Chris Kranky

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Hosted Telephony RIP?

Chris KoehnckeChris Koehncke

Best Buy announced a few weeks back they were getting rid of Speakeasy, the Seattle Washington based provider of hosted VoIP solutions to small and medium businesses. I said getting rid of, different publications had different thoughts. The VoIP technology trade journals tried to make it sound like it was a merger, which sounds like you had a car accident. A local Seattle business news sections simply said, it was divestiture.

Best Buy acquired Speakeasy in March of 2007 for $97m and likely pumped more money into it. The divestiture press release doesn’t quote any financial terms, which basically means Best Buy took a bath. Since none of the existing Speakeasy management was quoted, I suspect they’re none too happy that Best Buy has thrown them to the wolves. The ‘net is, Craig Young at Megapath bought a customer base which he can now milk

You always shoot the dog and Best Buy at $50 billion in revenue looking at likely $50-80m revenue Speakeasy and said (1) you’re losing money, (2) your revenues are growing exponentially and (3) you’re not strategic to what we’re doing. Thus some hapless corporate BD guy was given the mission to go dump this mutt to whatever buyer they could find for whatever they could get.

Megapath will likely whack all the costs, sharply curtail marketing expenses and put the entire business in glider mode and simply milk the cash out of it. This, by the way, is exactly what Vonage is or has been doing for the last few quarters, while investors hail merry that the CEO is some brilliant god. Sadly, as I’ve written years ago, voice is not a stand alone business. I’m getting fearful that neither is data as well (read posting on broadband costs).