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Ooma Not Dead Yet

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Ooma, a Palo Alto, Calif-based company that launched with much fanfare last year had run into a wall in recent months. It lost some key executives and failed to live upto its promise. Ooma promised free voice calls for life married to slick hardware was a classic case of too much sizzle, very little steak. Lately there were signs that the company was staring down a dark abyss.

Ooma is not dead, yet. In a bid to try and regain some of its lost momentum, Ooma is cutting the price of its Hub and Scout package by $150 dollars to $250. The company is going to sell a premier service package that is going to cost $12.95 a month or $99 a year. The company is refocusing on the consumer electronics retail channel, said Rich Buchanan, a former Sling Media executive who just joined Ooma as chief marketing officer.

I had a very candid chat with Buchanan, pointing out that it is hard to develop enthusiasm for a company that had overpromised and underdelivered. Instead of developing cheaper products and getting into the retail channel, the company focused on developing strange concept promotions for a device whose value proposition in a nut shell is: cheap calls.

Cheap calling is a tough, low margin and volume business – as Skype’s recent performance shows. Ooma device despite their slick packaging had some performance issues. Buchanan wants to refurbish the company’s reputation and brand. “Clearly I have my work cut out for me,” Buchanan acknowledged, admitting that “Ooma has a black eye.” He said the company had realigned and is focusing on building a retail channel.

I think even at $250 for the package, the device is still too expensive. You can buy PhoneGnome . Despite some distinct differences, the two companies serve the same end goal of making voice calls cheaper/free. (The comparisons between the two riles up our readers.) Buchanan who has been a retail guy for a long time, acknowledged that the right price for Ooma is between $99-to-$199. But in order to get there, the company will have to overcome some serious odds.

In US, the introduction of unlimited plans and other cheaper options from say Skype, has put Ooma on the backfoot. Given that I was impressed by Ooma at the time of launch, I hope

70 Responses to “Ooma Not Dead Yet”

  1. I don’t have Ooma yet but I can hardly wait to give it a try! I agree with the poster who mentioned that landlines are not problem free either, as long as your ISP is consistent then this system is at the very least a good deal compared to paying AT&T for the same local and minimal long distance. I’ve been paying them $45 for local and fees/taxes alone plus last month I made $2 worth of long distance and they gave me a $5 charge for “convenience fee” for being able to make the $2 worth of long distance calls. So….$45 + $5 + $2 = $52 compared to Ooma’s $250 up front. Simple math means 5 months after starting month, I’m in the black for an even better service (unlimited LD). Does it get any more simple?

    Just using basic math,


  2. Rich Buchanan


    I’m glad you appreciate the voice quality of our service. It sounds like you’re having ISP problems if your Internet service is dropping out every 5 minutes. If you’d like we could provide you with some guidance to talk with your ISP if you contact our customer support.

    On your issue of the $12.99/mo, that fee covers a set of advanced services beyond basic phone service, not unlike many of the packages you pay for today on your cell phone e.g. SMS, ring tones, games, etc. If you don’t want/need the advanced services, feel free to not pay the $12.99/mo, you’ll still get unlimited local and long distance US calling.

    BTW, you actually don’t get free long distance calling on your cell phone now do you. Remember that monthly fee you pay to your carrier?

    As to the issue of price? I fail to understand what point your making about the price of the unit. You want a less expensive solution? I would suggest a service like Skype or MagicJack that requires a PC for all the compute power to run the VOIP algorithms.

    Best regards,

    Rich Buchanan

    • Xavier


      I must say that I am impressed with the ooma product. I bought one for my parents who just moved to Mexico. Now they have a US number to which all their US freinds can call them and who they can call at no charge. The setup process is simple, voice quality great and features are cool. I’m thinkig of getting one for myself and already reccomended it to many.

      I must say though, that the tone of your responses to some of the unsatisfied ooma users does not sound like that of a serious CMO.


  3. Well, to start, ooma has pretty good voice quality. Although, my calls randomly seem to drop every 5 minutes. I guess that’s the price you pay since I no longer have a phone bill.
    Second, I think that their original “no more phone bills” quote is crap, because now they charge $13/mo… so, now you dont pay your phone company, you just pay ooma. Um, I’m sorry, to me that’s a phone bill. DUH!
    Ok, so, US long distance is free. I have that with my cell phone. So, there’s no real reason to buy or use ooma anymore.
    The price drop tells me that the company isn’t doing well anymore and that there are some type of struggles. I don’t ever see ooma going down to $99 or even $199 per box…
    They’ll be out of business before that ever happens.
    Goodbye ooma, nice try.

