CES: MagicJack celebrates two millionth customer

More than 2 million customers purchased a MagicJack in 2008, at a rate of 250,000 subscribers added per month. The palm-sized voice-over IP (VoIP) device and telephony service stole the spotlight in a crowded VoIP market this past year, attracting mixed reviews, including praise of its low-cost service and complaints about its online-only customer support. Still, the telephony application has resonated with consumers as it promises up to $1,000 in savings per year. According to inventor Dan Borislow, having continuously improved the service, MagicJack will lead to $1 billion in customer savings in 2009.

The company, which will be celebrating its banner year at a party at the Consumer Electronics Show this week in Las Vegas, also inked its first retail deals to kick-start 2009. The first was with Radio Shack six weeks ago and the second will be Best Buy, beginning this week. Thus far, Radio Shack has had to continually adjust its inventory numbers to handle higher than expected demand, Borislow said, adding that two more large retailers will be announced as partners by the end of the month. He anticipates 20 different retail locations by February. Consumers can also still get a free 30-day trial or purchase online.

“Our online sales have recently gone up again,” Borislow said. “They were down in the December time frame. As it turns out, we weren’t really a gift item, nor would I ever suspect that a telephone service would be. It’s something that people rely on… With the economy and the credit crisis and people trying to buy presents, December was a good month but not as good as November. And it won’t be as good as January. Our online sales have recently picked up pretty dramatically.”

Borislow is no stranger to heading up start-ups in the midst of an economic recession. He formed Talk.com in 1990, which sold long-distance service to four million AOL customers. Like MagicJack, the emphasis was on an affordable, necessary service for the typical American. To date, MagicJack has been marketed in late-night infomercials, a 28-minute spot to educate consumers, Borislow said. Now, it is switching to 30-second commercial slots, showing its cost-savings in relation to services like Vonage.

“I’ve had these professional media companies telling me how to brand it as a mainstream brand name and all I’ve ever done my whole life is sell a discounted service,” Borislow said. “I know no other way than by keep on pitching the price savings that you will get. Especially in these economic times, I think it’s resonating even more with people as they look at cost savings.”