netTALK Issues Terse Response to magicJack Criticism

It’s on! Or is it? In response to magicJack founder Dan Borislow’s sharply-worded comments last week, competitor netTALK has issued a very measured response, defending the credentials of its executives and highlighting the benefits of its TK6000 product, without mentioning its chief rival by name.

While declining our request for a phone interview, netTALK CEO Anastasios “Takis” Kyriakides sent us the following statement via e-mail:

We, at netTALK, would like to respond to the comments made about our company and our product, the TK6000, as of late. Contrary to comments made, our company is founded and run by a staff of seasoned executives with decades of experience who firmly attests to and stands behind the high quality of netTALK’s policies, customer service practices, network and product development activities. Unlike others on the market, the TK6000 works independent of a computer, offering more convenience, flexibility and functionality to the end user – not to mention cost and energy savings. Because the TK6000 is flexible enough to not require the use of a fully powered computer to make and receive calls like other units, our customers are able to save time, energy and money. We developed the TK6000 by reviewing the current leading products in the category and focusing on the best attributes from each, resulting in a product we, and our loyal customers, feel is a best-of-all-worlds communication device.

On Wednesday, magicJack’s Borislow wasn’t nearly as diplomatic when he ripped into netTALK, whose TK6000 device, like the magicJack, offers customers the opportunity to make unlimited domestic voice calls using their Internet connections. When asked about his rival, Borislow said:

It’s a piece of sh*t. It has static. The call quality is pathetic. There’s no phone numbers available, and it’s run by a bunch of fly-by-nights with no assets. They’ll be bankrupt soon. We’re a real company with the best network and best software.

netTALK’s longevity seems to be the cause of some speculation.In addition to Borislow’s prediction that “they’ll be bankrupt soon,” BusinessWeek.com’s stock section has a news update from December 14, 2009 that reads:

Net Talk.Com Inc. filed its 10-K on December 14, 2009 for the period ending September 30, 2009. In this report its auditor, KBL, LLP, gave an unqualified opinion expressing doubt that the company can continue as a going concern.

However, the very same 10-K statement says:

Prior to  our fiscal year ended September 30, 2009, we were in our development stage.  Commencing with the fourth quarter of our year ended September 30, 2009, we concluded that we have substantially established our operating architecture and have commenced revenue producing activities sufficient to emerge from the development stage of operations.

Now that it is past the development stage, the company’s future likely hinges on the success of  its TK6000 product, which is built on a solid, but not innovative concept. Being able to connect a phone device directly to the router rather than the computer is a huge convenience, but Vonage has been offering a similar service for years now and many cable companies offer their own phone service via VoIP boxes as well.  The key, in netTALK’s case is that it offers the device and service for a one-time-only fee of $99 while Vonage typically charges $24.99 a month and most cable companies charge a lot more than that (Time Warner here in New York charges $45/month).

We haven’t had a chance to test the TK6000 yet, but we’re expecting to get in a review unit in the near future and put Kyriakides’ claims to the test. If it lives up to its claims and the company stays afloat, magicJack could be in for a challenge.