Cisco"s w/l phones for businesses

CHICAGO: Cisco Systems Inc. said it would begin selling mobile telephones based on a short-range wireless technology. Cisco, the No. 1 maker of equipment that directs Internet traffic, has targeted wireless local area networks and Internet phone calling, known as IP telephony, as growth markets. The San Jose, California-based company already dominates in sales of networking gear to corporations.

The new phone, which is in customer trials now and will be widely available in June, is designed to work within a corporate campus. It will use the local wireless standard known as WiFi to connect callers to a Web-based phone network, allowing them to roam around without missing phone calls.

"It really extends the key benefits of IP telephony in the areas of productivity for employees, more mobility for the enterprise users," Marthin De Beer, a Cisco vice president, said in a telephone interview.

WiFi, or 802.11b, is an ultra high-speed wireless Internet connection usually available within a radius of a few hundred feet. By setting up multiple access points, or "hot spots," businesses can make wireless Internet access available throughout their offices.

Companies such as Cisco, Canada"s Nortel Networks Corp. and Avaya Inc. promise that putting phone and computer connections on the same network can cut costs and give employees new options. Some companies currently offer unified services that allow users to read voicemail and listen to e-mails.

Avaya said it has had a WiFi wireless phone out for a year, and new version coming out in Cisco"s price range. "They"re finally starting to catch up with where we were," said Mack Leathurby, Avaya"s director of portfolio solutions.

IP telephony is the evolution of a concept computer users first explored some five years ago to make cheaper phone calls over scratchy Web connections. Equipment makers hope it helps boost spending at a time when traditional phone carriers and corporations have slashed investments in networks.

The IP telephony market is estimated to grow to $8 billion by 2007 from $1 billion this year, De Beer said. However, analysts said wireless WiFi phones account for only a small portion of the market, with traditional wireline phones making up the majority.

Cisco"s new phone will work inside such businesses as hospitals, warehouses, and retail environments, using Cisco"s networking gear and WiFi hot spots, De Beer said. It will allow workers to keep one number as they move among offices.

For example, a Cisco employee travels to London, but can still use the WiFi phone while on company grounds to call his boss back in California as if dialing from his desk there, he said. And if the employee calls his wife, it would be a local call, as if he were dialing from his desk in California.

The ultimate goal would be for the WiFi phones to work in public hot spots, as well, but analysts said that is at least four to five years away. "To be able to walk in with a Cisco phone into Starbucks or Albertsons grocery store and make a phone call, that"s out there with the Dick Tracy watch (phone)," said Jeremy Duke, president of research firm Synergy Research Group.

Even De Beer said WiFi phones will not replace mobile phones because WiFi"s range within a given office campus is so small and is geographically limited, generally available only in certain urban areas. Making a dual-mode phone where users can switch between WiFi and a wireless transmission standard like CDMA (Code Division Multiple Access) would improve the pickup rate, Yankee Group analyst Zeus Kerravala said.

Leathurby said Avaya, Motorola Inc. and Proxim Corp. are developing such a phone, which they expect to introduce by year end. However, analysts said companies will not transfer en masse to Internet phone gear until customers can mix and match phones from different companies, something not yet possible.

Cisco"s new phone will carry a list price of $595, but is expected to sell for about $400, Cisco said. Cisco will use contract manufacturers to do some of the design and assembly of the phone, but declined to elaborate.

In a market where traditional wireline IP phones cost less than $200, that is a steep price to pay, analysts said. "The thing is priced as a Ferrari in the world of phones," Duke said of Cisco"s new WiFi wireless phone. Cisco also introduced low-cost traditional wireline phone models that compete more directly with Nortel and Avaya, analysts said. The 7902 lists for $130 and provides Cisco with its first true inexpensive offering for smaller companies.

© Reuters