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8x8 to Resume Videophone Sales

7/05/2006 02:08:00 PM Eastern

Santa Clara, Calif. — In an open letter to the company’s shareholders, VoIP provider 8x8’s CEO Bryan Martin said the company would resume sales of its Packet8 videophone after “extensive negotiations with our supplier” helped lower the product’s cost.

The videophone will become available in late August through the company’s Web site.

The letter was largely directed at allaying stock holders concerns about the company’s “volatile” share price. Martin attributed some of that volatility to the recent resignation of company CFO James Sullivan, general market turbulence and competitor Vonage’s troubled IPO.

Martin said 8x8 was positioned to weather the storm because of its small business and video products, which offer better customer retention than residential telephony, and its low-cost of customer acquisition.

“We have absolutely no intention of competing with nonsensical consumer promotions and advertising whereby customers added will never be considered profitable subscribers,” Martin wrote.

To better position the company, 8x8 is also “continuing the development of new videophone technologies and working on a new, lower cost, next-generation videophone platform,” Martin indicated.

8x8’s Packet8 videophone has had an on-again, off-again relationship with retailers. Company executives have indicated in previous interviews that a “sub-$100 model” will eventually be sold through retail. In the interim, the company is trying to make an end-run around video telephony’s perennial “two-phone” problem. With 8x8’s new PC soft phone, Web cam users can dial Packet8 videophone owners and vice versa. In this scenario, only one person need own a Packet8 videophone, while the other can use a Web cam and 8x8 software on his or her computer.