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What could be a better deal than making free calls on your computer? It's certainly worked for eBay subsidiary Skype, which says it has over 200 million users worldwide. But upstart Jaxtr argues it has something more compelling -- free calls from your phone.
Jaxtr, a Menlo Park-based VoIP service provider, has doubled its user base every month since its March launch. The company's previous high-water mark of 500,000 registered users has now reached 1 million, according to figures the company released this week. Two related stats: Over 16,000 users register for the service each day or about 660 every hour.
Also on Tuesday, Jaxtr announced it raised $10 million in Series A financing led by August Capital. Other investors participating in the Series A include Mayfield Fund, Draper Richards, Draper Fisher Jurvetson and Luxemburg-based Mangrove Capital. The latter three funds were all early investors in Skype.
The VoIP market took a bit of a negative hit earlier this month when the Skype service was hit by a prolonged outage. But even with its massive user base, Skype appeals primarily to techies, according to analyst Greg Sterling.
"Most people don't have a real awareness of what Skype is, so these articles about people relying on it, even in a negative context, helps raise awareness that there are alternatives to traditional phone service," said Sterling, who runs Sterling Market Intelligence.
That's music to the ears of Jaxtr CEO Konstantin Guericke. "The big difference between us and Skype is we work on phones, which is how most people want to make their calls," he told internetnews.com. "There's SkypeIn, but that's something you have to pay into; we're free."
Jaxtr offers 100 minutes in free calling to members in the U.S. and internationally (220 countries). Guericke said there are plans to offer a paid premium service that would extend the 100 minutes/month and also to build out its ad support. He also said the recent financing will help pay for additional technical support staff to service those paying customers. Analyst Sterling said the market for VoIP is far from mature and is more about growth than competition between Skype and upstarts like Jaxtr.
"In addition to free calling, Skype is looking to be an advertising platform and reduce the friction of what it takes to buy and sell on eBay," he said. "I think free international calling is the bread and butter and a big deal for Jaxtr right now. Price sensitivity can't be overestimated as a driver of consumer behavior."
Sterling does agree that phone-to-phone communication is more consistent with how users expect to make calls versus using a PC. "It's a red flag to ask consumers to change behavior; they won't do it in an accelerated fashion; it takes a long time."
For now Jaxtr is actually appealing most to a demographic that is perhaps most open to new ideas. Guericke said 700,000 of its million users are in their 20s.
One of the attractions for these users may be the ability to hear from people visiting their MySpace and Facebook profiles. Jaxtr offers a simple widget that can be added to a person's social networking page. Visitors to their profile page only need to click on the Jaxtr widget to initiate a call. The widget provides a link to make the call, so individual phone numbers aren't public.
Guericke noted that business professionals can do the same thing by adding a Jaxtr link to their LinkedIn profiles. Prior to Jaxtr, Guericke was a co-founder of LinkedIn.