To summarize: Desktop IP phones are minimally innovating (oh look, a picture screensaver!) while mobile phones are not only rapidly evolving, but more capable than their larger desktop ancestors. It is not: Will the cell phone replace desk phones? It is when.
Back when I wrote that 2008 would be the record year for IP phones, I was hoping to avert a tragedy. I felt strongly that the IP phone needed to expand its capabilities--beyond speaker, hold, redial, and transfer. The modern phone is an always-on IP device. There should be plenty of ways to expand its capabilities. I've tossed out ideas ranging from Internet viewers such as the Chumby or Sony Dash to full blown phone operating systems such as an Android IP phone. Or, the IP phone could integrate with building systems such as an IP thermostat for HVAC or video cameras/motion for security systems.
Meanwhile, the personal cell phone's value to the owner continues to expand. Remember when cell phones were just phones? Now the phones offer broad communications (email, IM, SMS, Twitter, Facebook), replace multiple devices (camera, navigation, voice recorder, music player, video player, calculator, watch, game devices, calendar), and provide a computing platform for countless applications. Smart phones are not slowing. According to (IDC) Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 54.7 million smart phones in the first quarter of 2010 (1Q10), up 56.7% from the same quarter a year ago. This growth is not a curiosity, but a threat. Cell phones kill industries ranging from printed calendaring/diaries to pay phones, and there are plenty of reasons to believe the enterprise desktop phone is next.
At Google's Atmosphere conference, Mary Meeker, Managing Director at Morgan Stanley, presented the mobile Internet as a the fifth computing wave. The first four waves were mainframes in the '60s, mini-computers in the '70s, PCs in the '80s, Desktop Internet in the '90s, and now mobile Internet. Each cycle has a 10-fold increase in users over the previous. And here's the news flash--those mobile computers she's referring to predominately happen to be phones. She stated that within five years, the mobile device will be the primary means for people to connect to the Internet (at home and at work). The operative word being "connect". Mary said five forces are aligning to increase mobile demand: 3G, social networking, video, VoIP, and impressive devices. "The rate of change in innovation related to mobile Internet is unprecedented, I think, in world history."
Now factor in how budgets are tightening, user expectations (from consumer services) are increasing, and everyone's favorite: the joy of spending other people's money. Flashback: about ten years ago, when I worked at GE--we provided remote home based employees with the following standard issue gear: two phone lines, a laptop, a printer/fax machine, a cell phone, and a ton of software. It wasn't easy for local employees to get this, after all, they had an office. At one point we switched to ISDN for faster network dial-up (add 1 router). That division is gone so I can't directly compare to now, but in general those days are gone.
Today, most home based users instead get a stipend to cover "some" expenses. Many corporations still issue notebooks, but thanks to thin-client remote access solutions, even that entitlement is fading. Employees provide their own bandwidth, their own computers, their own printers, and their own cell phones. Many of these items can be partially expensed or paid for via an allowance. The corporation is minimizing its role as technical outfitter and instead subsidizes existing equipment. Other people's money. This trend isn't new--in the golden days employers covered items from haircuts to cars (and coffee).
So let's recap. Desktop IP phones are minimally innovating (oh look, a picture screensaver)--the standard IP desk phone today is pretty darn similar (in value and features) to the digital phone of the 80s. Conversely, mobile phones are not only rapidly evolving, but more capable than their larger desktop ancestors. Mobile phones are in fact booming (one of the only sectors that didn't feel the pinch from the recession). It is more than just the cell phone too, it is the entire mobile ecosystem. Smart phones contain four radios: 3G, WiFi, BlueTooth, and GPS--all of these sectors are experiencing a minimum of 40% year over year growth. It is not: Will the cell phone replace desk phones? It is when.
It seems odd to picture a business without a phone on each desk, but it is already happening. Most employers don't want phones--they never have. Phones and phone systems are considered a cost of doing business, overhead, a requirement. But if that requirement could be eliminated without a negative impact to the business--the desk phones would be gone (not true for cell phones). And that is where we are headed.
The first incremental step is the soft phone. The soft phone is interesting and brings new features along with a more intuitive approach to advanced features. But let's be clear about this, the soft phone is a cost savings measure--not an upgrade. The zealots are giddy with click-to-dial and other features, but their excitement is misplaced. It isn't the soft phone that excites them, it is an upgraded UC solution. Soft phones don't offer the mobility, location awareness, or potential cost reductions associated with mobile phones.
What about those 3,000 PBX features? That is causing the delay. but things are rapidly changing, with both premise and cloud solutions that strengthen the value of the cell phone. The technology is known as virtual number services. It puts a different phone number in front of the mobile number--this new visible-published-public number can be corporate owned and managed. Virtual numbers represent more than simple forwarding, they typically include a bevy of call manager functions enabling features such as messaging, call transfer, and call recording. Virtual numbers can be implemented on many on-premise call manager solutions with products such as Avaya's one-X and Mitel's Dynamic Extension. The service is also available from multiple cloud providers such as Ringio.com and Phonebooth.com. Google's consumer virtual number service is called Google Voice, and a business edition is widely expected.
