Tuesday, June 23, 2009

Ooma gets more Funding (and will make a bigger Crater)

Well, well, this is like the Herpes virus of VoIP: Ooma got another round of funding - a whole $14 million's worth. I guess by the preceding sentence I am nowhere near as optimistic about their survival as the author of the column I linked to.

While I applaud Ooma for their ability to convince some people to hand over other peoples' money, one needs to look between the lines of what's going on in the VoIP world:

After Sunrocket, any hint of competition in consumer VoIP pretty much ended. Sure, there is MagicJack rattling Vonage, but their appeal is limited to people who leave their computers on all the time. With most computers today drawing more than A/C units and rising power prices, that can't last.

Lingo and Packet8 exist, but have gone silent, leaving Vonage to the prize. Vonage has serious issues with customer turnover (called "churn" in the industry), and has flirted with the contracts by other names - "cancellation fee" and "rebate recovery fee" come to mind - following the lead of the mobile providers in the race to the bottom, since customers can't leave anyways.

An then there is Ooma. With an offering most people can't understand, the investors are throwing good money after bad. Look at the funds you have in your portfolio, and make your corrections.

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