March 28, 2001, 10:25 AM —
It might not be today or tomorrow, but Voice-over Internet Protocol
(VoIP) will be the next technology to take over the desk in your office,
according to Mike Volpi, senior vice president and chief strategy officer
for Cisco Systems Inc.
Cisco already has made close to $1 billion in acquisitions related to
VoIP to strengthen its position in the market, and has 1,000 engineers
working on VoIP technology, so it's probably a good job the company is
confident about the technology's future. "We firmly believe that this is the
time to take market share," Volpi said, addressing members of the press here
at the company's headquarters.
VoIP technology allows users to send voice calls as data is packets
across the Internet or a corporate intranet, rather than using
circuit-switched networks employed by traditional carriers. Advantages
include the ability to pull information such as stock quotes directly from
the Web to an IP phone, or to screen voicemail in the same way that a user
might screen a list of e-mail messages.
"Most people that look at VoIP think in terms of cheap minutes," Volpi
said. "That market is interesting, yet it's relatively small," he added. A
decline in the sale of legacy phone equipment combined with growing momentum
behind VoIP has led Cisco to conclude that the technology is working its way
into mainstream corporate America.
"Companies are now rolling out full VoIP systems instead of just test
systems," he said. Of course, one of those companies is Cisco itself, which
runs approximately 16,000 IP-based phones. But the company said it has
gained 850 new VoIP customers in the first quarter of this year alone, with
eight of those companies installing in excess of 2,000 phones each.
Although Volpi admitted that Cisco isn't sure what would continue to
drive the technology, he did offer a few ideas, such as the appeal of
unified messaging, and the potential for IP phones to provide higher quality
voice calls under the right network conditions. Also attractive may be the
ability to easily transfer a user's calling preferences and phone settings
to any IP-based phone.
"What you can do with the phone is what drives the decision at the end of
the day, not whether it runs over IP or not," he said.
Although VoIP products still make up a single digit percentage of Cisco's
business, the market for VoIP phones and equipment has seen 100 percent
quarter-on-quarter growth, while sales of traditional PBX (private branch
exchange) equipment has dropped 16 percent, Volpi said, citing research from
"The reason for us to be in the business first is to make sure the
company has a market share to start with," Volpi said.