We’re still using headsets, and that really gets to our point that it’s all about CPE. For VoIP and Video over IP to get really mass market, it’s going to take huge improvements in CPE to get there
OK, we’ve heard that 802.11 is creeping its way into cellular phones. We’ve seen wireless racing through homes. We’ve experienced not-so-bad VoIP using Skype and other leading packages.
And it’s all been interesting thus far, almost at an academic level. Indeed, TeleChoice holds all of its internal meetings via an unlimited use, $25 to $50 per seat VoIP and Video over IP service provider called Viditel that has enabled us to track the continual improvements in packetized communications. We’ve been through four system upgrades in the past year, each version getting better.
They added cool capabilities like dual voice channels – copying each voice packet and sending it twice, so if a packet gets slowed up in transit its twin can get through. This has dramatically improved the voice quality of our meetings to the point where you cannot tell it’s not circuit-switched.
But we’re still using headsets, and that really gets to our point that it’s all about CPE. For VoIP and Video over IP to get really mass market, it’s going to take huge improvements in CPE to get there.
The great news is that those CPE improvements are going to be happening this year.
Vonage is probably the first provider that’s been able to fulfill on a wide scale the CPE ease-of-use pledge – it allows you to use your normal phone in everyday conversation. As a result, they’ve signed up 100,000 users and are the industry’s VoIP darling.
Typically, CPE advances start at the high-end corporate level and trickle down. It happened that way with 802.11 access points, routers, cell phones and all sorts of mass market devices we take for granted now.
But what is really going to blow the socks off of VoIP usage is the convergence of two mega-trends: wireless and VoIP, and this is going to be driven by CPE advances this year.
We’ve been calling this shot for a while, but at the Dow Jones VentureWire Network Outlook conference this week, two trends solidified that are really going to blow this market wide open.
The first is 802.11-based ‘cordless’ phones. Wireless 802.11 handsets, a la Cisco and Symbol Technologies, have been niche entrants to date due to their high cost. Whenever it costs $300 to $500 or more for a phone, it’s going to take a while for penetration to result. But Jeff Citron, CEO of Vonage, once again showed leadership by letting slip that in the fourth quarter this year, they’ll start shipping 802.11-based handsets to their customers. Citron said they never order anything in quantities less than the 100,000s and he thinks he can buy these at or about the same cost as his Motorola VoIP conversion devices today – something he pegged in the neighborhood of less than $50. And, oh by the way, he’s giving them away to subscribers who sign up.
Think he’ll be successful? In spades. We’ve been waiting for this inflection point to really make handheld 802.11-based devices an OfficeMax/Staples/Walmart mass market item. And Vonage has the clout and volume to do this. Look for players like VTECH (who also has the AT&T brand licensing franchise) and consumer good manufacturers to follow in no time flat.
Is it VoIP that’s solely driving them? Nope. As we’ve said before, the preponderance of 802.11 access points in the home is causing too much interference with 2.4 GHz and 5.8 GHz phones, and will lead many to buy these phones to simply replace their cordless phones. We hope that Jeff deploys these so they can have a co-presence on the circuit and packet switched networks – let people ease into this with a button to make an Internet call and another to make a PSTN call, sort of like dialing ‘9’ in the office.
The other thing that caught our eye at Network Outlook was a little start-up named Nimcat Networks, which was previewing its to-be-launched-in-April peer-to-peer VoIP phones. From the preliminary looks (we’re getting units to test shortly), this is the level of global simplicity we’ve been waiting for – you are not reliant on a particular service provider, or a particular centralized piece of equipment, or any central voice mail or other adjunct device: everything is housed in each phone. Unpack the box, plug it into your LAN, and the device will self discover other devices on its VPN and establish your corporate phone network. Link to the PSTN at one site and you can have a central phone number, automated attendant, personal voice mail, and other regular features. What’s great about this is that if you have a small company that is national (or international) in scope, you are not dependent on a single carrier to provide the same hosted service to all your locations and interlink them, nor are you tied to an expensive VoIP implementation that requires installing a central unit and management over all the devices. This is the packet version of a KSU-less SMB phone systems that made Panasonic and others wildly successful with entry-level phone sets. At first blush, peer-to-peer not only makes sense, it’s the only way to go for small business. The software is being integrated into phone sets today and soon, wireless handsets.
It’s developments like these that are going to move this all into the mainstream, and fast. We don’t have to think very long to buy a sub-$100 802.11 handset, and we don’t think others will wait long as well. Now if we could only get Vonage and Nimcat together, we’d be pigs in mud.
