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PX Eliezer7
Premium
join:2008-08-09
Hutt River
kudos:13
Reviews:
·callwithus
·voip.ms

1 edit
reply to Will Hill

Re: The Ooma Telo is now down to $150 ... what is going on?

I'm opposed to VoSP with bad business plans---I have said this about Vonage many times, because of their high costs of acquisition, operation, and retention.

I am in favor of VoSP with good business plans.

I've been very consistent about this.

PX Eliezer7
Premium
join:2008-08-09
Hutt River
kudos:13
Reviews:
·callwithus
·voip.ms

1 recommendation

Ooma is like buying a cow and hoping she will always give you milk even if you never feed her again.

-------------------------------------

Vonage is like buying a cow that gives you good milk, but that needs very expensive special feed. It remains to be seen if the income from selling the milk will leave a profit after the expense for the special feed.

decades

join:2005-01-17
San Francisco, CA
reply to pandora
we love the innovation but hate the shady business plan.

nitzan
Premium,VIP
join:2008-02-27
kudos:8
reply to Will Hill
said by Will Hill:

[Using that flawed logic ("the consequences of failure"), you should equally be opposed to the existence of Vonage (as well as any major VoSP), due to "the consequences of failure" of such VoIP provider.
The difference is that if Ooma stopped advertising and selling devices right now - they'll be out of business within a very short time because they get no revenue whatsoever from most customers.

Vonage on the other hand - while they do spend ridiculous amounts of money on advertising - if they stopped advertising right now they'd actually turn a profit. In other words if it's a choice between bankruptcy and a smaller user base - they can still opt for the smaller user base and become profitable instantly. Ooma doesn't have that option.

Mango
What router are you using?
Premium
join:2008-12-25
www.toao.net
kudos:13

1 edit

1 recommendation

reply to PX Eliezer7
And PAYG VoIP is like...

...having as much milk as you need, at any time, that never goes bad.

And, you don't have to worry about paying for the care and feeding of a freaking cow.

m.

dbwilson
Premium
join:2000-06-19
Fayetteville, GA
reply to pandora
I don't think the discounts are quite the harbinger of doom as some folks are hoping for. Just a few points to consider regarding the aggressive pricing a few days before Christmas for Telo:

For some time before Telo arrived on the scene, the Hub/Scout combo commonly sold for around $229. According to an interview Rich Buchanan gave on Sept. 8 ( »www.fiercevoip.com/story/it-expo···09-09-08 ), the Telo costs less to manufacture than just the Hub, so seeing the Telo sell for less than the Hub/Scout combo would not necessarily mean a corresponding drop in margin. A price of $199 for a Telo may actually represent a higher margin than $229 did for the Hub/Scout combo.

The $50 gift certificate at Amazon is for any Telo sold by any merchant on Amazon, which means it is no doubt paid for in large part by Ooma - but certainly does not cost Ooma $50 because it is a gift certificate, not cash. Only one merchant on Amazon, DataVision, is selling Telo at $199 right now. Amazon has gone back up to $249.99 on their own Telo pricing.

The aggressive pricing and gift certificate is apparently having the desired impact on sales through Amazon, as Telo's sales rank right now is:

#1 in Electronics > Office Electronics > Telephones & Accessories > VoIP > Phones
#1 in Electronics > Computers & Accessories > Networking Products
--
Leave It On!

mazilo
From Mazilo
Premium
join:2002-05-30
Lilburn, GA
kudos:4
reply to IanR
said by IanR:

What we do know about Oooma is how much money they have raised.
»www.bizjournals.com/sanfrancisco···y20.html
What we don't know is how they will turn their business model into profitability.
Ooma has been raising $$$ from investors since day 1. AFAIK, a profitable company that makes $$$ doesn't need to raise $$$ from investors. I am sure you can decide for yourself if Ooma is a financially healthy company. If you think Ooma is financially stable, feel free to invest your $$$ to get Ooma services. Otherwise, please stay away from Ooma. Don't say we didn't warn you!
--
Mazilo always prays for FREEBIES!
UK Phone: +44-703-194-2574

nitzan
Premium,VIP
join:2008-02-27
kudos:8

1 recommendation

reply to dbwilson
said by dbwilson:

so seeing the Telo sell for less than the Hub/Scout combo would not necessarily mean a corresponding drop in margin. A price of $199 for a Telo may actually represent a higher margin than $229 did for the Hub/Scout combo.
There is no possible way a $30 price decrease can represent a better profit margin. In order for that to be true the hubs would've had to cost at least $40-50 or more to make to begin with - which I doubt is the case. The difference between the cost to make the devices is probably more like $3 a pop rather than $30.