  4. I have been using Ooma for a year now and the service has been impeccable. Call quality is great (I have enabled QuOs on my Linksys router phone port – maybe that helps), I can check my voicemail from anywhere in the world, and best of all, I no longer contribute to SBC/AT&T’s bottom line!

    And when I’m ready to move, I can bring my Ooma box with me and keep my number. What’s not to like?

    I just hope the new pricing and push strategy will help Ooma survive and prosper.

  5. Marty

    I have to agree that the ooma detractors sound like they’re selling short a phone service they probably haven’t even tried. I’ve had ooma since January and it’s really pretty damned good. Occasionally, when I’m downloading files and talking at the same time on my cable-connected system, my callers tell me I’m breaking up… but this is the exception, and not the rule. Ooma is reliabe and the customer service people – especially Dante, rock!

  6. Jim Dutton

    I’ll have to say that everything discussed by Mr. Peng above has been delivered on. I’ve been using the Ooma system for several days now, and it is a distinct improvement over my decades long relationship with BellSouth/AT&T.

    Voicemail forwarded to email is wonderful.

    Your entire phone system being instantly turned into a two line system (by adding their Scout devices) is wonderful.

    Unlimited long distance without paying $25 a month for it is … wonderful.

    I just hope that this company prospers and is able to provide this service to me for years on end. However, my break even point on the cost of the devices vs the phone bills I won’t be paying anymore come VERY quickly in this process.

  7. Alan Horschler

    I have also been a happy customer for 4 months. The product does exactly what it says and I sometimes forget I even have it, which is a GOOD thing. I could often times tell I had Vonage which is one of the reasons I didn’t like it. I have referred 3 people who constantly thank me for telling them about it. The big telephone companies should watch out, I could see ooma becoming a serious threat in the next year or two.

  8. Ron Kay

    I have Ooma for two months now. I think the call quality is as good as my land line. No dropped calls like my cell phone and no monthly bill. I have recommended it to family and friends.

  9. The OOma call forwarding technology is a marvelous extension of VoIP.
    In the premises, OOma expects a Scout on each extension. Simple rewiring at the punchdown allows OOma to serve two lines to multiple extensions (8 in my building) with one hub and one scout. I could wait for OOma to introduce a multi-line SMB product, but, well, I have already ordered another Hub/Scout set to add two more lines at each extension. For the long haul, I haven’t found another solution which beats OOma for the price or the performance. Call me stupid, but … I appreciate OOma.

  10. Saragnac

    Here’s a thought for all you nay-sayers: If you don’t like it, don’t use it. It’s that simple. I just got one myself and hooked it up without any hassles whatsoever. In eight months this thing will pay for itsself — and I was with Vonage. I’ve had landlines all my life and, although this may come as a shock to some of you, I’ve actually had problems once and a while, and that was a complete nightmare! The big companies are so bloated that just the simple task of calling with a problem means you get transferred from one person to the next to the next to the next…….and have to tell each a detailed description of your problem. Every time I called Ooma’s CS (with questions only) it was a breeze.

    I’m just taking a stab at this but one reason I believe they can do what they do for the price is simple — did you see any Ooma commercial during the superbowl? The money they are saving on advertising is being passed along to the customer, and if this even works half as good as it has for me so far, I am going to continue to tell everyone I know to go get one!

    One more thing I thought was interesting. I had a hard time cancelling my Vonage account. They really didn’t want me to go, they even tried to keep me by lowering my monthly bill by $10. So, if you’re bent on slamming a company for trying to save folks money, why not go after Vonage for charging people $10 more than they need to every month.

  11. Chris Douglas

    Hey, I’m not sure what the glum and gloom is, I LOVE my Ooma service. The voice quality is indistinguishable from my landline which I kept for a couple of months just to be sure and is FAR better than the quality I experienced using Vonage or Skype, which was awful. I paid $250 for a box and in less than a year, will have broken even compared to most other VOIP options. “Mike Pierce” appears to be a paid shill for the decrepit old world telephone monopolies IMHO, since he has posted the same negative comments on about every blog and forum out there. I would ask of him and other like him- have YOU ACTUALLY TRIED OOMA? If not, please shut up. The pseudo-authority opinion pieces get old, and unless you speak from experience using a product, mean zero to me. My OOm service is solid enough that I plan to give my mother and brother Ooma as gifts this year.

  12. The $400 includes lifetime Premier service which is currently priced at $12 something a month. If this Ooma system pans out, the $400 is cheap compared to a monthly fee.

