Friday, January 8, 2010

..ere Seems ... Be ...thing Wrong The ...nection

I always thought the Magic Jack was some sort of a scam product that worked okay in some cases. Of course, the basis for this was that the ad mirrored so many other ads on TV touting wonderful, too-good-to-be-true products that are guaranteed to make your life better. Turns out I was wrong. Consumer Reports did a test of MagicJack and the results were very good. Go figure. (CR also checked out the Snuggy. Skip it. Whoo-hoo! I'm one for two.)

Now Magic Jack wants to let you use their product with your cell phone.

The size of a deck of cards, it plugs into a PC, which needs a broadband Internet connection. The device then detects when a compatible cell phone comes within 8 feet, and places a call to it. The user enters a short code on the phone. The phone is then linked to the magicJack, and as long as it's within range (YMax said it will cover a 3,000-square-foot home) MagicJack routes the call itself, over the Internet, rather than going through the carrier's cellular tower. No minutes are subtracted from the user's account with the carrier. Any extra fees for international calls are subtracted from the user's account with magicJack, not the carrier.

According to YMax CEO Dan Borislow, the device will connect to any phone that uses the GSM standard, which in the U.S. includes phones from AT&T Inc. and T-Mobile USA. At a demonstration at CES, a visitor's phone with a T-Mobile account successfully placed and received calls through the magicJack. Most phones from Verizon Wireless and Sprint Nextel Corp. won't connect to the device.

No word yet as to what the cell phone companies are going to do about this.

...YMax has sold 5 million magicJacks for landline phones in the last two years, and that roughly 3 million are in active use. That would give YMax a bigger customer base than Internet phone pioneer Vonage Holdings Corp., which has been selling service for $25 per month for the better part of a decade. Privately held YMax had revenue of $110 million last year, it says.

That's not a huge chunk of change compared to cell phone company profits, but you can bet they're not going to take it lightly if the MagicJack starts to siphon some of it off.

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