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The Desk Phone's Last Hurrah?

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Cisco's recent earnings announcement showed they shipped 57% more VOIP phones year over year. This bodes well for the US economy- it means more companies are hiring more people. But as Eric mentions, it is possible that this could be the last big bump before businesses move towards wireless phones, hybrid devices and other options that they view as smarter and more integrated. The only possibility stopping this trend will be if the desktop phone can catch up quickly. M5 is there trying to make a smarter office phone.

The Desk Phone's Last Hurrah?

I know, I can't believe I wrote that headline either. I don't think I believe it, but when Cisco reports 57% growth in IP phone shipments Y/Y, how exactly do you argue with that?

What I'm not doing here is arguing, either in a point-by-point way or in a general way, against Dave Michels; latest feature. Dave thinks mobiles will replace desk phones at an even faster rate than he thought would happen when he last wrote about the subject a year ago. And I totally agree with Dave.

Just step back and look at the big picture: People, when they have any choice in the matter, don't use wired phones. They use wireless phones. People don't like business telephones. They don't understand how to work them and how to use them. In contrast, they love their mobile phones. They play with their mobile phones when they're standing around, bored, with nothing to do for a few idle minutes.

Of course, people don't necessarily like to talk on their mobile phones, though they do plenty of that too. Younger folks love to text on their mobiles, and older folks love to check their BlackBerrys every three and a half minutes for new incoming emails.

But still. Cisco's IP phone orders grew 57% Y/Y in the last quarter. And this not some kind of hocus-pocus like people have accused Cisco of in the past, where they count switch ports or other things and then extrapolate out to get some number of VOIP end stations they've deployed. If they've shipped 57% more IP phones, you have to think that the market for IP phones grew by something on the order of 57% in that time.

So what gives? Why do enterprises apparently fail to understand that the desk phone is a dinosaur with no future value, a wasted investment?

The PBX/telephone business has always tracked pretty closely to the economy as a whole. When companies were hiring, they needed to buy phones; when they were laying off, they suspended investments. Maybe the fact that Cisco's overall Unified Communications business grew at just about half the rate of the IP phone business indicates that, at least in some industries, upticks in hiring are releasing pent-up demand, and while core systems may have had enough capacity to support the new hires, there was obviously a need to add end stations.

We know that businesses are proceeding cautiously into the recovery--they're not yet ready to start hiring even if their business looks like it may be bouncing back. So maybe the vaunted technology refresh that we've been expecting in UC--the notion that when companies resume their communications investments post-recession, they'll fundamentally re-think what they're buying and how they're using it--maybe they're still not ready to make that leap.

So maybe the near-term future of the desk phone is, in fact, going to be OK. If business is picking up and you're hiring, the conservative thing to do is to equip people in the same way you've been doing. Maybe the desk phone has one last gasp in it before its ultimate demise.

via No Jitter | blog by Eric Krapf, Editor | May 13, 2010