  13. Albert

    I just got my unit and scout from amazon today, a total of 250$. I am completely satisfied. I have vonage and will soon drop it. The ooma will pay for itself in 8 or 9 months. If anything else happens after that time period, I will have still came out on top. Vonage has an upfront offer for current customers for 239 a year. Ooma is cleary the winning choice.

  14. Jairus

    I don’t want to sound like Chris Crocker defending Britney but I am very happy with my Ooma service. In the interest of full disclosure I did take advantage of an invite so I didn’t pay the $400 for the box. Just like STS above I was pretty unhappy with At&t and started looking into other options after At&t charged me $60 for a 10 mins call to Europe. I think that we forget what Ooma is doing here…Ooma is offering an alternative to the 123 year old mammoth company like At&t. It’s not an easy thing to pull off, even Vonage, that raised a lot of money and had some heavy backing got hit with lawsuits. What made me go with Ooma was the positive review that they got from Walt Mossberg of the WSJ fame. The fact that Mossberg allowed Ooma to put a video of him explaining the service on their website (video has been removed since) says a lot. I hope that the company makes hte right choices and is able to take the product mainstream. More choices when it comes to phone services is allways a good thing IMHO.

  15. I’m happy with my $400 investment in Ooma – all the features I need, great service, fits seamlessly into my home network, and I don’t pay AT&T any more! (That’s a saving of $70 per month.)

  16. Raymond Padilla

    Ooma made some kind of update on Friday, which led to me being notified that my service address and password word changed. I called CS to tell them that I did not make any of these changes. They told me that my info was “probably” not changed and to try password recovery. That did not work over the weekend. Thankfully, it worked today, but it’s still pretty ridiculous that I was locked out of my account and couldn’t access my voicemails for three days. That’s unacceptable.

  17. I don’t understand all this talk of Ooma VERSUS PhoneGnome. I’ve got a PhoneGnome box plugged into an Ooma box and it’s a marriage made in heaven (the LINE side of PhoneGnome box connected to the PHONE side of Ooma box). This lets me use Ooma service (free domestic calls) any time on my PC or mobile phone, from anywhere. I can make cheap international calls using either service – this solves the problem with bad call quality on ooma international calls, because I can simply send those calls out via the PhoneGnome service at their (also cheap) rates – the call quality on PhoneGnome international calls has been excellent for me. Some international calls are even free (for the people that register their number in any of the dozen or so countries the service supports) thus extending the no monthly fees and no per call fees for domestic calls provided by ooma to numbers outside the U.S. via PhoneGnome.

  18. As long as they’re re-branding, they ought to re-christen the company Dooma and then go after the niche market (tiny, perhaps, but still probably three orders or magnitude larger than their current installed base) of goths addicted to spending a lot on non-functional items.

  19. Om is correct that the primary value proposition is making free US calls
 with no monthly charges. This is why we decided to decouple the core 
value of the ooma system from the enhanced features. This allows our
customers to choose which bundle is right for them.

    Our new retail bundle offers unlimited US calls with a familiar suite of features (caller-ID, call-waiting, and voicemail) for $249 with no monthly charges. They’ll also get a free trial of ooma Premier, after which they’ll have the option to subscribe for $12.95 per month or $99 per year.

Early ooma customers who purchased the ooma Hub(tm) device for $399 will
 continue to enjoy “ooma Premier” services without monthly charges. This
 package includes the Instant Second Line(tm) feature, real-time message 
screening, Send to Voicemail, Do Not Disturb, a personal number with private voicemail, and more.
    To show our appreciation to our early customers, we’ll be offering them
 complimentary number porting along with an extended three-year warranty 
(valued at $79 and $69, respectively).

    We are very excited about this new pricing model, as we believe it will
 make the ooma system more affordable to consumers and allow
 our customers to decide which package is right for them, whether it’s
 eliminating monthly phone bills for US calling or enjoying all of ooma’s innovative calling features for a low monthly/annual fee.

    • Emory

      Mr. Peng,

      I have read about Ooma and was on the verge of making a purchase.
      I had a few questions, and I have become very exasperated in trying to get answers.
      I submitted questions through the Ooma website several months ago, and I never received a reply.
      I am also quite peeved that the Ooma website lists a phone number where Ooma can be contacted,
      but when you dial that number all you get is an automated message sending you back to the internet.
      I was about 90% convinced that I would buy one of your units, but your unresponsiveness has now given me new reason for pause, as I don’t want the same exasperation if as a customer I have a question that needs to be answered.

      As you service still looks very appealing, I will ask you the questions once again.

