When MagicJack was selling tens of thousands of units per month, total revenues for 2013 were $143.5 million. In 2014, it was down to $116M. They were making about $20M per quarter on the magicjack. It is still in retail outlets and on Amazon. They were even making money on shipping and handling! But they were spending big on advertising.
Last year they acquired Broadsmart for $42M to really chase the business market. No name change. (Vonage should have followed that branding move.)
Back to price. If it was price, the race to zero would still be on. If it was only price, magicjack would be a billion dollar company. It isn't. It is Marketing.
Vonage is a billion dollar company. It spent heavily on patent lawsuits, advertising and technology to make the product better. Then to get into business VoIP it bought Vocalocity then others.
4 Things that Beat Price:
- Marketing - if they don't know you, they can't buy from you!
- Innovation - keep getting better
- Deployment - it has to be smooth and work
- Customer Experience - a combination of all of it