Jajah, as we've mentioned several times, remains among the edgiest of the new Internet telephone companies.
Today, the company seeks to mobilize users in India, offering them free calls if they get five other people to register for the service. Some 100 million Indians have both an Internet connection and a real phone, which are necessary to use the service.
The merits of viral strategy appear obvious considering such marketing has worked well for Internet companies such as Tagged, Facebook and Friendster. It's the first time we've seen such a viral move by a VoIP company, though. It also comes at a time when the industry is in the midst of painful consolidation: SunRocket, another VoIP provider, has gone out of business, leaving 200,000 subscribers without service -- after raising $80 million in venture capital, including a significant $33 million less than a year ago from folks like BlueRun Ventures, Mayfield Fund, DCM and Anthem Capital Management.
It's OK to be innovative when your service is free, but how are you going to make money?
Obivously, companies have offered VoIP for free before, which is the ultimate marketing strategy. Skype offers free calls between registered users, for example. However, Jajah lets participants in the viral program call anyone for free, even if the recipients of the calls aren't themselves registered (though it applies only to calls within India, to North America and the UK). The calls are free for 30 minutes only. Dialpad, another early VoIP player, got buried by Indian users, who used its free service to call relatives in the U.S., and overwhelmed Dialpad's network costs. So how on earth is Jajah going to make money, by driving phone call costs down to zero? Jajah says it still thinks people will pay for many calls. After the 30-minute free call limit is up, it charges a low rate, but one which still makes it money: From now until India Independence Day (August 15), India calls will cost 7.3 cents/minute (3.2 INR).
Jajah says it will offer similar campaigns in other countries, hinting Brazil, Russia and China may be next.
Jajah has plenty of competition. Companies like Rebtel and Jaxtr are following closely in Jajah's footsteps, using a similar way of connecting calls (by connecting your real phone with an Internet line)
A few days ago, Jajah introduced an anonymous calling feature to be used on dating site eHarmony.
It remains to be seen how successful this company will be. It has more than a million users, and says it is controlling more of its infrastructure through partnerships with companies like Deutsche Telekom. It says it is upgrading its sound quality, and that much more is coming this Fall. What's remarkable is that it has done all this on slightly more than $20 million in funding, much less than the boatloads of funding received by companies like Sunrocket and Vonage (Vonage, a public company, is seeking its stock price at an all time low).