dbwilson
Premium
join:2000-06-19
Fayetteville, GA
said by nitzan:

said by dbwilson:

so seeing the Telo sell for less than the Hub/Scout combo would not necessarily mean a corresponding drop in margin. A price of $199 for a Telo may actually represent a higher margin than $229 did for the Hub/Scout combo.
There is no possible way a $30 price decrease can represent a better profit margin. In order for that to be true the hubs would've had to cost at least $40-50 or more to make to begin with - which I doubt is the case. The difference between the cost to make the devices is probably more like $3 a pop rather than $30.
While sales prices are there for all to see, pulling numbers out of the air on COGS is pointless, I could make up numbers to support my speculation that would be just as much a WAG as yours. None of us know what the cost difference is between the Telo and Hub, only that someone in a position to know in Ooma has publicly stated that Telo is less. We don't know what cost the Scout adds to the Hub/Scout combo, but it is certainly not free.
--
Leave It On!


KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
reply to rugby
No, I think it is because they chose something else and they want their choice to "be the best". IE, Fanboi style.

They didn't choose Ooma and say it's because Ooma is going down. So we wait. And wait .... and wait... and Ooma keeps on ticking. I don't mind. I've broken even now on the savings over my old service. Even if they fail in the future, I've saved money over what I was paying.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini


KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
reply to nitzan
I don't think Ooma's plan is to provide people with free service.

I think they offer the hardware cheap to get the people in the door, and then when people find out they like Ooma, they will pay for premier services, and buy International plans and the like, buy new fancy hardware, etc things they can make profit on.

I don't think the plan is "Free for life."
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini


KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
reply to Will Hill
said by Will Hill:

said by PX Eliezer7:

Rather, ooma is a danger because of the consequences of failure.
Using that flawed logic ("the consequences of failure"), you should equally be opposed to the existence of Vonage (as well as any major VoSP), due to "the consequences of failure" of such VoIP provider.
Hell, using that logic, nobody had better go into business anywhere and take a risk, because, they may fail!
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini


KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
reply to decades
said by decades:

we love the innovation but hate the shady business plan.
Just because *YOU* don't know or understand the business plan doesn't mean that it is somehow shady or misguided.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini


prestonlewis
Premium,MVM
join:2003-04-13
Sacramento, CA
said by KrK:

we love the innovation but hate the shady business plan.
Just because *YOU* don't know or understand the business plan doesn't mean that it is somehow shady or misguided.
1. Many, many people question ooma's business plan and using the word "shady" is fair in my opinion.
2. ooma promises "free calls" for the life of the unit yet they apparently really need people to pay for extras to keep cash flowing in.

"No free lunch" is what sites like FierceVOIP and Techrepublic say about ooma. Ooma promises free calls but in reality they really need extra income to keep the lights on or face shut down. Hence ooma's promises of free calling are "shady". If most customers don't pay for extras, they're going to fold. If customers do pay for extras, it's not all the "free" now is it?

About 25% of ooma customers pay for extras. The expected lifetime of the ooma device is 5 years. Calculate expected termination fees, payments to Best Buy for shelf space, and the continuing falling price for ooma devices does not bode well for ooma's future.

It's pretty common to read customer reviews that include the words "pyramid scheme". In other forums, happy and satisfied ooma users speak about concerns over the service crumbling when the last person buys an ooma device.

So attacks on ooma's business plan is fair game in my opinion. Advertising "free" calls after buying the device yet depending on selling extras to a huge number of customers is shady.


n1zuk
making really tiny tech things
Premium
join:2001-10-24
Malta
kudos:2
reply to Aveamantium
said by Aveamantium:

No offence, but during the time that all the "gloom and doom" about Ooma has been going here at dslreports, most of us have already broken even on our initial investment as compared to other traditional VoIP services.
Don't the early investors in pyramid schemes usually make out well on their investment?
--
New to Forum Life? Click here and learn.

pandora
Premium
join:2001-06-01
Outland
kudos:2
Reviews:
·ooma
·Google Voice
·Comcast
·Future Nine Corp..
reply to nitzan
said by nitzan:

