We don’t talk about vonage anymore, its all about MagicJack now. MagicJack, the cheap internet phone gadget, using which, consumers can make unlimited calls via a USB jack. The service works by hooking up a standard home phone to the USB jack provided by magic jack. The USB jack is sold via stores like Best Buy, RadioShack and Walgreens. The price of the USB jack is $40. For the first year, unlimited calling is free. After that, its $20 a year. I remember paying more than $30 for a month for landline, and this one beats the price by a mile. The downside with the service is that you need to keep your computer powered all the time. So there is some money you pay for the computer power consumption.
The company sells about 9,000 to 10,000 units per day, and according to the Borislow, CEO of MagicJack, the company will make more than 100 million dollar revenue. Looks like recession has no impact on this company.
What is the Magic behind MagicJack service? It has its own network to support voice calling. Its parent company YMax communication is actually a CLEC (Competitive local exchange carrier). Unlike other internet phone companies who pay to get phone numbers, YMax as a CLEC doesn’t have to pay for phone numbers. ( Remember Google voice bought 1 million phone numbers via Level 3 communications) In addition, they make money via inter-carrier termination charges. Check out their YMax CLEC rates.I doubt if they generate all their revenue via inter-carrier termination charges. I guess this could be one of their cash cows. They still have to pay for Call Origination from the MagicJack phone. Don’t know how this is covered.
Who is using the service? Many older people, frequent travelers and overseas customers who want to make free cheap calls to America and Canada. They have some cool innovation up their sleeves; A Femtocell gateway that will allow consumers to use their GSM cell phone with MagicJack service and Number portability support.
For some Folks, MagicJack is a Scam and for others it’s a boon. Let me know what you guys think about MagicJack. Thumbs Up or Thumbs Down?
Sunday, June 28, 2009
Posted by Ravi Shankar at 5:30 PM