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Gear makers call on Internet phones for growth
New York, Mar 31: Communications equipment makers are pinning their hopes on an emerging market where companies rip out their old telephone switchboards and replace them with computer phones using Internet technology.
New York, Mar 31: Communications equipment makers are pinning their hopes on an emerging market where companies rip out their old telephone switchboards and replace them with computer phones using Internet technology.
Companies like Cisco Systems Inc.CSCO.O , Nortel Networks Corp. NT.TO NT.N , and Avaya Inc. AV.N promise that putting phones and computers on the same network can cut costs and give employees new options like reading voicemail or listening to e-mails.
The technology, dubbed "Internet telephony," marks the evolution of a concept that adventurous computer users first explored some five years ago to make cheaper phone calls over scratchy Web connections.
"They started out as science projects, but businesses don't have time for science projects," said Don Smith, chief executive of privately owned Mitel Networks of Canada. "Just at a simple level, the sound quality wasn't there."
The technology is now one of the brightest hopes for communications gear makers looking for new ways to make money once the depressed corporate spending market recovers.
Upstart Vonage Holdings Corp. has put Internet telephony in the limelight by selling cheap phone deals to consumers via high-speed Internet connections at home. The service includes free add-ons like caller ID, voicemail and call transferring.
Some businesses, such as the Memphis Grizzlies professional basketball team -- formerly the Vancouver Grizzlies -- have also dipped a toe in the waters.
When the team's headquarters moved more than a year ago, information technology director Mike Garrison said he got two networks for the price of one when he combined e-mail and phone calls on a single line in the brand new offices.
"We virtually support our own network today without having to bring in a telephone programmer," Garrison said.
But the Grizzlies organization is one of only a small number of U.S. businesses that have taken the plunge. Only 3 million office phones based on Internet technology had been sold globally by the end of 2002, according to research firm Frost & Sullivan.
One reason for the slow start is that the first Internet telephony products were lacking some features and the quality offered by traditional phone networks and, therefore, attracted only the most experimental communications managers.
Companies like Cisco Systems Inc.CSCO.O , Nortel Networks Corp. NT.TO NT.N , and Avaya Inc. AV.N promise that putting phones and computers on the same network can cut costs and give employees new options like reading voicemail or listening to e-mails.
The technology, dubbed "Internet telephony," marks the evolution of a concept that adventurous computer users first explored some five years ago to make cheaper phone calls over scratchy Web connections.
"They started out as science projects, but businesses don't have time for science projects," said Don Smith, chief executive of privately owned Mitel Networks of Canada. "Just at a simple level, the sound quality wasn't there."
The technology is now one of the brightest hopes for communications gear makers looking for new ways to make money once the depressed corporate spending market recovers.
Upstart Vonage Holdings Corp. has put Internet telephony in the limelight by selling cheap phone deals to consumers via high-speed Internet connections at home. The service includes free add-ons like caller ID, voicemail and call transferring.
Some businesses, such as the Memphis Grizzlies professional basketball team -- formerly the Vancouver Grizzlies -- have also dipped a toe in the waters.
When the team's headquarters moved more than a year ago, information technology director Mike Garrison said he got two networks for the price of one when he combined e-mail and phone calls on a single line in the brand new offices.
"We virtually support our own network today without having to bring in a telephone programmer," Garrison said.
But the Grizzlies organization is one of only a small number of U.S. businesses that have taken the plunge. Only 3 million office phones based on Internet technology had been sold globally by the end of 2002, according to research firm Frost & Sullivan.
One reason for the slow start is that the first Internet telephony products were lacking some features and the quality offered by traditional phone networks and, therefore, attracted only the most experimental communications managers.
In addition, as mobile phones became more popular and choked the growth of traditional phone lines, the reasons for telephone companies to invest in Internet phone technology began to disappear, Yankee Group analyst Christin Flynn said.
Bureau Report