As one surveys the tech landscape you don’t have to look very hard before it becomes painfully obvious that some companies that are here today will, no doubt, be gone tomorrow. Many technology and business analysts are quick to point out that we are simply in the midst of, “Bubble 2.0”, and this is to be expected. I argue that there are no prerequisite conditions required for a bad business model.

Having said this, some companies manage to elevate the art of promoting a failing business to epic levels. Today’s case in point is Vonage; or as I like to refer to them, “Dead VoIP Walking.”

Vonage: you know them even if you don’t use their service, thanks to a ubiquitous “orange” marketing campaign that prompts “people do stupid things everyday – like paying to much for phone service”, an ironic marketing tactic seeing how they are trying to operate the organization in a similar illogical fashion. Quickly, let’s look at the factors contributing to Vonage’s impending implosion.

Legal Woes without End

While Vonage is doing some clever marketing and enjoys some modicum of success with attracting new subscribers, market penetration is not really an issue, seeing how they could soon be sued out of existence! Patent case after case not only puts the entire revenue stream in jeopardy, but also acts as a drag on company resources and erodes confidence in the long term viability of the service. New technologies like VoIP are difficult enough a sell to non-tech users as it is, add doubts about your phone provider’s future, and the potential loss of service… Good luck with attracting and retaining customers.

Crushing Competition Closes In

Incumbent Telcos and Cable providers have compelling offerings that are either easier to use (or at least understand) and some cases are even cheaper when you factor in the discounts offered via service bundles. No question local dial-tone providers are not the most innovative kids on the block, but once forced to fight or run, they are now fighting back! In addition to the legal challenges from major players like Verizon, carriers have launched their own VoIP and/or unlimited fixed rate calling programs. Cable companies, long interested in lucrative IP dollars, are now in direct competition with the local bell companies and aren’t about to see an upstart like Vonage steal that action.

Forget about Vonage or your local dial-tone provider – Skype has already won. With a larger user install base then any other VoIP offering, a robust international network, droves of third-party hardware and lower prices, why would anyone select Vonage over Skype? Perhaps Ebay should open its wallet and fund a major marketing effort for Skype; at this point it would be a merciful act, bringing a quicker end to the ill fated Vonage.

The End is Nigh

One might conclude that VoIP is doomed, but quite the contrary. VoIP is just beginning to come into its own, unfortunately Vonage is just a sacrificial lamb on the alter of disruptive technologies – Remember that cute sock puppet or those home grocery vans?

The Bottom line: look for Vonage to cease operations as we know them in the next three to six months. As the Vonage pitch implies, ”Signing up with a VoIP provider that will soon be defunct, now that’s just stupid!”