3. If enough people get burned - the FCC may act and enforce stricter regulations on VOIP providers. Many of the smaller providers will not be able to withstand such regulatory burden.
Thank you for a well thought out reply. I agree with the danger Ooma represents to VOIP. I'm not as certain that failure is the only possibility (Ooma can change its TOS quickly and begin to charge). Of all the dangers, I agree that your #3 (quoted above) is the greatest. It would be very unfair if Ooma indirectly, due to government concern, brings down small VOIP shops who do have sustainable business models.
--
"People demand freedom of speech as a compensation for the freedom of thought which they seldom use."

pandora
Premium
join:2001-06-01
Outland
kudos:2
Reviews:
·ooma
·Google Voice
·Comcast
·Future Nine Corp..
reply to decades
said by decades:

we love the innovation but hate the shady business plan.
I did read a few positive comments in this thread about Ooma's innovation. Thanks for that. I personally wouldn't define Ooma's business plan as shady, but as unknown. However I understand why many feel it is shady. Only time will tell what happens.

The only arguments for Ooma viability currently is for it to make a profit from premier subscriptions. The last time I checked Ooma claimed 28% of its users subscribed to premier. If true, this does generate an ongoing revenue stream. At a rate of about $100 per year per premier user, or about $25 per Ooma user per year (dividing the $100 by 4). Telo users will pay an additional $12 per year after the first year in addition to the average of $25. For Telo users the average income for Ooma (assuming they use premier at the same level as hub users) will be about $37 per year.

$37 per year sounds very low for 5,000 outgoing domestic minutes and a phone number per month, but this seems to be where Ooma is headed for the time being. Ooma recently introduced an international long distance plan, and appears to have other premium services in the works. How well, and if, those services will draw sufficient income, only time will tell.
--
"People demand freedom of speech as a compensation for the freedom of thought which they seldom use."


Aveamantium

join:2006-10-02
Loveland, CO
reply to n1zuk
I honestly think Ooma is trying to ramp up their Premier Services such that more and more people will sign up. Think of their basic tier as a teaser. I've heard 25-30% of the current users currently have premier and it sounds like there will be even more features introduced at the CES (most likely requiring premier).


tom thomas

@comcast.net
reply to nitzan
said by nitzan:

said by dbwilson:

so seeing the Telo sell for less than the Hub/Scout combo would not necessarily mean a corresponding drop in margin. A price of $199 for a Telo may actually represent a higher margin than $229 did for the Hub/Scout combo.
There is no possible way a $30 price decrease can represent a better profit margin. In order for that to be true the hubs would've had to cost at least $40-50 or more to make to begin with - which I doubt is the case. The difference between the cost to make the devices is probably more like $3 a pop rather than $30.
there is also i different cash flow dynamic as a result of the annual regulatory fee charge to telo users but not hub users.


tom thomas

@comcast.net
reply to pandora
although it is a very different product it would not surprise me if sales of oomas are dropping dramatically due to the popularity of magicjacks. the MJ is causing people who are looking for an alternative to landline phones and cable company VOIP to not accept very much of either an initial fee or ongoing expense. MJ has set the price to beat when it comes to discount consumer VOIP.

PX Eliezer7
Premium
join:2008-08-09
Hutt River
kudos:13
Reviews:
·callwithus
·voip.ms
reply to KrK
said by KrK:

Hell, using that logic, nobody had better go into business anywhere and take a risk, because, they may fail!
Not at all.

There are degrees of risk. Life is more than just an On/Off binary switch.

Good bankers, smart investment capitalists, and ordinary folks investing their savings, evaluate those risks every day when deciding where to put their money.

For example, in the current climate, a car maker that wants to focus more on midsize energy-efficient cars is a better risk than a car maker that wants to push Hummer-type vehicles.

Prediction is admittedly not perfect, otherwise investing would be easy....

------------------------------------

Ooma still pushes free lifetime service.

»www.ooma.com/products/cost-savings

If they change their model, they ain't Ooma any more.


PX Eliezer7
Premium
join:2008-08-09
Hutt River
kudos:13
Reviews:
·callwithus
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reply to tom thomas
said by tom thomas :

MJ has set the price to beat when it comes to discount consumer VOIP.
MJ is a major challenge for ooma.

I imagine that the ooma folks are tearing their hair out and I don't blame them.

There are a lot of folks in this country who are incapable of understanding the major differences between the devices.

Or even if they DO understand, they'll go the cheaper route with MJ anyway.

dbwilson
Premium
join:2000-06-19
Fayetteville, GA
reply to pandora
Earlier in this thread, I said that the $50 gift card offered at Amazon was for Telo from any Amazon merchant, and that this meant that Ooma was no doubt footing the bill for it, but in digging a bit deeper (initiating a purchase of Telo with the coupon included) it seems that is not correct. The gift card is only for the Telo sold by Amazon at $249.99, so the whole premise of this thread of a $150 Telo does not exist, at least at this time.
--
Leave It On!


