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ooma chief talks with FierceVoIP
Consumer VoIP was ratcheted up a notch over the summer with the introduction of service in a self-contained device. The future-phone sporting the company name of ooma quickly grabbed headlines, partly because the ooma's creative director is television celebrity Ashton Kutcher, but also because of an appealing design. The ooma router, dubbed the "Hub," looks a lot more like an ultra modern intercom controller than the typical little gray box with blinking blue lights.
ooma's launch strategy is unique to VoIP as well, although TiVo did something very similar years ago: offer free service to early adopters for the price of the device.
The ooma phones were beta launched in June for $399, a price that guarantees three years of free service. The commercial launch is scheduled to take place this month.
Andrew Frame is the founder and CEO of ooma, based in Palo Alto, Calif. His credits include starting an ISP at age 15 before joining Cisco, and at 17, becoming the youngest person there to earn that company's top technical honor. Taking the same award a second time that year put him in the company of only seven other people. Frame started developing ooma in 2005. The company has raised $27 million from Draper Fisher Jurvetson, The Founder's Fund, Worldview Partners, Draper-Richards, WI Harper and other investors, and board members include the co-founders of TiVo and Ariba. ooma's formidable pedigree enters an equally formidable consumer VoIP marketplace, where standalones have yet to generate a profit from service. FierceVoIP wanted to know what ooma intended to do differently, and Frame agreed to answer a few questions from editor Deborah McAdams.
FierceVoIP: Tell us a little about yourself and how you came to develop ooma?
Andrew Frame: I have spent most of my career working with network infrastructure. I worked at Cisco fixing and deploying large-scale service provider networks for some time, and then joined core router startup Procket to work on a terabit core router. It was time to move into the application space, and the time was right to form ooma, whose mission is to un-fossilize telephone service and bring forth a new world of applications and services.
I then set out to build the strongest possible team to build and bring ooma to market. I can't say enough positive things about the people at ooma; it is their passion, dedication and creativity which makes it all possible.
FierceVoIP: How many White Rabbits (ooma's term for beta testers) have you had?
AF: We have had over 10,000 requests and are responding to the interest and demand for ooma as quickly as we can. As of mid-August, we have fulfilled slightly more than 1,000. We have a great appreciation for the support of our newly formed customer base. We are thrilled with the passion the customer base has demonstrated so quickly!
FierceVoIP: How many pre-sale orders does ooma have?
AF: We are not disclosing this information at this time.
FierceVoIP: You've said ooma is 911/e911 compliant, is that correct?
AF: Yes, and it is important to note that we support both real 911 and Internet-based e911, and we offer consumers the choice.
If you are OK with broadband quality e911, then we allow you to operate using purely broadband with no landline. If you are uncomfortable with broadband quality e911 and broadband reliability, then we allow for the integration of your basic landline into our service and it will use the 911 you are used to.
The market reality is that around half of residential VoIP users maintain a land line for 911 and reliability. Today, it is a separate phone number and separate account that doesn't integrate with their VoIP service.
FierceVoIP: The ooma Hub initially carries a one-time charge-$400 now; $600 as of 2008. Does the company intend to pay the 911/e911 service fees, or will subscribers be responsible for those fees.
AF: The product is currently priced at $399 for the Hub which includes domestic calling, the Instant Second Line, and the Broadband Answering Machine, all without monthly fees. In the future, there will be enhanced services that will have monthly fees. Placing an international call is very similar to Skype. Consumers establish a prepaid account from our online interface and as calls are placed the money is automatically deducted.
FierceVoIP: The ooma Hub fine print says users won't be charged for service for at least three years. Why three years, and what happens after that?
AF: We are required by the accounting rules to establish a reasonable service life. It is not uncommon to see such limitations in the fine print. In fact, if you look at the fine print for Tivo's "lifetime service" it also mentions three years being the definition of "lifetime." What really happens over time may be quite different with many people upgrading their device or service level well before the three years are up, while others may have the original device much longer than three years.
FierceVoIP: What is the company's projected cost of termination fees in those three years?
