The office desk phone is dead!

Hardwired office desk top phones, some costing several hundred dollars a piece, and a very lucrative business for the likes of Cisco, Avaya and others, are on their last legs.

They will follow the same path as landline phones have in residences, where already 25 percent of consumers in the US (and higher in some other countries) have abandoned them for the convenience of their mobile phones (it’s much higher then 25 percent in the younger age groups).

And those percentages are rapidly growing. Smart phone users find they get much more bang for their buck, and balk at paying two carrier fees for what they consider redundant services. And like most technologies of the past few years, what happens with consumers, generally gets implemented by businesses within a relatively short time.

So, within 2 to 3 years, I expect 25 to 35 percent of business users to employ a mobile smart phone device exclusively and abandon use of a fixed line desk phone. The impact to businesses will be significant as they embrace this mobile enabled mindset.

The result is that mobile devices will need to be enabled with many of the same productivity enhancing features of current fixed line desktop phones connected to feature-rich private branch exchanges (PBXes, or business-specific phone exchanges). Companies will be required to extend existing PBX/business phone functionality (e.g., extension dialing, call forwarding, internal routing) to a wide range of mobile devices. Vendors of business oriented smart devices, and business PBXes, will have to scramble to meet that need. But a significant portion of existing business PBXes are old and can’t easily be upgraded, nor are there universal standards to make cross-platform connectivity easy.

So who might be some of the winners and losers of this rapidly emerging trend?

Cisco stands to lose lots of desktop device business as a result. Cisco knows this, which is why it created the Cius tablet. It’s still too expensive for many users, and it’s not going to be the primary communications device like a smart phone, but it’s a step in the right direction. And Cisco competitor Avaya, with its A175 tablet and Flare interface, is moving in a similar direction.

Of course, Cisco and Avaya do have a significant stake in the back office IPBX (IP driven PBXes) market — where they should do very well by rolling out smart phone directed features (and partner with third-party solution providers).

On the device side, RIM bought a PBX extender company (Ascendent Systems) several years ago and turned it into an IPBX connected extension of its BlackBerry Enterprise Server (BES) architecture, which turned into its Mobile Voice System (MVS). It was ahead of its time when it was launched, but as more users choose to adopt only smartphones, this capability will grow in importance. Of course, MVS only works within the BES environment, so it’s not as valuable for mixed device environments, but this does give RIM a market advantage for BlackBerry environments.

Google offers Google Voice, which is cross-platform, but will ultimately be “tuned” for Android devices. Microsoft has Lync (formerly Office Communications Server), which it hopes will extend its dominant Exchange franchise into a unified communications powerhouse, but currently has limited mobile support. And IBM offers Connections and Sametime to enhance its suite of communications and social networking tools attractive primarily to the largest enterprises.

None of the above are direct replacements for the office phone/PBX today, but they are clearly pointed in that direction, unifying the voice and data features of the smart device world. And Cisco is not sitting still either, integrating a number of its acquisitions (e.g., WebEx) to enable mobile unified communications on its IPBX platforms. And there’s the wild card of what Apple might do in this space – partner or offer its own competing product to Google Talk.

Ultimately, it’s the user who stands to gain the most. And its companies who stand to feel the most pain in the next couple of years as they struggle to implement a strategy to make this happen within their existing telecomm/IT environment.

Short term costs will go up, as companies must purchase extensions to existing backend systems, or replace them altogether with newer generation products. Longer term however, the need for a single device which is always connected and always available to the user will enhance both that user’s productivity, and lower overall costs to the business by increasingly piggybacking on already existing connections and application (e.g., VoIP, email/messaging, presence, optimized routing, WiFi (free) calling, etc.).

Here’s the bottom line: few businesses have yet moved very far down this path. Its likely many will feel the heat from users in the next 6-12 months — especially the executive ranks that adopt newer technologies quickly and have the highest expectations. And as with in-demand devices like the iPhone and iPad,  IT/telecom operations will likely be caught off guard and struggle to catch up.

Jack Gold is the founder and principal analyst at J.Gold Associates, based in Northborough, Mass. He covers the many aspects of business and consumer computing and emerging technologies.

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  • http://www.facebook.com/people/Tom-McGuire/1080050050 Tom McGuire

    Wow, thanks for posting on a topic that has been discussed already for several years in many ciircles and by IT professionals worldwide. The decline of the desk phone has been speculated on ever since the first mobile and softphones first began to appear. This is nothing new. If this was written 3 years ago it may have been newsworthy, but now it just seems like old hat.

  • http://twitter.com/EricWarnke Eric Warnke

    I actually disagree on the viewpoint that it's “dead”. Sure there's a decline, but at the end of the day my smartphone isn't at all comfortable to use, the speakerphone sucks, it's hard to hold with your shoulder, and it gets really hot when using it for extended periods of time. Never mind network congestion and dropped calls.If anything I think we'll see something more like a base station that you dock your phone with and you're able to use the handset and speakerphone capabilities of it, rather than directly use the phone. Also, VoIP over WiFi as a standard feature for smartphones is just around the corner; it already exists but it's not heavily adopted.

  • http://www.facebook.com/people/Tom-McGuire/1080050050 Tom McGuire

    Plus, how many offices have you been in where there are no desk phones? My guess would be none. I haven't seen any yet. That's not to say they don't exist or that companies aren't considering it, it's just that it's not an actual reality at this point. I agree with Eric that their future probably lies in some complimentary relationship with mobile devices. The 2 can already exist as one extension/number on an IP PBX, so that isn't a tough one to figure out. But dead is I think is a bit premature.

  • http://pulse.yahoo.com/_5IZY7KXSMYEJYGCJCJ35RU7JGA religous equal

    While it is true that the market is shifting in that direction, desk phones will not truly die off. Many companies may consider keeping said infrastructure until time dictates they should move to mobile, not if they could. I actually agree that a hybrid setting with mobile and desk will probably be the future. As far as I know, the company I work for has no new plans of going only mobile, and desk phones will be here for a while.

  • lmaury

    I still have a landline for important calls because, while I love my Droid phone, the voice quality isn't good enough for me to read nuance and emotion in the voice on the other end. Over a landline, I can tell what a person is thinking. Over a smartphone, I can't.However, if this Cius Tablet has decent voice quality, it could rule.

  • http://www.cognation.net deancollins

    ha ha ha…. #FailYou can tell this was written by someone talking out of their butt. Aint going to happen.Been discussed ever since mobile/Dect/CT3 was introduced (oh i'm sorry never heard of those – go do some reasearch).Todays news tomorrows fish and chips.

  • PeterA650

    Voice quality has nothing to do with your smartphone. It has everything to do with the codecs employed by your cellular carrier. Remember, their main consideration is bandwidth so they can service as many subscribers per cell as possible. Also, _you_ may want decent audio quality but, trust me on this, your employer will gladly make a compromise in that regard to save $$. How do I know? That's what fuels my bank account and stock options ;)

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