Ooma, a Palo Alto, Calif-based company that launched with much fanfare last year had run into a wall in recent months. It lost some key executives and failed to live upto its promise. Ooma promised free voice calls for life married to slick hardware was a classic case of too much sizzle, very little steak. Lately there were signs that the company was staring down a dark abyss.

Ooma is not dead, yet. In a bid to try and regain some of its lost momentum, Ooma is cutting the price of its Hub and Scout package by $150 dollars to $250. The company is going to sell a premier service package that is going to cost $12.95 a month or $99 a year. The company is refocusing on the consumer electronics retail channel, said Rich Buchanan, a former Sling Media executive who just joined Ooma as chief marketing officer.

I had a very candid chat with Buchanan, pointing out that it is hard to develop enthusiasm for a company that had overpromised and underdelivered. Instead of developing cheaper products and getting into the retail channel, the company focused on developing strange concept promotions for a device whose value proposition in a nut shell is: cheap calls.

Cheap calling is a tough, low margin and volume business - as Skype’s recent performance shows. Ooma device despite their slick packaging had some performance issues. Buchanan wants to refurbish the company’s reputation and brand. “Clearly I have my work cut out for me,” Buchanan acknowledged, admitting that “Ooma has a black eye.” He said the company had realigned and is focusing on building a retail channel.

I think even at $250 for the package, the device is still too expensive. You can buy PhoneGnome . Despite some distinct differences, the two companies serve the same end goal of making voice calls cheaper/free. (The comparisons between the two riles up our readers.) Buchanan who has been a retail guy for a long time, acknowledged that the right price for Ooma is between $99-to-$199. But in order to get there, the company will have to overcome some serious odds.

In US, the introduction of unlimited plans and other cheaper options from say Skype, has put Ooma on the backfoot. Given that I was impressed by Ooma at the time of launch, I hope