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Jajah Goes Mobile

I don’t know about you, but there’s nothing that frosts my socks quite the same way as my monthly, sky high, mobile phone bill.  Well, this morning Jajah’s founders Daniel Mattes and Roman Scharf gave us all a new option.  Jajah mobile is a compact applet that you download to your cell phone, and which automatically makes choices for you about how to direct your long distance phone calls on your cell phone.  Dial a long distance number, and Jajah will automatically redirect the call over their network at just 2.5 cents per minute.

To put that in perspective, I have a 1600 minute plan which I regularly exceed. It’s a pretty rich plan, allowing unlimited roaming throughout North America, and one rate for all calls within North America too. It costs me 20.625 cents per minute.  Rogers best rate for a local plan is 10 cents a minute, and Jajah is 2.5 cents on top of that.  Using Jajah Mobile would knock the $330 I pay monthly down to $200.

Too bad they can’t reduce my Blackberry data plan the same way!

Wanting to know more about the story behind Jajah, I had a long, but very illuminating call with Roman, and his new VP of Marketing Don Thorson, last Friday night. 

Jajah’s goal is to be the first global telecom company.  By taking a different approach to VoIP, by not insisting that you scrap your telecom company, but rather by being an adjunct to it, Jajah believes that they can be everybody’s second phone company, rather than what Vonage is trying to be. And in the process, they can build out a user community, and platform hooks which will allow them to offer new services more quickly, and more easily than others.

My pal Andy Abramson would call them a “minute stealer”, but there’s a lot more to Jajah than that name conveys.   

The most interesting aspect of the business model is the way they have shied away from providing DIDs, and other tools for originating calls.  By building out a network to do terminations only, they’ve kept their costs lower than any of their competitors.  All they’re paying for is terminations, and in 80 countries they have a physical presence of their own with over 200 servers.  What that means is that at 2.5 cents per minute, they earn $10/month per subscriber with a 30% margin.  According to Jajah investor Venky Ganespan, of Globespan Capital, Jajah is already profitable.

Although they say that calls in North America are free, like their rival SipPhone, the details are little more subtle than that statement might imply.   

  1. Any call between any two Jajah subscribers in North America is free.  If you’re not calling a Jajah subscriber, then it costs 2.5 cents per minute. 
  2. Any call that takes advantage of any of their features is not free: if you use their scheduled call feature, or their conference call feature, you’re paying.   Having said that, you’re only paying their already low rates.  

Students of viral marketing, pay close attention to those two statements.  Jajah has created a powerful one-two stroke that encourages many people to register for their free service, while maximizing revenue from those willing to pay the freight.

As I chatted with Roman and Don, a much larger vision emerged.

Jajah wants to be present at the point that the communication need arises, and also when the call has finished.  In other words, where they the incumbents are merely handling a call, they want to be an engine for the complete communication – including the time before and after the call.   Hence their integration with Plaxo, and Outlook on the outbound side, and their plans to allow calls to be recorded, and followed up post call.

In keeping with this business vision, Jajah has delivered a new conferencing service, a scheduled calling service and a click-to-call button for businesses. The click to call piece is especially interesting, as they’re building a whole infrastructure around it.  They’ve got caller pays, called party pays, anonymous number, public number and “expiry dates” for the buttons all in the works.  They’re also working with companies that build blogging tools, browsers, and so on – the fundamental building blocks of the web.

In other words, they see themselves providing some of the core applications building blocks in a Voice 2.0 world. 

The system itself is built on some proprietary software, and Asterisk.  They have a proprietary voice codec, for instance, and a proprietary algorithm for routing the calls. They built their initial prototype in just two weeks, and version 1 of the product in 92 days.  It makes a good case for using open source!

While Roman declined to answer exactly how much traffic they’re carrying today, he did offer these statistics:

  • In excess of 1 million users have registered for Jajah today. 
  • All their core metrics – registered users, minutes, and so on — are doubling on a monthly basis. 
  • 82% of visitors hitting their web site try the service right away (that’s a phenomenal conversion rate), which Roman attributes to the ease with which you can make your initial call.
  • They’re earning $10/month per user, with 30% margins. I estimate that means that they’re probably paying for about 550 minutes of traffic per user per month, but getting paid for 400 minutes. 
  • As volume has increased, their termination costs have decreased by 50% since February
  • 40% of revenues come from Europe.  That’s also where the largest pain is. 

I should note that some Jajah competitors I spoke with expressed doubts about the veracity of some of these claims.  My opinion?  Jajah mobile could change the mobile landscape very quickly, making them one of the most important VoIP companies in the market today. It’s natural to find that a little too good to be true. 

