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#107267 by Nadinejt
Tue Feb 26, 2013 11:24 am
Hi - As the device is a key component to being able to use OOMA's telephone service, I am having a hard time understanding why OOMA does not offer an extended warranty offering for their Telo device past the 3 years OR whenever a customer wants to protect their device if out of warranty.

I chatted with OOMA support and all I got was "sorry, that is our policy"

I would think that as long as the device being warranted is working at the time of registration then why not cover the unit and pocket the extended warranty profits and give the customer peace of mind..

Not providing any kind of ongoing warranty leaves this customer to think that OOMA has no faith in it's hardware's reliability.

Need help with the rationale.

#107339 by caseybea
Wed Feb 27, 2013 2:12 pm
Simple. I would assume Ooma would prefer to make money with future hardware sales. If you think about the business model, this theory fits.

Now, that said, I would not be adverse to paying some money each year to keep my hardware supported, and this offers an avenue for easy replacement. But in my situation, if Ooma did that, they would then lose out on the opportunity to make money on fees and such if the day comes that my Ooma hub dies.

My gut feeling says, it's not in their interest to offer an extended warranty.....
#107346 by MLXXXp
Wed Feb 27, 2013 3:54 pm
caseybea wrote:My gut feeling says, it's not in their interest to offer an extended warranty.....

Generally, the opposite is true. If the hardware is reasonably reliable, warranties are usually money makers. Why do think electronics store salespeople tend to push you for an extended warranty?
#107356 by peabody
Wed Feb 27, 2013 7:51 pm
Electronic devices which have something wrong with them usually fail fairly quickly, almost certainly during the first year. If they make it past that point, then they're likely to be pretty reliable for several more years. Then as time goes on, the failure rate starts to climb as parts start to break down.

So it may be that Ooma sells the one year warranty only for the years when the unit is very unlikely to fail - years 2 and 3. But that's not a very long life for a device with no moving parts and that isn't subject to repeated on/off heat cycles - doesn't inspire much confidence as to the quality of construction.

But you know, it's an interesting marketing question. I just wonder if it might be good for Ooma to collect $40 a year indefintely as a "warranty" as opposed to depending on periodic sales of a new box. I guess it depends on the actual margin they make on a box, and the expected life.
#108319 by Hal2
Tue Apr 02, 2013 3:49 am
I have no objection to Ooma offering extended warranties past one or three years, but they're doing you a favor by not offering that. Extended warranties are hugely profitable for the companies that sell them. The May 2013 issue of Consumer Reports has a quick reminder about this: The cost of replacement (or repair for more expensive devices) is often not much more than the cost of the extended warranty, yet in most cases, the warranty is either never needed or never used. It's hard to use extended warranties; they almost never work out well. Typically you have to mail the device back and wait weeks to get somebody else's used and refurbished unit sent back to you. Can you be without any Ooma device for several weeks awaiting a replacement? You're better off "self-insuring," which means that you pay to replace the device with a brand new and updated one after the manufacturer and any credit-card warranty you get has expired. Yes, you will lose the cost of having to buy a new device occasionally, and if you're exceptionally unlucky, you'll come out behind in the long run doing this. But most people will come out way ahead if they do this with all the cars, electronic devices, etc. that they buy.
#108320 by Hal2
Tue Apr 02, 2013 3:57 am
johnvan wrote:Renting the boxes might be a popular way to go.

Ma Bell used to make quite a bit of money from that, LOL. You'd have little old ladies who had paid $3 a month for a Princess phone for 25 years, which doesn't sound like much, but back then it was. The cost of the phone to Ma Bell might have been covered 23 years ago, but they were still happily pocketing the monthly rental fee. The cable company still works that scam, and in fact, some cable companies now charge an equipment rental fee even if you bring your own cable modem to the party. Shouldn't be legal, but in these days in which the deck is stacked against the consumer, it is legal.

The one advantage to renting this kind of equipment is that box technology can change quickly--Ooma (like video-streaming service Roku, for example) could release new devices you had to buy in order to get access to new features--and telecom companies like Ooma can be bought out or go out of business at the drop of a hat. (I have no information suggesting that anything like this is about to happen to Ooma; I'm just saying it happens in telecom generally.) If you're renting, you can update to newer technology more easily, and if the company folds or changes hands and you no longer like it, your losses are minimized. It would be painful to have just bought an Ooma box and paid for a Premier membership and then lose Ooma a few weeks later.

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