AF: We do not disclose these details, but as you can imagine, we have quite an advantage given our P2P architecture. In addition, traditional termination fees have been declining significantly and are expected to continue to decline over time.
FierceVoIP: Does ooma use a VoIP peering architecture, and if so, what percentage of traffic is then pure IP?
AF: We support industry standards, and hope to be peering with others soon. We are strong believers in an all-IP future. Critical mass of VoIP users will be reached cumulatively by the industry as a whole. You bet we'll be part of this.
FierceVoIP: How is ooma different from PhoneGnome, aside from the physical aspect?
AF: I'll start with a quick feature comparison.
Ooma:
- Custom Digital Voice Appliance, plug-and-play, control of all software, platform architecture
- Unlimited free domestic calling
- Broadband Answering Machine allows for live call screening, the ability to send live calls to voicemail, check from web, etc.
- Instant Second Line automatically enables a second line on a phone number using existing equipment
- Box will receive automatic upgrades and bug-fixes.
PhoneGnome:
- Resold Cisco ATA device, not true plug-and-play, no control of the software
- Free calling between PhoneGnome devices, pay for all other calls
- Pay for Voicemail
- No second line
In addition to the data-sheet feature comparison, there are important intangibles as well. When designing ooma, the requirement was that it had to be simple enough for our moms to install and use, yet powerful enough for them to fall in love with. We wanted to create a new category of consumer product that would give average consumers access to the power and promise of VoIP. It is not only plug-and-play, but the features are intuitive and are accessed automatically without having to read an instruction manual.
We are a company with a laser focus on the user experience. Maintaining a complete and holistic control of the experience requires a more committed approach to development. We do not operate a softswitch, we don't use off-the-shelf ATAs, and we don't even use an off-the-shelf OSS. We had many unique requirements, so we had to build a lot of this stuff on our own.
FierceVoIP: Olga Kharif in Business Week gave the ooma device an unfavorable review, mostly for audio quality, but also for a customer service hang-up. What's your take on her assessment?
AF: Nearly every review so far has been great; notably, we received praise from The Wall Street Journal and The New York Times. In addition to the support we've received from reviewers in the media, we've enjoyed seeing all of the positive feedback from our user base.
We have a strong competitive advantage when it comes to voice quality--we have developed the system ourselves with quality as an imperative. We use better codecs and better QoS queuing algorithms on the hardware. It all boils down to better quality.
For example, we have one user whose father is hard of hearing and claims his father will only allow him to call him from his ooma. I believe that Olga's experience was atypical in terms of both the voice quality as well as the customer service experience. It was an accident that the phone was disconnected, we called her back immediately.
FierceVoIP: Much of the audio quality of any VoIP device depends on the network. You have no control over that. Would you recommend that people do multiple speed tests before buying ooma?
AF: Agreed, although we don't control the broadband networks, we are doing everything possible to maximize the quality over the third-party networks. We have the best possible VoIP experience in the industry. You can try it for yourself. We have a 30-day money back guarantee.
FierceVoIP: Will you be partnering with any carriers, i.e., cable operators or ILECs?
AF: That is the plan. We are friendly with the incumbent industry. Our platform is essentially an application that integrates both broadband networks and the PSTN, which they've done a great job building. Our focus is to build outstanding products and provide constant innovation on the service side.
The question, which we are answering, is, "In tomorrow's consumer telecom environment, which applications and services are generating revenue?"
We have a compelling roadmap of cool and unique features that are all high-value for consumers, but generate recurring revenue.
FierceVoIP: Is there an ooma mobile device in the works?
AF: We are not ready to make any announcements in that area yet.
FierceVoIP: What is the origin of the swirly ooma logo?
AF: It is an overhead shot of a huddle. That huddle exemplifies the community joining forces to bring forth a fresh new choice for consumer telephone service.
Comments
Posted by Anonymous | September 4, 2007 - 1:58pm
As a PhoneGnome user, I found Mr. Frame's comments about PG completely misleading. I subscribe to the basic service and get FREE voicemail and a free fully functional second line. If you follow PG's installation directions and use it in concert with a POTs line like Ooma does, you have a second line with NO blockage ever as it doesn't operate in line sharing like Ooma.
