Who Will Buy Dual-Mode?

The first big wave of dual-mode cellular-WiFi handsets looks set to arrive any day now. Manufacturers such as Nokia Corp. (NYSE: NOK) displayed prototype handsets at the recent CTIA Wireless show, while European carriers such as Orange (NYSE: FTE) say they will offer the handsets to subscribers when they become available.

This leaves one nagging question -- who exactly will buy these new devices? Enterprise users that Unstrung has been speaking to tend to view these devices as promising technology but not something that they need to sign up for right away.

Part of the point of such devices is to save enterprise users money by exploiting existing infrastructure for cost savings. “We’re still a couple of years out from that.” reckons Jolean DeKort, telecommunications manager at multinational ink manufacturer Flint Ink, in Ann Arbor, Michigan, adding that she hasn’t yet seen any “clearcut data” on the savings to be realized by deploying dual mode phones.

That’s not to say companies aren’t interested in the technology as it matures. “Once they release a product that can really work with the enterprise PBX, which supports VOIP and IP telephony, then there will be a true cost saving, but I haven’t really seen that yet,” DeKort tells Unstrung Part of the issue for device makers is that many users are still busy putting in the infrastructure that will allow them to actually offer employees such services. “It’s just too soon,” says Shawn Eveleigh, senior systems administrator at Oakville, Ontario-based water treatment technology firm Zenon Environmental. “We’re just starting to implement VOIP on our network now.”

It is possible that well-heeled consumers will buy into the dual-mode concept. In-Stat is predicting that worldwide, consumer VOIP subscribers using wireless IP phones will grow from 2 percent currently to 73 percent in 2009. Typically, the appeal of VOIP now is that it is cheaper than using traditional phones and services. But Parsippany, N.J.-based research firm InfoTech isn’t expecting the cost of dual-mode prices to dip to the $400 level until 2008 at the earliest. This, of course, won't stop vendors from pushing on with these devices. Most of the early handsets are based on unlicensed mobile access (UMA) technology, which allows calls to be switched between cellular and WiFi networks. The technology appeals to operators because it allows them to maintain control of the call by tunneling the data back over a WLAN or Bluetooth network to a gateway on the operator's network, which processes and forwards the call data to the circuit or packet-switched mobile core. (See UMA Steps Up.)

The first UMA handsets from Nokia are expected in the U.S. this year.

— Dan Jones, Site Editor, Unstrung

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