As telecom equipment makers aggressively market IP phones capable of running business applications, an industry analyst warns companies will waste billions on buying phones with large screens for users who already have a personal computer in their workspace.

Gartner Group Inc. estimates companies will needlessly spend US$20.3 billion on expensive IP phones between 2005 and 2010. The Stamford, Conn.-based market research firm’s forecast is based on an estimate that of a total of 150 million IP phones sold during this period, 75 per cent will be on models that cost $150 more than a cheap phone that will serve all the user’s needs.

In a recent report titled, “Don’t Purchase IP Screen Phones If You Already Have a PC on Your Desk,” the research firm recommends businesses spend their money on something different, such as unified communications applications for their PCs.

Gartner Group managing vice-president Bob Hafner, who wrote the report, said he’s not telling telecom managers not to buy any high-end IP phones.

“This is only for people that have a PC on their desk,” he said. “If you don’t have a PC on your desk, you probably do want one of these phones for some of the applications.”

For example, he said, a high-end IP phone with a bar code scanner might be ideal in a retail store for an agent who doesn’t have a PC.

But those who already have PCs would be better served with a less expensive IP phone (in the US$150 range) and unified communications applications that connect the phone to the PC. “A lot of people are buying these screen phones to run little applications like directories and stock tickers,” Hafner said. “I was talking to someone who puts the cafeteria menu on their phone everyday. If those are the kinds of applications you want, put them on the PC.”

Some IP phones cost as much as US$1,000 and Gartner estimates companies worldwide will overspend on IP phones by US$16.9 million.

The remainder of the $20.3 billion that companies will overspend is due to telecom managers buying IP phones with Gigabit Ethernet ports, which can add US$75 to US$150 to the price of a phone. Gartner estimates 30 per cent of IP phones will be unnecessarily ordered or upgraded to Gigabit Ethernet.

If companies instead bought low-end IP phones, with one- or two-line displays, they could take the money they saved on the phones and spend it on applications such as instant messaging, presence, unified communications and conferencing for their PCs, according to Gartner.

But Gartner is not advising users to stop buying phones and use soft phones on their PCs, because PCs are not reliable enough yet. But, Hafner said, IP phones usually have proprietary development environments, whereas PCs can run telephony applications based on widely-used operating systems.

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