Posted by Dennis Peng | September 4, 2007 - 3:40pm
In terms of voicemail, PhoneGnome provides a basic service for free which e-mails the voice message that was left by the caller. Traditional capabilities of a voicemail system such as customized greetings and the ability to check your voicemail through the telephone (at home or on the road) is a paid service. Even with the paid service, a caller is unable to leave you a message if your POTS line is in use.
ooma takes the voicemail experience to a new level by providing:
(a) a convenient answering-machine experience for easily checking message at home without having to pick up their phone or sit down in front of a computer
(b) the ability for the user to screen their calls and only answer the phone after they recognize the caller's voice or know what they are calling about
(c) the ability for the user to check their messages remotely by whatever means they like, whether it is on-line or through the telephone
(d) one-touch access to Do Not Disturb and the ability to send any call to voicemail
It's all the convenience of an answering machine with the power and functionality of voicemail, and more. That's the ooma Broadband Answering Machine feature.
As for providing a second line, PhoneGnome does not give you a second line - it provides your traditional 1.5 lines of calling, which is a standard phone line with call-waiting. Some PhoneGnome users have figured out how to use a phone that is not connected to your PhoneGnome to make another call while the PhoneGnome is in use, but it only works under certain call scenarios (when the first call was not a incoming or local outgoing POTS call) and may entail you paying your local phone company for one of the calls. It's a resourceful hack, but not a seamless experience.
With an ooma Scout device, the Instant Second Line feature converts your phones from one line phones to two line phones, giving the household the capability of having two distinct and simultaneous phone conversations from different phones in the household. All phones connected to an ooma Scout device have access to both lines (each with unlimited calling within the US and cheap international rates), the ability to switch between lines, join an existing call in progress, put calls on hold, conference the lines together, or split the conference apart. All this can be done with an intuitive 2 button interface.
And to clarify, under no circumstance would an ooma user ever have their calls blocked or be unable to use the full benefits of their Instant Second Line. Our Distributed Termination technology is transparent from the user's standpoint. They can always make and receive calls like normal, regardless of whether another ooma subscriber is using their phone line or not.
Dennis Peng
Director, Product Management @ ooma
Posted by Anonymous | September 4, 2007 - 5:33pm
Dennis, with all due respect to your position at Ooma, you need to do a little more homework. And for the record, I'm not here to defend PhoneGnome -- I'm a user not an employee.
Yes, you are correct as far as basic vs. premium voicemail features go. Mr. Frame made a blanket statement that PG had no voicemail, it does.
As for the second line, you are simply wrong. Following PG's installation directions -- and that of many other VoIP providers -- I configured my PG to dial-out on line 2 of my 2-line system. Line 1 is of course my POTs line. So in practicality here's how it works.
For incoming calls, both my lines ring (as they are both assigned my POTs number. I answer on line 1. If a second caller dials my number line 2 rings as it's assigned the same number. I can place line 1 on hold, answer line 2 or someone else can. Both lines are in use -- the first through the POTs termination, the second through broadband (VoIP) termination.
For outbound calling, the same holds true in reverse. I place all my LD calls on line 2 through IP. Anyone else in the house can still pick up line 1 and place a free local call or a LD call at my carrier's rate. Full, two line functionality with a single PG box -- on all lines in my home -- not just those with added Scouts at additional cost or Ooma at whatever price.
Of course, as I'm not sharing my line -- as with Ooma -- I can never be blocked or inconvienced from making a call. And when the regulatory bodies step in and stop Ooma from its theft of terminating access I won't be left high and dry.
Posted by Dennis Peng | September 4, 2007 - 10:11pm
I'd love to better understand how you have your PhoneGnome set up at home. It sounds like you may have a call-hunting feature on your phone line and a cordless two-line phone system, and have plugged in a POTS line and a VoIP line (which is your PhoneGnome service). I have a couple questions of clarification - you can reach me privately at dpeng@ooma.com.
ooma's product was built from the ground-up to offer 2-lines of "hybrid" service and hide the complexity of which line is POTS and which line is VoIP. The user shouldn't need to worry about which line is which and/or "plan" their communication to maximize their cost savings. The user should be able to just use their phone without having to think. Additionally, they should be able to reap the benefits with their existing phone equipment, even if it is just a normal phone (most consumers probably do not have 2 line phones). Extending 2 lines of service throughout the house on all of your existing phone jacks and equipment dictated a unique architecture and product that did not exist in the marketplace and will enable a whole-class of new services for ooma subscribers in the future.