{ 11 comments… add one }

  • Tom Keating September 27, 2006, 5:43 am

    Great analysis Alec!

    The statistics and revenue breakdown was pretty interesting.

    Keep up the good work.

  • Alec September 27, 2006, 11:51 am

    Thanks Tom. It was an interesting call, that’s for sure.

  • Frederik September 27, 2006, 2:20 pm

    And thanks a lot for your great blog post Alec!

  • Mark September 27, 2006, 3:01 pm

    I find the jajah mobile aspect most interesting. But I’m not clear on how it actually works. No mobile call that I’m familiar with is “free” yet. You still spend metered minutes. But I can imagine that if some mobile calls are more expensive that others (domestic vs. international, for example), then jajah routing can affect savings by terminating to a relatively inexpensive domestic number, hauling the overseas traffic via IP, then terminating the call locally.

    I’m further assuming jajah mobile’s Java ME client acquires routing information over an IP data path (MIDP 2.0 devices have full IP stacks) vs. caching static routing information, then terminates the call to the “best” local number on your behalf by programmatically dialing (http://www.petrovic.org/blog/2006/04/26/dialing-midp20-phones-programmatically/).

    Can someone verify that this scenario is even close?

  • Frederik September 27, 2006, 6:16 pm

    Hey Mark,

    JAJAH allows you to place free or close to free international and long distance calls using your regular phone (landline or mobile). You simply provide your own number and the number you want to call to our system and both (or even more with the conference call solution) call participants receive a local call from our nearest by termination point. Everything in between is handled via an encrypted connection via the Internet.

    As you were providing this information (the two numbers) via our website http://www.jajah.com before you are now able to place the same free or cheap JAJAH call directly from your cell phone, so we even took the browser out of the JAJAH equation.

    This works via a tiny plugin which you can download from our webpage (http://www.jajah.com/info/tools/mobile/) to your existing cell phone. It now provides the number you want to call to our system either via a short data connection or via text message seamlessly. By default your national calls are not getting touched but you are able to place all your so far very expensive calls via JAJAH now.

    In contrast to Europe or other places in the world you have to pay for incoming calls in the US, so you are right it’s not “completely free” because it touches your US minutes plan but you are just receiving a local call which simply applies to the plan you have while placing a “free” international to Europe, Asia or wherever in the world. Isn’t this nice :-)

    So we take away the international or long distance charges to knock down your phone bill dramatically.

    I hope I could answer your question.

    Best regards, Frederik

  • Alec September 27, 2006, 7:45 pm

    You’re welcome!

  • A reader October 4, 2006, 9:16 pm

    You wrote that scheduled calls & conference calls cost something. Conference calls do have a charge, but scheduled calls do not – they cost the same as regular calls. (i.e. either free, or 2.5 cents per minute for calls to North America & most European countries). This is important because people who do not have a separate phone line from their computer connection can use the scheduled call feature to set up a call to take place 2 minutes later, then disconnect, in order to receive the call. (I say receive because a Jajah call works by Jajah calling you – your phone rings)

  • Alec October 5, 2006, 6:43 am

    Thanks for the correction. That’s useful to know.

  • alotta k November 9, 2006, 10:14 am

    I would very much like to start using Jajah exclusively for long distance call but I became nervous when I read their privacy policy and specifically: "Among the services JAJAH offers, Users may initiate phone calls between them which are partly or fully handled via JAJAH telecom partners. Therfore any information which You may post during such phone call, including any personal information shall not be deemed private. JAJAH cannot guarantee the security of such information, that you disclose or communicate in such phone call and you do so at your own risk. ".

    I wonder, is the risk in using Jajah the same as using a landline? Is webcalldirect any different/safer?

    I should also add that when I asked Jajah's tech support (via email) to answer my simple question, the result was (as expected) very unsatisfying! In fact they referred me right back to the clause in the privacy policy that I asked about.

  • Alec November 10, 2006, 3:21 am

    Alotta — what they're saying is that they can't guarantee what any other carrier is going to do with your calls. My take? The risk is no different than the risk with a landline.

  • Ono January 6, 2007, 1:20 pm

    hi – i am really new in the VOIP market and i have few basic questions regarding this AMAZING article.
    i will be delighted if someone could answer those questions:
    – how does the Telco market works? what does it mean to pay only for Termination? can i assume that the local telco provider charge only for termination? isnt it that in the USA, local calls are free? so if you have 2 servers ,lets say in SanDiego and NEW York, and you called to a local Number in NYC, and the server takes care through VOIP to deliver the call between NYC-SAnDiego, and then delivery the call to a local number in Sandiego… shouldnt is be free? what do i miss here?

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