February 7, 2005 4:25 PM PST

Wi-Fi phones don't add up to much

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A new study suggests it will be a number of years before Wi-Fi phones, supposedly a revolutionary telephone technology, manage to fulfill expectations.

Analysts at Infonetics Research say portable phones using Wi-Fi, the popular technology that creates 300-foot zones of high-speed wireless connectivity, are taking hold in hospitals and businesses, but worldwide sales were negligible last year.

The results are disappointing. After years in development, the much-anticipated devices were supposed to take off in 2004. But with just 113,000 such handsets sold last year, or $45 million in total sales, it's apparent the prognosticators were wrong. Rather, the sales "represent a market at its birth," as Infonetics analysts put it.

Wi-Fi phones combine two very hot and potent technologies--Wi-Fi and voice over Internet Protocol (VoIP) software, which lets Internet connections double as extremely inexpensive phone lines. Typically, VoIP subscribers use a wired phone line, whether a single home phone or any number of phones in an office setting. But many service providers see an opportunity to create wireless versions of their services using Wi-Fi. Introducing the appropriate VoIP services and technology could turn hot spots into giant phone booths.

But it could take at least until 2009 before the cost of Wi-Fi phones drops enough for a mass market breakthrough, according to Infonetics.

"Voice over wireless Internet devices have the potential to be a hugely disruptive technology," Richard Webb, Infonetics directing analyst said a statement. "As VoIP goes wireless, this will present a challenge not only to fixed line operators, but to mobile operators."

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WiFi Telephony
WiFi telephony is an emerging sector of the communications industry that will be valued at $5 billion by 2010. 25 million new WiFon devices will be sold in the coming 5 years.

As an alternative to cellular, wifi telephony allows a user to connect to the Internet from public wireless LAN hotspots anywhere in the world, and make or receive low-cost VoIP calls, check voicemail, and SMS. Future releases of WiFon handsets and PDAs will include a SIM reader and camera.

WiFon devices are not locked, and may be configured for any VoIP service provider network.
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