YMax’s MagicJack Catches Sales Tailwind

YMax Corp. isn’t a well known name when it comes to telecommunications in the United States. And MagicJack sounds like the product in an infomercial that helps you change a tire. But the two names may become synonymous with cheap broadband calling.

MagicJack is a device about the size of a matchbox that plugs into a PC. A regular phone can then be plugged into MagicJack so the user can make and receive calls much like using a regular landline. And it is cheap. This miracle of technology costs $39.95 and comes with one year of unlimited free calls to anywhere in the U.S. and Canada. A second year’s service costs $19.95.

In January YMax was selling a few hundred units per pay. The company started a broad advertising campaign that month and now it is selling 8,000 to 9,000 MagicJacks per day. If the trend continues, YMax will have half a million subscribers by the end of June.

Unlike most voice-over-Internet Protocol (VoIP) providers, YMax is licensed as a phone company in the continental U.S. and operates a wide network of servers to carry its calls. Most VoIP providers outsource that side of the business.

According to YMax Chief Executive Don Burns, many customers buy MagicJack as a complement to a cell phone, compensating for poor cell coverage at home. When the computer is off, the service can be set to forward incoming calls to a cell phone number.

YMax’s business plan doesn’t allow for much profit from MagicJack. It charges about as much for a year of service as its rivals do for a month. To boost income, YMax plans to sell advertising that shows up on the PC screen while calls are being placed. Ads would target users based on the location of the PC.

To boost sales even more, MagicJack will go on sale through the shopping channel QVC and big-box retailers.