Ooma is the latest kid on the block and seems to generating lot of attention. Almost, every VoIP blog worth its salt has given its perspective on ooma VOIP. We will not cover the details of the service but will try to evaluate the offer vis-à-vis other providers. You can read about the service here and here. For the time being it suffices to say that Ooma offers unlimited free calls within the US. Good person, that I am, let me first highlight the positive side of the service.
1. Free local number in your area (or close to it).
2. Convenience to combine your old traditional phone with Ooma.
3. Second line at no additional charge
4. International calls at low rates, using VoIP
5. Value added services like answering machine, call waiting, DND, three-way conferencing, caller-id and call blocking.
Let us look at it a little closer, to see if it really deserves your dollars ($399 now and $599 starting 2008). Ooma saves a lot by routing your calls through other phone lines (other Ooma users) instead of using normal exchanges and thus avoids the termination charges. This leads to a huge security issue as your phone line can be used by anybody without your knowledge and can land you in trouble. With increasing threat perception, this is not a risk you may want to take. For the time being assume that Ooma manages to bridge the security issue, is it still worth it?
While, lot of websites and blogs are claiming that Ooma offers unlimited free calling within USA forever, the fine print at ooma seems to suggest that there will be no monthly charges for at least 3 years. This means that Ooma can charge you after a period of three years. Also, Ooma mentions that some numbers like the emergency services would be charged separately. Next, Ooma is not competitive in terms of international calling. Their site mentions that the rates for international calls are as low are five cents, which is way too high for a lot of international destinations as compared to other providers.
Let us do some numbers to evaluate the commercials of the service. Ooma is currently offering their hardware for around $400. A lot of VOIP companies, Raketu, Nonoh, etc. offer free calling to around 40 countries including US for about 90-120 days if you pay them $10, which can be used to call the non-free countries. Some of them even support SIP and hence can be used with a VoIP adapter. You can easily get a VoIP adapter from ebay for around $30 or you can get a used Sunrocket gizmo and unlock the same for even less. Even if you assume that $10 gives you 3 months of free calling to 40 countries, you get free calling for 10 years, which is not so bad. Also, you are avoiding the risk of Ooma closing down in the near future. With what happened to Sunrocket, this possibility cannot be neglected. To receive incoming calls you can set up your adapter to use any of the free incoming numbers services.
To be fair, Ooma has bought two of the most revolutionary concepts (VoIP and P2P) together. I would call this disruptive innovation, as it has the potential to turn the traditional phone model on its head. The idea is promising but little ahead of time. It needs a little more research and fine tuning.
But till that happens, I think the ooma VOIP offer does not cut the ice and $400 is a big commitment for a product which is not mature, fraught with risk and not fully tested as yet.
We lately update this post with a new fresh review and special coupon offer by Ooma. Please check our latest Ooma Review
Quick Update: Ooma is offering a special coupon code which will give you this enticing VOIP service for $349 instead of $599 (Retail Price). You can use our coupon : ooma coupon
This article is written by Alok Saboo, Alok is a PHD Student in Marketing at Smeal College of Business, Pennsylvania State University.
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