Here it comes, I am guessing we should expect a whole bunch of companies to jump on the bandwagon?
Introducing the iPhone—But Not from Apple
Cisco is using a long-held trademark on a new line of consumer handsets—less than a month before Apple is expected to release its own cell phone
by Arik Hesseldahl
Here's the punch line: It's true. Not only that, but the company unveiling the device isn't Apple Computer (AAPL). Instead, the manufacturer behind a series of new products bearing the iPhone name is Linksys, a unit of networking equipment maker Cisco Systems (CSCO).
The company is announcing a series of Web-enabled telephone handsets designed to work with Internet calling services such as Skype, a division of eBay (EBAY), and other services, including SIP Phone's Gizmo Project.
For longtime tech watchers, Cisco's ownership of the iPhone name shouldn't come as a big surprise. Cisco has owned the trademark on the iPhone brand since 2000, when it acquired Infogear—which had registered the name in 1996. Infogear showed an Internet appliance bearing the iPhone name at the International Consumer Electronics Show in Las Vegas in 1997 (see BusinessWeek.com, 2/3/97, "A New Gig for Your Phone: Net Surfer"
. Cisco spent $301 million to acquire Infogear in 2000. It later acquired Linksys, a maker of consumer home-networking products, in 2003.
Linksys' announcement comes amid increasingly persistent speculation that Apple is on the verge of announcing a wireless phone that includes some of the music-playing features of its popular iPod music players. The name? Let's just say many thought it would start with an "i." Apple CEO Steve Jobs is widely expected to announce some kind of phone device at the Macworld Expo trade show in San Francisco on Jan. 9. Apple had no comment.
Trademark filings for use of the iPhone name have been spotted in countries outside the U.S., and Apple rumor sites recently raised eyebrows with the discovery that the Internet domain www.iphone.org
points to www.apple.com
What's in a Name?
There's no telling what an Apple telephone device will be called, and presumably Apple could use the iPhone name under an arrangement with Cisco. Indeed, Apple's very corporate moniker is split between itself and Apple Corps, the British holding company created by the Beatles in the 1960s.
Still, it's no match made in high-tech heaven. A contract limits the scope under which each party may use the Apple name, and as the computer company's activities have expanded over the course of nearly three decades in business, the two companies have sued each other over the finer points of how to interpret that contract (see BusinessWeek.com, 5/9/06, "Apple Finds It Can Do That"
Cisco's reputation is built on making the routers and switches that direct traffic around the Internet and catering to a client base that includes the world's largest corporations and providers of communications services. But increasingly, Cisco is transforming into a maker of devices aimed at consumers too.
Dennis Vogel, a product manager for Cisco, says the use of the iPhone name is part of a larger strategic vision concerning networked homes. Cisco CEO John Chambers will expand on that strategy in remarks at the International Consumer Electronics Show in Las Vegas in January. "He'll be talking about the integration of devices around the home," Vogel says. "The phone is a good starting point, but there is quite a bit more to be done."
One feature likely to appear in future products, Vogel says, is a smart call-routing feature. When a call comes in to a typical home, all the phones in the house ring until someone picks it up. With call routing, a call from a particular number makes only certain phones ring or all phones in the house ring, according to a set of rules.
A call might be sent directly to the phone in a teenage son's or daughter's bedroom instead of ringing all the phones in the house. Other calls might ring more than one phone in the house but not all of them.
Additionally, consumers will be able to make and receive more than one call at once, meaning family members won't have to wait on each other to use a landline or move to a cell phone because the house phone is in use.
All Aboard the Skype Bandwagon
There's certainly demand for devices that do more than handle traditional phone calls over landlines. Skype, the most popular Internet calling service, already claims to have more than 100 million registered subscribers around the world and says the software required to use its service has been downloaded more than 200 million times.
Hardware products that allow consumers to gain access to Skype have already started to hit the market from other vendors, among them a handset recently released by Netgear (NTGR) and Belkin (see BusinessWeek.com, 12/13/06, "Netgear's Phone in the Rough"
. Meanwhile, Vonage (VG) said in its most recent quarterly earnings statement that it had more than 2 million lines in service. Time Warner (TWX), Comcast (CMCSA), and Cablevision (CVC) all offer their own Internet calling services as well. Additionally, a recent study by market research firm In-Stat suggests that there are nearly 10 million voice-over-Internet-protocol (VoIP) phones used in businesses and forecasts that number will grow to nearly 46 million by 2010.
The Cisco-Linksys line of phones are coming to market just as the Internet calling business is heating up considerably. One model, the iPhone CIT4, is aimed squarely at Skype users who also use a landline phone. It's a cordless handset with a base unit that connects both to a regular phone line and to a computer network. It doesn't require a PC to use. Skype users can make free calls to other Skype users, but calls to and from conventional phones incur a fee. Skype announced plans for a flat-fee unlimited calling plan on Dec. 13, under the terms of which customers in the U.S. and Canada would pay $29.95 a year for unlimited calling to conventional phones.
Another new Linksys product, the iPhone WIP320, is a self-contained handset that connects to Skype by way of a home Wi-Fi network. A few other phones from Linksys bearing the iPhone brand include the WIP300, which is also a wireless handset that works with the Session Initiation Protocol, or SIP, which makes it compatible with services such as the Gizmo Project, as well as users of Earthlink's (ELNK) VoIP calling services among others. As with Skype, customers on SIP-compatible services can also make and receive calls to and from conventional phones, but such calls require a fee.
Another important step for VoIP will be to cell phones. Last month, Nokia (NOK) said it had integrated Internet calling on its N80 mobile phone in a partnership with the Gizmo Project.