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Hello VoIP, It
2007-07-23
Even with SunRocket’s spectacular demise and what could be Vonage’s imminent collapse, VCs are still not convinced VoIP is a bad investment.
Exit SunRocket stage left. Enter Ooma stage right. Ooma is a new VoIP startup armed with $ 27 million in funding from Draper Fisher Jurvetson, an early Skype backer, and The Founders Fund.
Palo Alto, California–based Ooma launched a beta of its product on this week, and its CEO and founder, Andrew Frame, talked to Red Herring about what makes his company different.
“Comparing Ooma to SunRocket or Vonage is comparing apples to oranges,” said Mr. Frame, a former employee of Cisco Systems.
“SunRocket and Vonage offer basic phone service, which you can get from the telephone company,” he said. “And they are fighting a price battle against the telephone company, which has a better product and far more resources, as both SunRocket and Vonage found out.”
Ooma’s brain trust spent two and a half years developing a product that Mr. Frame said is significantly different from anything currently on the market.
For one thing Ooma’s business model is more akin to that of a hardware firm than the service business model used by Vonage, SunRocket, and the traditional phone companies.
Subscribers pay a onetime price of $ 399 for a kit that includes a box called the Ooma hub, which connects to the end user’s broadband device, usually either a DSL or cable modem.
“You don’t pay a monthly fee like Vonage users do,” Mr. Frame said. “The ongoing service is free, and you own the devices.”
In the kit is another product, called a Scout, which creates a second phone line. If one line is busy, another person can pick up any phone and make a call on the second line.
“Oftentimes people pay $ 40 or $ 50 per month for a second line,” Mr. Frame said. “Ooma gives you the second line for free.”
The product also includes Internet enabled voice mail, and special dial tones.
“We use a peer-to-peer system like Skype, and we are based on a hardware model, so we depend on gross hardware margins,” he said.
“We are profitable on each customer from day one,” Mr. Frame said. “Eventually we will deliver enhanced services that will have monthly fees associated with them, but that’s in the future.”
The name Ooma was chosen because it invokes curiosity, Mr. Frame said. Also it has four letters and the IP address was readily available.
By Cassimir Medford
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