When a company makes as big a splash as MagicJack has, others are bound to follow in its wake.
A plug-and-play tool, MagicJack delivers free local and long distance calling for $20 a year. (See our review here)Thanks to a massive infomercial blitz, the company says it has sold five million units.
Riding the coattails is UnifiedDirect, a Florida VoIP company that in January released MyPhone2Go, a VoIP-on-a-stick offering. Priced the same as MagicJack, MyPhone2Go is making its play based largely on ease of use.
Whereas MagicJack needs to install software on any computer it's used with in order to run, MyPhone2Go is entirely self-contained, explained UnifiedDirect President Barry Lee. A softphone built into a USB stick, "there is nothing to install on any computer, and when you have finished the call or exited out of the program nothing is left behind with that computer."
Lee is betting this will prove attractive to users seeking simplicity, as well as to those who may find themselves looking to connect through someone elses machine. "If I am going to go to your office and I want to use your computer for a minute to make a call, you may not want anything loaded on to your computer. Thats a big difference," he said.
To run MyPhone2Go, a user inserts the stick in a USB port, clicks the run option and immediately encounters the phone interface.
MyPhone2Go also looks to outdo MagicJacks voice quality, which has received some negative feedback. Lee said he spent half his development money acquiring a high-end voice engine from an undisclosed vendor. In our test calls from MyPhone2Go, sound quality was generally very good.
The system does have its drawbacks. In particular, an issue can come up regarding firewalls. Third-party firewalls are not a problem, Lee said, but Microsoft firewalls pre-VISTA may need to be disabled in order to make the device operational.
Lees business plan calls for an entrance into specific niche markets. While MagicJack has gone direct to consumers, and also has approached the market largely through big-box stores, Lee believes its penetration among smaller retailers has been less thorough. He said he is talking to at least four resellers about strategies for bringing his product into convenience stores and similar venues.
The international market also is high on his list of priorities. For U.S. users traveling abroad, Lee said he is working to broker deals with tour operators and other group venues to make MyPhone2Go connections available to travelers.
At the same time, he foresees a growing market for users abroad who may wish to call the United States via VoIP. His high-priority markets include Brazil, Mexico, and several African nations. (The company recently made a humanitarian shipment to Haiti.)
While the basic unit was intended for outbound calls only, Lee is making U.S. phone numbers available as part of his effort to court overseas users. "Suppose a Brazilian buys one of these units. He can add a U.S. inbound number to it so that all his friends and relatives in the United States can call him on a U.S. number and it rings in his house in Brazil," He said. That service costs $60 a year.
Users also can port their home phones to make MyPhone2Go their main number, or for $60 a year can forward a home phone to a MyPhone2Go DID line.
These extras are a crucial component in Lees financial plan. He said he makes some money off the basic unit (selling for $39.99) and has a slim margin on the basic calling plan ($20 a year). Its the add-ons that will truly bolster the bottom line, he said.
The premise of MyPhone2Go may be seen as a classic case of David and Goliath. With MagicJack dominating the market, Lee needs to find the untapped niches that will allow it to thrive.
That play relies to some extent on user dissatisfaction. Lee points to a widely reported statement by Dan Borislow, CEO of MagicJacks parent company YMAX, that only 3 million of the 5 million MagicJacks sold are in use. Lee sees this as an opportunity to tap a market ready for VoIP but still in search of a satisfactory means of access.