February 16, 2012 5:30 AM
If you’re new to my blog or the VoIP space, you may not know Ooma. On the other hand, if you go back far enough with me, hopefully you’ll recall I was one of the first to trial Ooma as well as write about them. The VoIP space has evolved since then, and while my early posts were not optimistic about Ooma’s prospects, that view was balanced by their strengths, which I believe have served them well to survive into the present.
Two things in particular stood out for me, especially compared with OTT services. First is voice quality, which I feel has always been better than any other VoIP service I’ve used; with Vonage, Primus and Skype being my primary reference points. Second is how they’ve packaged the offering – notice that I didn’t call it a product or a service. That’s where I think they’ve done a good job – they’ve managed to productize VoIP by tying it to an end device you buy in a store.
Ooma is unique that way, and their slick packaging and product design really does make you think of Apple. That’s definitely a plus in my books – not just because it makes you feel good about dishing out the cash up front to buy Ooma, but also because you’ll be more likely to recommend this cool-looking/cool-sounding thing called Ooma to friends/family, which is a pretty important driver for their growth.
Being an early adopter, I could go on about the product-based elements of Ooma, but this post is tied to more current events that I think need some amplification. First is the fact that Ooma is now offered in Canada. When I was invited to trial Ooma, the service was strictly U.S.-based, and being in Toronto, they could only assign me a DID with a U.S. area code. Last November, their Canadian service was launched, so in addition to my initial Ooma number, I now have a second number with a Toronto-based area code. Due to my long and unique relationship with Ooma, I’m pretty sure I’m the only Ooma user in Canada to have this setup with two inbound DIDs.
I haven’t posted about this until now for a few reasons. Aside from being busy with projects and conferences, I didn’t actually get my Canadian Ooma number until recently; plus, I wanted to spend some time using the service with both numbers. On that front, I can say that the call quality has remained great, and now they tout Ooma’s “HD-quality”. That moniker didn’t exist a few years ago, and I’m glad to see them using it as a differentiator. I say that for two reasons.
First, consumers need to understand that VoIP can actually be better than TDM, and at minimum, they must perceive that quality will not be compromised when switching. Today, this actually applies to two scenarios. The main one is switching from their incumbent where they’re going from TDM to VoIP, but there is also another market opportunity in play here – VoIP subscribers from other services. I find the latter a more interesting scenario since there are so many options available. Most are OTT, and being run over the public Internet, quality can be highly variable. In my experience, Ooma doesn’t have this problem (you should read up on their peer-to-peer architecture on their website as a starting point to understand why), but there’s another factor to consider as well.
Most VoIP services have no contracts, so switching costs are basically nil. This plays nicely into Ooma’s value proposition, whereby your only cost is the roughly $230 upfront layout for the Telo box. You can add some higher-end features, but the basic service is free from that point on, so knocking out the $30+ monthly cost of an OTT VoIP service should be a no-brainer.
The second factor that makes HD attractive is the comparative quality against mobile calling. You may rightly ask "who the hell uses a landline these days, dude?", but bear with me. I know people like this have very short attention spans, but put your so-called smartphone down for a sec and read on - you might actually learn something.
When Ooma first came out, mobile wasn’t as entrenched, but today, it’s really killing all forms of landline telephony. Fair enough – even I concede that mobile will eventually rule – but there are still tons of landlines out there, and in the overall scheme of things, Ooma is still a pretty good deal to have as your backup service at home. It’s more economical than TDM, and with HD, the calling experience is way better than any mobile service or on any "smart" phone. For people who routinely use their mobile phones at home – I have never understood the logic there – I’m sure they would revert to landline once they experience how good Ooma sounds in comparison.
My main message here is to get the word out that Ooma is now available in Canada. The service has been available since November – and yes, it has 911 – with distribution where you’d expect to find it – namely Best Buy, Future Shop, Canada Computers, London Drugs, select Costco locations, and Amazon.ca. As their website shows, some of these channels are in-store only, some online only, and for Costco, both options exist.
VoIP has gained more traction in the U.S., namely because there are more offerings, and of course, Vonage created awareness with its mass market advertising. We got a little of that in Canada, but not much, plus the incumbents have had a pretty good hold on the market. That’s been changing, though, as cablecos have made big inroads with VoIP, and with the recent addition of new wireless players, mobile adoption has been growing – but still lags the U.S. As such, there’s still good upside here for VoIP, and while Ooma has a distinct offering, I believe there’s an appreciable segment of the market that will see value here.
There’s one more thing to add to strengthen this story. More recently – at CES last month – they announced their HD2 cordless handset. I think call quality is the killer app for Ooma, and to maximize this opportunity, you need the right handset. Existing analog or digital home phones will work just fine, but you’ll need HD2 to get the true HD experience. Just like watching HD TV for the first time, once you experience this, it’s hard to go back. Of course, this also gives Ooma another product to sell and adds to their top line revenues, but it makes the service stickier. A top quality audio experience is the best way to keep Ooma customers, especially those who live on their wireless phones.
Not only that, but HD2 takes VoIP beyond free phone calls. The phones have a 2” color screen, which shows photo caller ID. Now the experience starts to feel more like a mobile call, plus there’s a social media tie-in by supporting Facebook profile pictures as well as displaying contact lists from IM platforms like Google and Yahoo. That’s pretty key, since happy Ooma users can now use word-of-mouth virally. I’ll take that path any day over expensive TV advertising to acquire customers as cheaply as possible.
Before you get too excited about this, though, we are in Canada after all. HD2 will be available in the U.S. next month, but won’t likely be in Canada until the spring. Just be a little patient, folks, but your time will come too in the Great White North. Hopefully, the takeup will be good, and I’ll revisit Ooma once there’s time to gauge their success. Until then, drop me a note if you’d like to call either of my Ooma numbers and experience it first-hand. I’ll be happy to oblige!
Originally posted on Jon Arnold's Analyst 2.0 Blog
Jon Arnold is Principal of J Arnold & Associates, an independent telecom analyst and marketing strategy consultancy. The consultancy’s primary focus is on IP communications and disruptive technologies, such as VoIP, mobile broadband, telepresence, unified communications, social media and Web 2.0.