As I stated before, our Distributed Termination technology never inconveniences the customer from having their calls blocked inbound or outbound. That's an obvious objection that was solved early on in the product design cycle.
Posted by Josh | September 4, 2007 - 6:56pm
Hi. I am a gadget enthousiast, so I tend to buy every new device that comes out and I tend to read and follow all the gadget news. I also consider myself pretty technical - somewhat of an engineer when it comes to using new devices/services.
Finally, since I am about to describe VoIP usage in my household its good to know that my house has two adults and two teenagers in it and we have two phone lines plus all four of us have cell phones.
At one point, we used to have Vonage on one line and we had a normal phone service from AT&T on the other line. That used to cost us about $25/month for the Vonage line and about $55/month on the other line for local and long distance and 3-way, caller-id, etc.
So $80/month total for our household. We then dropped vonage and I installed PhoneGnome on that line that was before vonage. Since I am fairly technical, I got quite the kick out of installing PhoneGnome, because it was a full weekend of tinkering with my home network before I could get it to work. (Something that probably puts me in a small and rare crowd of people who have the time and patience to do but as long as I dont have to spend my weekends installing one for my neighbors that is OK for me!).
So anyways, not to brag, but I am doubtful any of my nontechnical friends could have figured out what I needed to figure out to get it to work. Nonetheless, once I got it working it worked ok and did what I expected it to. In other words, it provides similar functionality as other traditional VoIP solutions at similar prices (slightly lower than first traditional VoIP services) for my family.
Voice quality is tolerable - like a cell phone on the highway but not nearly as good as a tradtl pstn line. The features I was able to make work and use are similar to traditional first generation VoIP providers.
So I basically have the same use case that I did before with Vonage. One phone in our den is plugged into PhoneGnome and the other phones in our house are plugged into AT&T. So while we get some cost savings with PhoneGnome over Vonage (about $10-13/month) we still maintain two different pstn lines in order to make sure that I can use the phone at the same time one of my kids is using the phone and to ensure that my wife doesn’t complain about what she calls "fake 911."
So we were paying about $65-70/month with this setup which was better than the original set up we had with vonage but still more than I would like to spend of course.In early July, thanks to a friend, I was able to install ooma. So I now have about 45 days of experience with a new home phone setup (the ooma system) for my family.In this case though, I changed our setup and the amount of money we spend dramatically.
First things first, while I did set aside the whole weekend to install ooma thinking the time would be needed, I was actually done in about 15 minutes. My wife was shocked it was so easy and for the first time in five years of buying every gadget on the market gave her a reason to actually recommend a gadget to her friends and family.
So that was kind of cool to hear her tell her friends about ooma being as easy to install and use as it easy to use her kitchen appliances. More importantly though, I changed our setup at home in a big way.
I cut out one of the two lines. I now just have one pstn line with ooma running on it. All the phone extensions in our house (3 of them) are connected to ooma, so I don’t have to ask my kids to get off the phone when I want to use it. I also disconnected the AT&T voicemail and the AT&T 3-way, caller-id, etc.
So while of course $400 for the ooma Hub sounds like a lot and it is a lot for some people, the big difference for me is that I am now only spending $19/month for a basic line from AT&T, so I am saving approximately $40/month from before with PhoneGnome and $50/month from when I had Vonage.
So I am happy to brag about my usage of ooma in my house to family and friends because I know they are nontechnical but can still install it easily. And I know that even though $400 sounds like a lot that if they have a similar household as myself they will have made up the $400 in monthly savings in less than one year.
