiting a niche market in international IP telephony, and working with their local telcos to enter into cooperative agreements. As we have said in many earlier posts, this is very difficult to do politically and economically. This is the niche maket that is expected to experience hypergrowth, as has also been mentioned before. Most countries are leery of their national telcos being swallowed up by large US firms, or exploited economically with little return flow. That is why companies like ATT are running into brick walls, and their top guys are leaving to sign up with smaller VoIP companies with a different business model. The way in which DGIV is penetrating the market is HUGE! They are partnering with the local phone companies that provide the dial tones. The local phone company has nothing to lose here. They will still provide the dial tone. The point is that they have everything to gain! By being able to offer their customers a low cost solution to their long distance needs, they will grow the long distance demand - increasing the demand for local access and their own revenues. It is very much a win-win situation. Furthermore, they don't have the perceived risk of working with a large American firm. As Rocketman also mentioned, this is a budding market/technology. The telecom industry is currently at $600-650 billion (That's with a B) per annum. The telephony companies have yet to make a noticeable dent in that figure and so are no more than a future threat to the large players. That's why market penetration is the key tactic at this point in the game. The strategic element is where the market penetration comes. Southeast Asia long distance demands are expected to grow at a 20-35% rate over the next few years. A figure that I saw was that a FAX might cost upwards of $10 to send in Indonesia. Guess where one of DGIV's target markets are: that's right, Asia. Europe is the other major target. Other figures I've seen (I think from DGIV's web site)... A FAX from Hong Kong to the US was used as an example. A direct line xmission would cost about $1/minute. A callback situation would be on the order of $.58/min. Using DGIV's solution would cost for the two local phone calls: $.10-.20/min in Hong Kong and $.08-.10/min in the US for a total of $.18-.30/minute. The cost of transmitting through the internet is miniscule. Worst case, this is about 1/2 the cost of the next cheapest solution. By the way, FAX transmission accounts for about $45B in revenues of the total. Yes, indeed the market is there. The cost savings are compelling. The technology is in place and we have a very sound strategy... nothing wrong with the execution either. I think we are well on our way. So, I might as well say it. My name is Rick and I am a DGIV-aholic. (ooooh, I feel so much better).