VoIP Handset Market Set to Take Off With Vonage VTech Unit

Voip Handset Market Set to Take Off

July 22, 2005

By Sean Michael Kerner

The global Wi-Fi Voip handset market is set to take off according to a new study released this week from Infonetics Research. The study hits the street at the same time as Vonage and VTech officially launch a 5.8GHz wireless Voip system, with a Vonage Wi-Fi phone expected sometime this fall.

According to Infonetics Research's report, WiFi Phones Biannual Worldwide Market Size and Forecast, 143,000 Wi-Fi Voip handsets were sold in 2004 adding up to $54.7 million in revenue. Of that total $6.7 million in revenue was from dual-mode Wi-Fi/cellular handset sales.

Though currently a relatively small market, Infonetics expects Wi-Fi handset growth to continue till at least 2009 as Voip over Wi-Fi grows both in the enterprise and with consumers.

"Growth will be on the modest side in the short term, but handset prices will come down, and service providers will begin to think 'outside the box' a little with regards to potential service bundles," Infonetics Research analyst Richard Webb told EnterpriseVoIPplanet.com. "I think a lot of folks would like the idea of having one phone and one number which you can use pretty much anywhere."

There are however some technical challenges that need to be solved before widespread adoption, such as roaming across different wireless platforms, signal range, and quality of service issues. Webb expects that since vendors are currently working on solving the technical challenges that by mid-2006 market adoption will begin to take off.

"Traction is there but we're talking about two technologies which are still on the road to maturity—WLAN and VoIP—which have both come a long way but still have some technical hurdles to go before they see more widespread adoption in the enterprise in particular," Webb explained. "Voice is such a key application; some enterprises will be reluctant to change from their current voice services which work fine right now, even though they could do it cheaper."

Webb places Cisco among the vendors poised to be the big winners as the market matures. He noted that Cisco is showing growth in Wi-Fi Voip handsets and they have a large and growing customer base for both WLAN and VoIP.

That said, there is still room for specialist handset vendors, at least in the single-mode (WiFi-only) handset segment according to Webb.

"SpectraLink are the market leaders so far and have been genuine innovators, the vendor which most WLAN infrastructure vendors (WLAN switch makers particularly) want to prove interoperability with," Webb said. "If they and others such as Vocera can continue to innovate, they still have an edge, and a healthy growing business, which could ramp up more dramatically than our admittedly conservative forecast suggests."

On the dual-mode, WiFi/cellular handset side, Webb expects that most of the large cell phone vendors will get involved.

"Motorola already has a dual-mode handset and others will follow," Webb said. "We anticipate Wi-Fi becoming an increasingly common feature in cell phones over the next five years."

Vonage and VTech
It appears as though Voip services are getting in on the wireless handset market as well. This week, Vonage and phone maker VTech announced what they claim to be, "the world's first broadband enabled cordless phone system."

The VTech IP-8100-2 is a 5.8 GHZ cordless broadband phone system that is pre-configured with Vonage's Voip service. The system includes a phone base that plugs into a users existing broadband connection. It includes its own integrated router so an additional router to share the connection with a PC is not required. The system also eliminates the need for a stand alone adapter.

The IP-8100-2 is expected to be available at over 8,000 retailers starting on July 24, 2005 at an MSRP of $149.99 (with the plum of a $50 mail in rebate after 60 days of service).

The VTech product partnership is not Vonage's only Voip handset initiative. Vonage spokesperson Mitchell Slepian told EnterpriseVoIPplanet.com that Vonage is device agnostic and looks forward to releasing products that offer customers the most choice.

"Vonage anticipates releasing a Wi-Fi phone in the fall of 2005, as it recognizes that its residential and small business customers will utilize it to make their communications methods easier," Slepian said.