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Tech Industry

Cisco shoots for cheaper Net telephony

The networking company says its forthcoming Internet phones have prices on par with rival products and will spur more offices to use IP telephony.

Cisco Systems unleashed a low-priced voice over Internet Protocol phone on Monday, hoping to counter its reputation as the most expensive alternative for companies choosing Net telephony.

The 7902G, at $130, puts the company on par in price with competitors, including SpectraLink, Cisco Systems Product Manager Jim Cirincione said. Several analysts, including the Meta Group, estimate that the average price of an IP phone is between $125 and $135.

IP phones allow people to make calls that travel over the Internet, rather than across privately owned long-distance telephone networks. The cost of making Internet phone calls is significantly less than that of basic long-distance service because the calls bypass the telephone companies' lines. As a result, many large corporations and tech-savvy consumers are using this technology for long-distance dialing.

Cisco has already sold 1.5 million IP phones worldwide, mainly to the 6,000 companies that are using its switches and routers to manage their networks' Web traffic. But many of the same companies chose to use buy their IP phones from competitors, citing the higher price of the Cisco gear.

"We've always been thought of as the higher-end solution," Cirincione said. "But with this phone, we're definitely on par."

Whether it grabs Cisco new customers remains to be seen, with the worldwide economy still at a crawl and corporate spending still tight. But the recent onslaught of earnings reports offered some upbeat results for the telephone industry.

In related news Monday, Cisco unveiled further details about its 7920 wireless IP phone due in June for $595. It will be Cisco's first IP phone to use a Wi-Fi network to connect.

"Some people were surprised that we didn't have it priced higher," Cirincione said.

Unlike the wired varieties, the Cisco phone is meant for niche markets such as hospitals or warehouses, where the work force is usually moving or never still for long, Cirincione said.

Rival SpectraLink unveiled two wireless IP phones phones on Monday, both scheduled to ship in the second quarter. The NetLink e340, aimed at offices, costs $400. The more rugged NetLink i640, for hospitals or warehouses, is $599.