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Covad Communications is the principal supplier of broadband voice and data communications in the United States. In February 2001, Covad announced plans to provide Internet services directly to consumers as opposed to using resellers. It spent about 200 million dollars to buy a DSL retailer company by the name of Bluestar Communications Inc.
This move was to be a substantial threat to their business as it had them competing with their resellers in offering Internet services to the end users. Blue star communications already had links to small businesses and individuals making its acquisition by Covad a strategy in eliminating the resellers. Covad rebranded Bluestar Communications to Covad Business Solutions.
Analysis of Covad’s Strengths and weaknesses
The management of covad took advantage of their new branch, Covad business solutions, and used it to get feedback from customers. They started by listening to their users and giving a positive feedback to their recommendations.
They diversified their distribution channel. In responding to the needs of consumers, Covad lowered their Internet charges and in the process attracting more end users and small businesses.
Having lowered prices, Covad adopted new mechanisms of marketing and selling their products. Covad communications started using a web-based sale, and telesales to reach out to Internet consumers as well as deploying consultants and experts in the field. Consultants and experts interact directly with the end users.
Small businesses that do not want to interact with these experts have telesales and web-based options at their disposal. Telesales as the name suggest involve the use of a telephone. Web-based sales are whereby customers and staff interact via the Internet using chat or messages.
Covad Business solutions’ strategy to deal directly with small businesses enables them to develop the range of the services they provide. Customized services that suit the needs of the end users are now available. One significant achievement is the customization of Internet speeds. One uses the speed that the business requires and pays for that speed only.
A company that uses only the web interface to access files over the Internet cannot pay the same amount as one that streams and downloads large files. Different DSL speeds offered attracted many consumers from other Internet Service Providers (ISPs).
Small businesses and individuals started to enjoy superior web hosting services and given unlimited email addresses for their offices at a reasonable price. Other customized business services include domain name hosting and computer networking (Schneider, 2008).
Covad experienced many challenges in their strategy to serve end users. One such problem is the elimination of resellers. By going directly to the consumer market, Covad acted as a competitor to them. This created a corporate rift between the two partners for a while.
Covad currently faces competition in the cable industry by Time Warner, Cox and Comcast. These competitors are no match to them because they already have a large client base within the United States.
Covad as a company has its strength in the prominent-brand name and its availability in the stock exchange making it a trusted firm. Its weakness was the inability to interact directly with end-users.
Covad identified an opportunity in the form of Bluestar Communications and took it by buying the company. One threat that the company face is a new Internet regulation and copyright rules that limit their customers from downloading anything and everything (Heckmann, 2006).
Comparison between Covad and other ISPs
The major difference between A T & T and covad is that A T & T provides cell phone services besides Internet solutions. They have a vast pool of clients and make it easy for them to market their Internet-based products. Cox cable and Time Warner have concentrated their efforts on customer support (Reese, 2009).
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They have the reputation of providing the best customer support services as compared to covad. This strategy has benefited them in gaining many customers.
Covad is famous for having a reliable Internet connection. Though the speed is almost the same as that of cox, A T & T and time Warner, it has a robust Internet backbone that ensures the Internet provided is reliable and has no latencies.
Heckmann, O. (2006). The competitive internet service provider, New York: J. Wiley Publishers.
Reese, N. (2009). A T & T U-verse vs. Time Warner Cable. Web.
Schneider, G. (2008). Electronic Commerce, New York: Cengage Learning Publishers.