Ooma an exercise in futility

By Stan Beer
Friday, 20 July 2007 10:12

Opinion and Analysis

About the only thing I like about Ooma is the name - because it reminds me of one of my favorite actresses. To put it simply: the world needs another cheap voice calls company as much as another sequel to Rocky. Trying to launch such a service is an exercise in futility.

A colleague who recently visited New York on business told me that there is so much investment capital sloshing around that funds don't know what to do with it all. That's the only explanation I can come up with for how a company like Ooma managed to get funded into existence.

Right now, I like most of my friends and acquaintances, have a number of options if I want make a voice call. I can use the old PSTN land line; I can use my mobile phone or I can use Skype from either my computer; my laptop; or my Skype phone (which is also a DECT cordless phone). I plan to pick up a new Nokia N95 mobile phone soon on a cheap capped plan, which will allow me to use Skype on the mobile.

The land line, with its monthly line rental, is by far the most expensive way to make calls and it is essentially just a voice calls device. The reason we still have it is as much a factor of our friends and family wishing to contact us as anything else. If we wanted to make cheap calls overseas, however, we could simply buy one of a number of phone cards that enable users to make overseas calls for 2 or 3 cents a minute.

Our mobile phone service allows all our family members to make phone calls to each other for free, we can also send text messages and, with a monthly capped plan, it works out cheaper than our land line.

The cheapest by far, however, is our Skype service, which allows us to talk to and instant message all our fellow Skype users for free or call virtually any landline in the world for a few cents a minute. The quality of voice calls can be erratic sometimes but it complements our mobile service nicely.

Of course, you could also no doubt choose from a range of cheap VoIP services available in your particular part of the world and then there's Google Talk, Yahoo IM and Windows Live Messenger.

In the midst of all this sea of choice of messaging and voice communications, much of which can be had for a low cost monthly broadband connection or capped mobile service, comes Ooma. This new service with the catchy name not only requires you to have both a landline and a broadband connection, but it would like you to spend US$399 up front for a box that performs the magic of eliminating the cost of long distance calls.

Aside from the fact that consumers don't like paying large sums of money up front for the right to make telephone calls sometime in the future, for the system to work it requires that there are enough Ooma boxes in all the locations that callers might want to reach. Like Skype, Ooma is a peer-to-peer system which uses the resources of all subscribers to its network. Unlike Skype, which simply uses the 150 million or so PCs on its network to relay messages and voice calls, Ooma is going to have to try to build its network from scratch by initially giving away boxes to selected users for free.

If by now you're wondering why on Earth anyone would even think of trying to launch a product/service like Ooma when there is basically zero need for it then you're not alone. It's a catchy name though.