The last comment I will make about my family's use of ooma is that my wife and kids all agree that talking through ooma sounds way better than any of our past home phone conversations. It’s much better than a cell phone and sounds equal to normal pstn line conversation with no delays or static like other VoIP and cellphones as far as we can tell in the last 45 days.
So now with ooma my job as my household's CTO/CIO is no longer needed as it was before, and my wife is very happy with me every time she does the bills. The best way I can describe my upgrades I did from Vonage to PhoneGnome to ooma is that its like upgrading from one of those original mp3 players that came out in 2000 to the iPod Nano. While the original mp3 player worked ok (like PhoneGnome), its nothing like the Nano (like ooma) when it comes to usage, experience, performance, etc.
That is the best way to understand the difference between other VoIP solutions and ooma before even you take the big ooma cost savings into consideration...
Finally, since I am about to describe VoIP usage in my household its good to know that my house has two adults and two teenagers in it and we have two phone lines plus all four of us have cell phones.
At one point, we used to have Vonage on one line and we had a normal phone service from AT&T on the other line. That used to cost us about $25/month for the Vonage line and about $55/month on the other line for local and long distance and 3-way, caller-id, etc.
So $80/month total for our household. We then dropped vonage and I installed PhoneGnome on that line that was before vonage. Since I am fairly technical, I got quite the kick out of installing PhoneGnome, because it was a full weekend of tinkering with my home network before I could get it to work. (Something that probably puts me in a small and rare crowd of people who have the time and patience to do but as long as I dont have to spend my weekends installing one for my neighbors that is OK for me!).
So anyways, not to brag, but I am doubtful any of my nontechnical friends could have figured out what I needed to figure out to get it to work. Nonetheless, once I got it working it worked ok and did what I expected it to. In other words, it provides similar functionality as other traditional VoIP solutions at similar prices (slightly lower than first traditional VoIP services) for my family.
Voice quality is tolerable - like a cell phone on the highway but not nearly as good as a tradtl pstn line. The features I was able to make work and use are similar to traditional first generation VoIP providers.
So I basically have the same use case that I did before with Vonage. One phone in our den is plugged into PhoneGnome and the other phones in our house are plugged into AT&T. So while we get some cost savings with PhoneGnome over Vonage (about $10-13/month) we still maintain two different pstn lines in order to make sure that I can use the phone at the same time one of my kids is using the phone and to ensure that my wife doesn’t complain about what she calls "fake 911."
So we were paying about $65-70/month with this setup which was better than the original set up we had with vonage but still more than I would like to spend of course.In early July, thanks to a friend, I was able to install ooma. So I now have about 45 days of experience with a new home phone setup (the ooma system) for my family.In this case though, I changed our setup and the amount of money we spend dramatically.
First things first, while I did set aside the whole weekend to install ooma thinking the time would be needed, I was actually done in about 15 minutes. My wife was shocked it was so easy and for the first time in five years of buying every gadget on the market gave her a reason to actually recommend a gadget to her friends and family.
So that was kind of cool to hear her tell her friends about ooma being as easy to install and use as it easy to use her kitchen appliances. More importantly though, I changed our setup at home in a big way.
I cut out one of the two lines. I now just have one pstn line with ooma running on it. All the phone extensions in our house (3 of them) are connected to ooma, so I don’t have to ask my kids to get off the phone when I want to use it. I also disconnected the AT&T voicemail and the AT&T 3-way, caller-id, etc.
So while of course $400 for the ooma Hub sounds like a lot and it is a lot for some people, the big difference for me is that I am now only spending $19/month for a basic line from AT&T, so I am saving approximately $40/month from before with PhoneGnome and $50/month from when I had Vonage.
So I am happy to brag about my usage of ooma in my house to family and friends because I know they are nontechnical but can still install it easily. And I know that even though $400 sounds like a lot that if they have a similar household as myself they will have made up the $400 in monthly savings in less than one year.
The last comment I will make about my family's use of ooma is that my wife and kids all agree that talking through ooma sounds way better than any of our past home phone conversations. It’s much better than a cell phone and sounds equal to normal pstn line conversation with no delays or static like other VoIP and cellphones as far as we can tell in the last 45 days.
