SunRocket Cans 25% of Workforce or 30 People, Whichever's More Sensational

SunRocket LogoThe aggressive rollout of VoIP services from local cable companies over the past few years has likely caused some growing pains for companies like SunRocket and Vonage. The router-like VoIP devices can be a tad tricky to set up (especially for neophytes) and only being able to use one handset is far less convenient than being able to pick up a phone anywhere in your house. Your cable company, on the other hand, will either send someone out to set up your service and/or flip a switch and let you plug into your existing phone jacks.

As far as pricing is concerned, however, SunRocket has beaten both Vonage and the cable companies handily. If you’re willing to pony up $199, you’ll get unlimited everything for an entire year compared to Vonage’s $24.99/month offering and cable’s $39.99/month average. I have SunRocket’s $9.99/month plan which gives me unlimited incoming minutes and 200 outgoing minutes.

Last Friday, SunRocket laid off about 25 percent of its workforce citing competition as the major reason for the layoffs. The 3-year-old VoIP provider has a little over 200,000 residential subscribers (myself included), many being younger, more price-conscious and tech-saavy consumers.

I don’t think this is the end of SunRocket, not by a long shot. It’s got a great opportunity to surpass Vonage as the leading VoIP carrier in light of Vonage’s legal battles with Verizon and the fact of the matter is that 25% of SunRocket’s workforce is only about 30 people. With 90 people left and a cool $80 million in venture capital back in March of 2005, SunRocket should be okay for the short term.

The biggest challenge that SunRocket is going to face will be how it’s going to survive for the long haul. It needs to differentiate itself enough from the cable companies’ offerings to get subscribers, but that’s a pretty tall order for a company that’s not real big on conventional advertising. Plus, the simple reality is that most people use their cell phones as their main phone lines and those who still keep a landline are made up mostly of old, crotchety baby boomers — hardly SunRocket’s current demographic.

What might benefit SunRocket most is a merger of some type. I use SunRocket for its call forwarding, call blocking, and signature number features — not its phone service. Everything just gets forwarded to my cell phone, I never actually use the phone SunRocket sent to me back when I signed up.

If my current cell provider, Sprint, offered these features, I wouldn’t have to subscribe to SunRocket and I’d gladly pay an extra $10/month towards my Sprint bill. If SunRocket could position itself to get swallowed up by a cell phone company to provide backend account features similar to the ones it offers now, I think it might have a shot at some of that coveted staying power.

Internet-Phone-Service Provider Drops a Fourth of Its Staff []