Will enterprises hang up on desk phones?

Despite mobile pervasiveness, the market for IP desk phones is expected to boom

Enterprise desktop phones face growing competition from wireless handsets, but they aren't going the way of the typewriter just yet.

Cell phones, already ubiquitous, are now being joined by Wi-Fi handsets and dual-mode devices as popular tools for workers to stay connected. Features that consumers take for granted on their mobile phones, such as call history, text messaging and a wide variety of ringtones, frequently are missing or harder to find on a desktop set. Softphone clients on PCs, another alternative to desk phones, are gaining more capabilities and generally can work more easily with applications than a desk phone. But as enterprises embrace a new generation of telephony based on IP (Internet Protocol), they're still buying desktop phones, users and analysts say.

The new wave of IP wired sets comes as wireless options proliferate. Cisco Systems, Avaya and other major telephony vendors showed off numerous Wi-Fi business phones at the Interop trade show this week in Las Vegas. For employees on the road, there are dual-mode phones that can work with IP PBXs (private branch exchanges) for features such as extension dialing and can get better coverage in the office by switching to Wi-Fi. New software also can bring cell-only phones into the PBX fold.

In this light, increasingly elaborate desktop IP phones that often are more expensive than wireless devices are coming under fire.

"Why does my US$200 cell phone have ten times the functionality of my thousand-dollar IP phone?" remarked Yankee Group Inc. networking analyst Zeus Kerravala.

"Desk phones are 50-year-old dinosaurs. They shouldn't be there anymore," said Gartner mobility analyst Ken Dulaney. "All the desk phone does is forward calls to cell phones."

Yet Dell'Oro Group estimates the market for IP desk phones will boom in the coming years. The market research company said 11.3 million were sold last year and the number will rise to 34 million in 2010. The growth will come even as PC softphone sales grow from 2.6 million to 8.6 million, said analyst Alan Weckel. While strictly Wi-Fi phones will settle into vertical markets such as hospitals, which restrict cell-phone use, dual-mode phones will also be popular, he said.

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