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Cisco calls on Internet telephony

The networking giant is hoping to overcome persistent doubts about Internet telephony's reliability with new products set to debut.

Before technologies that broadcast voice signals over corporate networks can catch on, equipment makers will need to overcome persistent doubts that their products can ever replace tried-and-true phone networks.

That reluctance so far hasn't stopped equipment makers from trying to build a market for so-called Internet telephony products. "There's been a lot of hype around convergence over the past couple of years," said Marthin De Beer, senior director of marketing for convergence solutions at Cisco Systems, one of the manufacturers making technology that "converges" computer and voice data on a single line.

"We have crossed that chasm. There will always be skeptics," De Beer said. "This is reality. It does work."

Cisco is adding new technology tomorrow to an existing Internet-based voice networking strategy announced last fall called "Avvid" and is expecting "major rollouts" of its technology this year, according to executives. The technology is commonly referred to as voice-over-IP or Internet telephony, and Cisco hopes to spearhead the market for it.

The benefits are numerous. Corporations can use the same network wiring to connect PCs and phones and thereby can create communications between the two. Net telephony also promises to reduce costs, since voice traffic can ride across a private corporate network rather than the public telephone network--a trend often called "convergence."

But many believe Internet telephony for corporations remains a market in its nascent phase. Corporations remain unwilling to add voice traffic to their layouts until it can be proven to be as reliable as current bullet-proof phone networks.

Despite the early stages, analysts believe the market is promising. Sales of Internet-based voice systems resulted in $300 million in revenue in 1999 and are expected to jump to $5 billion by 2003, according to market researcher Cahners In-Stat Group.

But that market data belies continued skepticism on the part of some network managers counted on to add such technology to their networks.

Research has shown large businesses do not plan to deploy the new Internet-based voice systems until the technology is proven. A recent study by industry consultants Infonetics Research found that the average large U.S. business loses millions of dollars a year from data network failures--and most large businesses may not want to risk having a phone system and data network crash at the same time.

De Beers claims he has not seen such demand for new technology in his five years at Cisco.

The internal information technology (IT) department of chipmaker Texas Instruments has tested new Internet-based phones and back-end switching equipment similar to what is called a "PBX" from Cisco since last fall. Yet the company stresses it is still in trial mode with 500 phones, despite positive reviews.

"I haven't used my old phone in months," said Dan Ripple, the company's manager of voice services.

Converged systems also promise to reduce maintenance. If an employee at Texas Instruments changes offices, they can just carry their phone to the new office and plug it in to a network jack. The phone is automatically "discovered" on the network, obviating the need for a phone technician or tweaks to a corporate PBX switch and software. Further feature changes can be made using a Web interface, according to executives.

Competitors Nortel Networks and Lucent Technologies are also in various stages of implemented their own Net telephony strategies. Others, such as 3Com, have added similar technology to their roster of networking equipment.

What is significant about Cisco's Latest move is it comes as the company continues to hone its strategy to provide voice capabilities across its traditionally data-focused line of equipment, often used for Internet tasks. That pits it against traditional phone specialists like Lucent and Nortel.

Cisco has added 10 new or updated products, scheduled to ship in May of this year, including new Internet phones and associated system software and hardware that the company hopes will extend Net telephony from small office uses up to larger corporations.

Though Texas Instruments said it is still in tests with Cisco's technology, others are planning large installations of IP-based phone systems, including early customer Merrill Lynch, according to Cisco executives. Cisco claims to have 10 customers testing its latest technology. The company also said it shipped 50,000 Internet phones to 500 customers in 1999.

Cisco said it had installed 5,000 Internet-based phones internally by the end of 1999, with plans to expand that to 30,000 phones across the company's campuses by the end of this year.

Cisco's new products can handle installations of up to 100,000 IP phones, according to executives.

Included in the launch are second-generation IP phones, new version of the company's back-end IP voice management software, and new support for voice in the company's Catalyst 6000 line of network switching devices. Cisco has now launched 50 IP-based phone products or improvements since last fall.