SMCinAZ
Premium
join:2000-11-29
Glendale, AZ
reply to pandora
Why pay for Premier? I have 0 need for it, thus never pay a dime beyond my original purchase of the hub 7 months ago off of Ebay for $182.

For phone messages i use an answering machine. Imagine that.

For everything else, I use a Sprint Sero plan cell phone at a net of $12 per month after discounts, etc., for 500 minutes.

So, again, why Premier?

adowla

join:2009-12-16
New York, NY

1 edit
My main reason was the international bundle. $15/month gets my family 500 minutes to Bangladesh with fantastic sound quality. I can't get that anywhere else. Vonage used to offer unlimited to Bangladesh with their Asia plan and dropped it. Lingo I believe adjusted their offering from unlimited to 300 minutes. Neither of them had the inherent voice quality that Ooma does (guessing due to QoS?). And there's the idea going around that Ooma will offer unlimited international minutes to the countries involved in their international bundle for an extra $5/month shortly, something I definitely would sign up for.

Is the business model unsustainable? Possibly. But I've gotten my investment back already, and I'm getting the best voice quality I've ever had to Bangladesh, so I'm a pretty happy customer.

pandora
Premium
join:2001-06-01
Outland
kudos:2
Reviews:
·ooma
·Google Voice
·Comcast
·Future Nine Corp..
reply to dbwilson
said by dbwilson:

Earlier in this thread, I said that the $50 gift card offered at Amazon was for Telo from any Amazon merchant, and that this meant that Ooma was no doubt footing the bill for it, but in digging a bit deeper (initiating a purchase of Telo with the coupon included) it seems that is not correct. The gift card is only for the Telo sold by Amazon at $249.99, so the whole premise of this thread of a $150 Telo does not exist, at least at this time.
The Telo was $199 @ the time of my post. 249 with 50 off isn't a big deal IMO.
--
"People demand freedom of speech as a compensation for the freedom of thought which they seldom use."

dbwilson
Premium
join:2000-06-19
Fayetteville, GA
said by pandora:

[The Telo was $199 @ the time of my post. 249 with 50 off isn't a big deal IMO.
Yep. It was $199 at the time of my post last night, but not from Amazon itself, just through another retailer listing on Amazon. Now no one has it for $199 AFAIK. A rapidly changing price picture. The only $199 offer that does not involve gift cards for the buyer that I'm aware of right now is via the referral codes that current customers have.
--
Leave It On!


ptrowski
Got Helix?
Premium
join:2005-03-14
Putnam, CT
kudos:4
reply to tom thomas
said by tom thomas :

although it is a very different product it would not surprise me if sales of oomas are dropping dramatically due to the popularity of magicjacks. the MJ is causing people who are looking for an alternative to landline phones and cable company VOIP to not accept very much of either an initial fee or ongoing expense. MJ has set the price to beat when it comes to discount consumer VOIP.
I would doubt that highly due to the fact that people don't want to automatically have to keep their computer on all the time for a main phone line.
--
"So, Lone Starr, now you see that evil will always triumph because good is dumb."

Have you been touched by his noodly appendage? »www.venganza.org


dcurrey
Premium
join:2004-06-29
Reviews:
·Time Warner Cable
·Cincinnati Bell
·ViaTalk
reply to dbwilson
said by dbwilson:

Yep. It was $199 at the time of my post last night, but not from Amazon itself, just through another retailer listing on Amazon. Now no one has it for $199 AFAIK. A rapidly changing price picture. The only $199 offer that does not involve gift cards for the buyer that I'm aware of right now is via the referral codes that current customers have.
Costco still shows it for $199. Includes 6 months premier and $100 international credit.

»www.costco.com/Browse/Product.as···nav=&s=1

PX Eliezer7
Premium
join:2008-08-09
Hutt River
kudos:13
Reviews:
·callwithus
·voip.ms
reply to ptrowski
said by ptrowski:

I would doubt that highly due to the fact that people don't want to automatically have to keep their computer on all the time for a main phone line.
Some don't understand that at the time of purchase.

Some keep their computers on anyway.

Some understand the issue but don't mind because they will use MJ mainly for outbound calls, especially "LD".

Some understand the issue but don't mind because they are OK if their inbound calls go to voicemail.

After all, so many people have given up their home "landline" althgether---no POTS, no cable phone, no Voip, just cellular.