The biggest challenge with virtual numbers is managing outbound callerID. If a cell phone is called directly, the features, applications, rules, reporting, etc. of the virtual number service are bypassed. The solutions generally involve initiating the call through the virtual number server or service. Here are some methods to do this:
* From the Computer: Click-to-dial programs talk to the communications manager/service, which initiates the call to the recipient and the cell phone.
* From the Cell Phone: Two basic approaches--the first is a cell phone application that overrides the dialer to transparently dial the call manager/service first. Without a client, the manual option is to dial the call manager first and then dial the recipient using DTMF codes. A new potential offering will be a redirect service at the carrier level. CounterPath's new NomadicPBX product allows an MVNO to control cloud/equipment routing.
* From a desk phone: Organizations obviously own a lot of phones today and even with a cellular target, the desk phone will offer years of service. But with SIP, T1, or PRI services, the carrier or phone system can send out a specific DID. With a little luck and a lot of work, it is possible to send out the virtual number - this method nicely leverages installed equipment.
* From Skype: Skype-Out allows a user to dial any phone number, it has the ability to support a user-selected outbound CallerID. However, there is a slight gotcha here favoring cloud services: Skype verifies the number via SMS text.
Virtual number services deliver the features and control without the device. Users can access a portal that sets business hours and can even block certain callers. On Mitel's Dynamic Extension, a cell phone user can be part of a call center/ACD and their status/presence, such as "in a call", can be reported back to OCS or other presence systems. With Ringio.com, users can share contacts and get screen-pops with detailed notes and history. Phonebooth.com's new Holdr app lets callers hang-up while on hold and it reconnects when the wait's over. Virtual number service features are growing and include unified messaging, conference bridges, call recording, and many more.
Resistance is futile, but let's hit some of the expected objections.
* Quality: IP phones are increasingly supporting wideband codecs, but the PSTN will not. Cellular networks are planning upgrades to wideband; Orange has already started overseas.
* Coverage: Coverage is generally expanding and femtocell technologies will address coverage holes.
* Intercom: Where it is important, organizations can use push-to-talk services.
* Dropped Calls: AT&T may miss this boat.
* Skype: Supported on some cell phones now, particularly Verizon. Cell phones won't replace desktop computers nearly as quickly as desktop phones.
* VideoConferencing: Likely coming with 4G, and desktop video solutions appear to be favoring the desktop computer over the IP phone.
* Paging: Can be accessed via a direct dial phone number and PIN.
* Soft phones: If needed, most smart phones can run a SIP soft phone client over WiFi and some over 3G.
* Work/Life Boundaries: Work calls are already coming to the cell for most of us--a virtual number allows more control over when and who can ring it.
* Cost: The enterprise is already paying for lots of cell phones, and the costs associated with desk phones are not trivial. Remember, the enterprise will only likely pay for a portion of this shared resource. Employees will appreciate the subsidy. Cost savings could also equate to fewer computer desktops, less liability about 911/location reporting, and improved ROI from mobility.
* Advanced Applications: The desktop phone is not part of the UC solutions, it's the services and integration capabilities that these solutions enable. These capabilities will come from the cloud or on-premise applications. Consider cloud service providers--Twilio, Voxeo, IfbyPhone for advanced IVR apps, OnState for call center, Calliflower for conferencing, etc. Or, go with on-premise servers for video, presence, conferencing, etc. Plenty of ways to skin the UC cat.
* Features: Some compromises today, but less and less, and this area is showing significant innovation.
Then there are a few areas where the cell just wins hands down: mobility, 911, location awareness, and headset compatibility.
The fact is, unified communications tools and capabilities are more likely to increase in a cellular workflow than with a desk phone. Consider presence: a smart phone not only knows where you are (GPS), but where you should be (calendar). It also knows your contacts. Consider rich presence rules that reveal your location to VIPs or calling rules such as "don't ring at church," and "only VIPs ring through after 5PM at home." But the real power of the smart phone is in the applications capability: Check inventory or prices, scan bar codes, look-up part numbers, view a video or picture, track packages, email, IM, etc.
Today, most of the cell phone apps are consumer focused, but enterprise apps are actively migrating to the mobile space. The applications, features, and capabilities are either there or will be there soon. But the real driver will be financial. Each employee brings his or her own device. As the company grows or shrinks, so does its telecom capacity. Other people's money. Things like this change slowly, but the virtual number capabilities are growing in availability and maturing.
Dave Michels is a regular contributor and blogs about telecom at PinDropSoup.
