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Ooma - Will Blow $27 Million

OOOOOOOOOOOOMAAAAAAAAAAA or Ooma. Alerted by Andrew Hansen to Ooma's premature launch announcement (Available September), I read Techcrunch (a corporate release blurb rubbished in the comments). Then Saunderlog, and Aswath. Like them I don't get to try it. Aswath provides the technical reasons why it doesn't work. Alec I think tempered his comments. Ooma is already battling price perceptions in Techcrunch comments. 

The reality. Ooma is a box. It is supposed to replace a landline --- which most of us don't want anymore (except for 911). The cost of just the hardware $400 before they try and nickel you to death with additional charges doesn't add up for anyone. I'm not sure how that ever got past first grade market research. Although there still seem many that want it... or is that just the free giveaway ones via Gigaom?  There there will remain plug and play technical hurdles in the home for anyone that has cable rather than ADSL as the phone line may or may not be close by.

On the competitive front. Phonegnome provides similar technology options at a much lower cost. Skype and various handset suppliers provide various options for wiring your house and achieving the same thing with some sense of security on a computer that's already paid for. I'd add often at a sound quality that beats what this solution is likely to provide.

So far I've not seen it compared with mobile Wi-Fi related devices. My experience with Nokia's N80, and N95 have convinced me that before long everyone will carry a dual mode device. Too bad the iPhone still looks crippled in this regard. So, the comparison must be made with T-Mobiles Home Hotspots and what's already available though GizmoVoIP, Truphone and Talkplus type plans.  Dialing out for free (or almost free) is no longer much of an issue.

The marketing angle is wrong here. Lots of money, star appeal and yet at the end of the day those that both understand it and might love to use it won't go out and promote this product. While my VoIP friends and advocates may try and convince me to buy an iPhone; there is at least something to that. It's called progress. Ooma will never pass that test. It won't grow as your communications needs grow. It will become obsolete.

The VoIP blog world will give this a complete thumbs down. I hate to be the bearer of really bad news. I've given some other products some harsh reviews usually after I've done the "test" and considered how it works for me and a broader audience. The launch blogs Gigaom, Techcrunch and perhaps other haven't done their readers any favors by not providing more skeptical initial reviews.

Part of the corporate and investment problem here is the gestation period. Money has been in this baby for over three years. That shows up one of the big development challenges for hardware. Development is not fast or agile like software. The plumbing is now about software while the hardware is being driven by mobile handset cycle times of just months. This product is years late. It may also have a questionable legal interconnect strategy. Still those problems may come later.

This is not the next revolution in VoIP and certainly not the innovation the corporate site claims. In the end David Beckemeyer has the best response to Ooma. He simply says VC's you
can have it all in days before they launch for a lot less than 27 million. I agree, and it is possible
in that time to launch with a competitive brand platform and positioning with technology that is already deployed and tested with customer research etc. More importantly it creates an IP asset that the company can leverage even after the cost of calls go to zero.

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Comments (3)

Punked? For $27Mil! It’s not a record, of course, but a tidy sum. If this lasts as long as SunRocket, I will be surprised. The reality distortion field around this will not carry it anywhere. Interesting to compare to the original Free World Dialup, but that was TEN years ago and a fun experiment. --Not a mainstream attempt at anything. There aren’t enough early adopters enchanted by a fairy tale to carry this to the dump. I will be watching at Weird Stuff Warehouse for boxes of White elephants, I mean, Rabbits. Hard to believe I am trying to be restrained, but I have been on this road a long time. Insert quote from Abe Lincoln here. You know the one. You can fool some VCs or analysts all the time, or you can fool all VCs or analysts some of the time, but you can’t fool all the people all the time. Good luck with this game plan.

Edward:

In February, I met with Andrew Frame and innocently asked him what "ooma" means? Was it "object of my affection?" No! The startlet became indignant and proudly asserted that he "pulled it out of his ass," then dismissed me. Guess I won't be getting a white rabbit.

Mike:

Just to detail one more reason why OOMA can't work, at least not how they have apparently envisioned it.

The available material says that they would route a call to one of their boxes (hubs?) of a user in the same area code as the intended destination, as if the entire NPA is alway "toll-free". This just isn't the case in most of the US. They would have to mainntain a data base for every rate center telling what exchange codes were "toll-free" from that exchange so they don't try to make a "toll call" from the unsuspecting user's phone. (Does anyone at OOMA even know what I am talking about? Ever heard of a "rate center"?)

And if they inadvertantly try to make a call through a user's land-line to a number that is toll, but of course fail to start with a "1", will OOMA's box detect the intercept announcement or tone that comes back, recognize that it misrouted the call, and try a different route? I bet not.

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