      1) I am still a bit confused about using Scout.
      My idea is that I will disconnect the external phone line (leaving my house) altogether, and then if I connect
      your hub to any phone jack in my house, ALL of my wired phones should still work, because all
      of the phone jacks in the house are wired together.
      I should therefore not need to use the Scout unit unless I wish to use two separate telephone numbers simultaneously.
      Please confirm if my understanding is correct. If not correct, and I would need to use
      a Scout on each other jack in the house, then please explain exactly what Scout is doing.
      On one wired phone, I have a splitter between the phone and the jack, with a caller ID unit also connected.
      Wll that still work with just the core, or will I need the Scout for that too?

      2) It is not possible for me to run a cable or wire between my cable modem and any phone jack in my house.
      I will instead connect the Hub to my router through a Wireless Access Port.
      Are there any special conmsiderations for that configuration?

      3) I have Cable modem service, 10Mbps download and I would like an estimate of how much of my available bandwidth will OOMA use?
      Is the Ooma bandwidth also used when I am not on a call?
      Will Ooma interfere with on-line browsing and/or with video streaming?
      Will the Ooma call quality deteriorate if I am browsing or streaming video and also place a call?

      Thank you for your attention.

  20. Hi Raymond and Fernando,

    Yes, we have been experiencing problems with our international prepaid billing provider. It is a top priority for us and we are actively working to get this fixed. Our customer’s experience is of utmost concern for us, so we cut our billing provider out of the loop when we can detect an extended outage. Thank you for your patience so far and please continue to let us know about problems you experience so that we can address them promptly.

    Dennis Peng

    • Hi Dennis
      My hub & scout purchased from arrived today. I was so excited to follow the instruction to activate the unit. What I got was – “You have entered an invalid Activation Code”. Double check the code and same message. Called tech support and was told to just wait. Is this something you can help quickly. I’d like to get it setup over the weekend. By the way, googled and read that you can help on this matter through Ooma’s forum, however, can’t register there to contact you from there… Thanks in advance.

  21. Recall that those first early adopter buyers were told that they were getting a “special” price at $399 – they were told they were “saving” $200 off the future “real” price of $599

    Now they find out they really paid $150 MORE (and that if they just wait a little longer they will only pay $99).

    That’s a great start towards “refurbishing the company’s reputation” and fixing their “black eye”

  22. Funny that Ooma is now offering a monthly subscription. When I put up a website detailing Ooma’s problems, and offered the suggestion that they needed to do just that for any hope of surviving, I got several calls from Ooma execs, threatening legal action for “slanderous” comments about their product. Now I undestand that those 2 execs are gone.

    I don’t feel sorry for anyone who paid $400 for what will likely soon be worthless. There were plenty of web resources (including mine) that pointed out the pit-falls.

  23. Fernando

    This explains the problem my wife encountered last night when trying to make an Int’l call to Japan. She told me that every time she dialed, the call automatically dropped.

    We’ve never had issues with their Domestic calls but now I’m a bit concerned about their future. Fortunately I didn’t pay the $450 for the box.

    Let’s hope they stay around.

  24. Allen Stern

    if you tell me that the sweet spot for a product is x, and it’s currently priced at 2x, why would i want to buy it now at 2x when i can just wait for the drop to x – especially since you just reduced the price.

    mine is still in the box

  25. Ommma should have had a subscription type offering from the get go ….$450 up front is just too much for most folks especially when people have been burnt by start ups in the past

  26. Raymond Padilla

    Ooma have been very uneven for me so far. I got in the program early thanks to this site (thanks Om!) and was very excited at its potential. Domestic calls have been great, but that wasn’t why I was interested in the product — I can get comparable solutions through Skype and Yahoo! Messenger. International calls were the big deal here. Ooma’s pricing is very competitive. A lot of the rates are half that of Skype’s and slightly less than Yahoo!’s. While the rates were fantastic, service was another story….

    Initially, international calls were a mess on Ooma. There were all kinds of connection and voice quality issues. These were sorted out after a few months and the service was very solid. More recently, the company claims to have made “changes” to how international calling works. For the last week, more than half my calls do not go through and the call quality is unacceptable. When I make the same calls on Skype, Yahoo!, or VoIP Discount, the quality is much better, so this is clearly an Ooma issue. Customer Service hasn’t been helpful at all. I get such useful advice as “please try again”, “dial slowly and correctly”, and “please bear with us”. I tried working with customer service on these issues and was surprised to learn that my failed calls don’t show up on their system at all, so they have no idea how unreliable the service has become.

    Anyway, Ooma is still just a potentially great product that’s a tough sell. By now the service should be solid, but it’s not. I don’t see how a company can go on a big marketing push when its product doesn’t work the way it’s supposed to.