So now with ooma my job as my household's CTO/CIO is no longer needed as it was before, and my wife is very happy with me every time she does the bills. The best way I can describe my upgrades I did from Vonage to PhoneGnome to ooma is that its like upgrading from one of those original mp3 players that came out in 2000 to the iPod Nano. While the original mp3 player worked ok (like PhoneGnome), its nothing like the Nano (like ooma) when it comes to usage, experience, performance, etc.
That is the best way to understand the difference between other VoIP solutions and ooma before even you take the big ooma cost savings into consideration...
Posted by Anonymous | September 4, 2007 - 10:39pm
Mr Peng, I realize it's difficult to suddenly be cast as the expert for a product that your company doesn't even make, and I don't think anyone is well served by a he-said/she-said back and forth about PhoneGnome, but you started it. :) With so much mis-information flying about, you have to expect actual PG users to respond.
Your statement that with the PG paid voicemail "a caller is unable to leave you a message if your POTS line is in use" is patently untrue. PG can do it the EXACT SAME WAY Ooma does it, with busy-call forwarding on the POTS service. I do so on my line and I know it works. PhoneGnome even provides the info on their forums and blog to set it up. Ooma forces activation of such forwarding (at the customer's expense, including the monthly fees for it), whereas PhoneGnome lets the customer decide whether they would rather just let those calls ring busy (at no cost).
Also, we should point out that even the paid version of PG voicemail is only $20 per YEAR, so it would take a while to offset the cost of an Ooma box on that basis.
What a lot of people also don't realize is that with the PhoneGnome box, I can use ANY SIP provider, and that means there are options for free calling beyond just US calls (I get free calls to a couple dozen countries) and I can switch easily if one provider goes belly up or messes with their rates, without getting a new box or changing anything hardware-wise. Whereas with the Ooma box, I get free US calls (for either life or three years, depending on whether you believe the marketing or the legal statement at http://ooma.com/press.php) but my only option for non-US calls is the Ooma calling plan/rates which I'd wager I can beat given the vast number of SIP providers available out there. Plus I have to give all that money up front and hope I get a return or break even at some point.
And while we're tossing features back and forth, something you DON'T say is that while you brag about the Ooma users being able to screen calls (a cool feature), you fail to mention that the normal calls from an Ooma subscriber to a PSTN number via your beloved DT will have the Caller ID blocked, thus preventing the people I call on the PSTN from this exact same ability (and as a result, perhaps many such calls will just be rejected by the called party). I hardly call that "transparent from the user's standpoint."
I think some of the features of Ooma are legitimitely clever and cool, but all these false assertions and mis-statements hurt your credibility, IMHO.
Posted by Marty Hughes | September 5, 2007 - 10:51am
Great comparison between Phonegnome and ooma. I've been waiting for a clear comparison.
I have been hesitant to buy a voip product, and phonegnome is not for me. I'm not a geek and don't have the expertise or a free weekend to tinker around getting it installed. It's also not nearly as delicious as ooma. I am reading a lot about ooma and the more I read the more I seem to crave it.
Posted by James | September 5, 2007 - 8:10pm
Because I have a cable broadband connection and a vonage landline with 500 minutes a month, this solution does not satisfy my needs. If I had DSL and a conventional phone line with unlimited local it might make sense, but for now, that's not the case. It's an interesting idea though.
Posted by Anonymous | September 11, 2007 - 1:11am
Have been getting Your VOIP newsletter a short time. Have You written about Magic Jack for a one time fee of $40. Only takes about 5 minutes to start calling after hooking it up to cable and a telephone. No911. Works good so far.
Posted by fixsmith | September 20, 2007 - 2:34am
You folks here at FierceVoIP really should do a bit of research on the Magic Jack. Portable, Clear as a bell, USB to Phone jack adapter the is self installing and works with most touchtone corded or cordless handsets. Free calling to all US and Canada. $40.00 for the hardware and 1st year use. $20. for the second year. It will catch on like wildfire imho.
fixsmith
Posted by Deborah McAdams | September 20, 2007 - 11:25am
My dear Mssr. FixSmith,
Read today's FierceVoip.
D.
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