Cisco spruces up IP phone

Hoping to provide some breathing space between itself and competitors, Cisco Systems on Tuesday unveiled its first-ever voice-over-Internet-Protocol (VoIP) telephone with a colour touch screen, a Cisco executive said.

Marketing director Hank Lambert said the new features are meant to make VoIP phones much easier to use than previous models, which used greyscale screens. The features will for now be found only on Cisco's 7970G, which costs $1,000 (£640). But colour touch screens are poised to become a regular feature in Cisco's Internet telephony lineup if prices of the raw materials drop, he said.

"As the technology evolves over time, we'll try and drive popular technologies into other Cisco products," Lambert said.

Cisco is adding new features just as major competitors are beginning to finally chip away at the company's four-year-long dominance of the VoIP market. Though Cisco has sold 2 million VoIP handsets, more than its competitors combined, it's beginning to show weakness in sales of other VoIP hardware. A recent survey by InfoTech Research concludes Avaya overtook Cisco as the No. 1 worldwide supplier of a key piece of Internet telephony network equipment for businesses.

At risk for Cisco is its dominance of an equipment market expected to mushroom to $15bn in the next three years, according to research company Synergy Research Group. After years of overpromising and under-delivering, VoIP providers are generating renewed interest among consumers, thanks to sharp growth in broadband connections to the home, improvements in quality of service, and hook-ups that allow VoIP calls over ordinary telephone handsets rather than clunky PC microphone systems.

VoIP services for now typically promise a smaller phone bill, virtually wiping out charges for long-distance and international calls. In addition, connecting phone calls over the Internet could eventually open the door to advanced communications services that tie voice together with email, instant messaging and videoconferencing -- something that Microsoft and others are already working to achieve.

One of the first customers using the 7970G is the city of Palm Beach, Florida, which is conducting a very limited trial of the gear, Lambert said.

Like most VoIP phones, the 7970G will also perform Internet functions such as searching a database for work orders. It does so by running programs written in an emerging software language called XML (Extensible Markup Language) that's used to share data over networks.

Also Tuesday, Cisco said it will extend XML capabilities to its 7905G and 7912G VoIP phones by the end of the year. The phones are available now, selling for $135 and $165 respectively.