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Why Ooma's Business Model is so successful?

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Ooma’s Company Overview

Ooma, Inc. is a leading provider of innovative communication solutions and other connected services to small businesses, home, and mobile users. Founded in 2004 and headquartered in Sunnyvale, California, Ooma offers a range of products that enable a smarter and more efficient means of communication. These include Ooma Telo, a home phone service, Ooma Office, a business VoIP phone service, and Ooma Home Security, a security solution. The company's mission is to empower people to connect in smarter ways, enabling them to share and engage with each other in more meaningful and efficient ways. Ooma's solutions are designed to deliver superior voice quality, easy setup, and a rich set of features that can be customized to meet the specific needs of its users. Business Model: Ooma's business model is based on selling hardware devices that connect to the internet and provide a range of communication and other connected services. The company sells its products directly to customers through its website, as well as through retail partners. Once customers purchase an Ooma device, they can subscribe to premium services such as Ooma Premier, a suite of advanced features, or Ooma Office, a business phone service. The company also earns revenue from selling additional hardware accessories that enhance the functionality of its core products. Revenue Model: Ooma's revenue model is a combination of hardware sales and subscription-based services. The initial revenue is generated from selling its communication devices, such as the Ooma Telo or Office. The company then generates recurring revenue from customers who subscribe to its premium services. These services are offered monthly or annually, providing a steady stream of income. Ooma also generates revenue from the sale of accessories and other ancillary products. The company's diversified revenue streams help to ensure financial stability and foster growth.

Country: California

Foundations date: 2004

Type: Public

Sector: Telecommunications

Categories: Communication

Ooma’s Customer Needs

Social impact:

Life changing: affiliation/belonging

Emotional: design/aesthetics, provides access

Functional: connects, integrates, reduces cost, quality

Ooma’s Related Competitors

Ooma’s Business Operations

Curated retail:

Curated retail guarantees focused shopping and product relevance; it presents a consumer with the most appropriate options based on past purchases, interactions, and established preferences. It may be provided via human guidance, algorithmic recommendations, or a combination of the two.

Customer loyalty:

Customer loyalty is a very successful business strategy. It entails giving consumers value that extends beyond the product or service itself. It is often provided through incentive-based programs such as member discounts, coupons, birthday discounts, and points. Today, most businesses have some kind of incentive-based programs, such as American Airlines, which rewards customers with points for each trip they take with them.

Customer relationship:

Due to the high cost of client acquisition, acquiring a sizable wallet share, economies of scale are crucial. Customer relationship management (CRM) is a technique for dealing with a business's interactions with current and prospective customers that aims to analyze data about customers' interactions with a company to improve business relationships with customers, with a particular emphasis on retention, and ultimately to drive sales growth.


A digital strategy is a strategic management and a business reaction or solution to a digital issue, which is often best handled as part of a broader company plan. A digital strategy is frequently defined by the application of new technologies to existing business activities and a focus on enabling new digital skills for their company (such as those formed by the Information Age and frequently as a result of advances in digital technologies such as computers, data, telecommunication services, and the World wide web, to name a few).

Direct selling:

Direct selling refers to a situation in which a company's goods are immediately accessible from the manufacturer or service provider rather than via intermediate channels. The business avoids the retail margin and any extra expenses connected with the intermediaries in this manner. These savings may be passed on to the client, establishing a consistent sales experience. Furthermore, such intimate touch may help to strengthen client connections. Finally, direct selling benefits consumers by providing convenience and service, such as personal demonstrations and explanations of goods, home delivery, and substantial satisfaction guarantees.


Freemium is the sum of the words free and premium and refers to a business strategy that provides both free and premium services. The freemium business model works by providing essential services for free and charging for enhanced or extra capabilities. This is a typical practice among many software firms, who offer imperative software for free with restricted functionality, and it is also a popular approach among game developers. While everyone is invited to play the game for free, extra lives and unique game features are accessible only once the player buys.

Software as a Service (SaaS):

Software as a Service (SaaS) is a paradigm for licensing and delivering subscription-based and centrally hosted software. Occasionally, the term on-demand software is used. SaaS is usually accessible through a web browser via a thin client. SaaS has established itself as the de facto delivery mechanism for a large number of commercial apps. SaaS has been integrated into virtually every major enterprise Software company's strategy.


Subscription business models are built on the concept of providing a product or service in exchange for recurring subscription income on a monthly or annual basis. As a result, they place a higher premium on client retention than on customer acquisition. Subscription business models, in essence, concentrate on revenue generation in such a manner that a single client makes repeated payments for extended access to a product or service. Cable television, internet providers, software suppliers, websites (e.g., blogs), business solutions providers, and financial services companies utilize this approach, as do conventional newspapers, periodicals, and academic publications.

Technology trends:

New technologies that are now being created or produced in the next five to ten years will significantly change the economic and social landscape. These include but are not limited to information technology, wireless data transmission, human-machine connection, on-demand printing, biotechnology, and sophisticated robotics.

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