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Analysts sees phone calls moving to the LAN

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With the rapid advance of technology, it's not hard to believe that the workplace will look very different in a few years time. One analyst firm has identified two trends that it believes will emerge quickly: LAN telephony and wireless LANs.

LAN telephony uses networking equipment such as Ethernet wires and routers to carry voice traffic around the office, and a telephony application server to host and administer a variety of services. The technology could help companies cut costs by managing voice and data traffic on a single, packet-switched network, and lead to new types of phone services for users, according to a report issued by research firm Cahners In-Stat Group of Scottsdale, Ariz.

"LAN telephony is the ultimate convergence of voice and data and it will become the network of the future, integrating all data applications with the telephone," says Brian Strachman, industry analyst for Cahners In-Stat.

The technology will make it much easier for an employee to take their telephone to a different part of the building, plug it in, and retain the same phone number, speed-dials and caller preferences, Strachman said in an interview. Merging voice calls with the data network will also allow telephony services to be tied more closely to PC applications, the analyst says.

"It's quite likely you'll be able to pick up your telephone and say, 'Call Bob for me,' and the software will recognize the name, look it up in your PC database and dial the number for you," Strachman says.

For all this to happen, IT managers will have to be sold on the potential cost savings of LAN telephony. In addition, vendors such as 3Com and Cisco will have to ensure that their products interoperate - which isn't the case today, Strachman says.

Nevertheless, the cost of LAN telephony equipment is expected to fall rapidly over the next two to three years, and by 2003 sales of LAN telephony equipment will outstrip sales of traditional PBX gear, Strachman predicts.

Wireless LANs also will proliferate during the next two to three years, driven by a variety of factors and offering several benefits to users, Cahners In-Stat says in a separate report.

The increased use of notebooks in the workplace means companies can deploy wireless base stations that will allow workers to wander about the office or in and out of conference rooms and remain connected to their LAN, says Michael Wolf, a senior analyst with Cahners In-Stat's voice and data group.

"If you're a small company and you move a lot, you could put down a wireless LAN. When it's time to pick up and move you don't have to take any wiring with you," he says.

The adoption of wireless LANs will be a rapid one, Wolf predicted, driven by cheaper silicon components that in turn will drive down prices for wireless LAN equipment. Also important will be the widespread acceptance by vendors of a new technology standard, known as 802.11B, which supports connection speeds of up to 11M bit/sec, the analyst says.

However, wireless connections will continue to lag wireline connections in terms of speed for some years yet, Wolf predicts.

Cahners In-Stat estimates that the wireless LAN market was worth about $770 million last year. Between 2000 and 2004 the market will grow at a compound annual rate of about 25% to be worth around $2.2 billion in worldwide sales, according to the analyst firm.

The two reports by Cahners In-Stat, "LAN Telephony: The Future of Enterprise Voice" and "Enterprise Wireless LAN Market Analysis," are available for purchase from the company.

Cahners In-Stat can be contacted at 480-483-4440, or at www.cahnersinstat.com/.

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