Features To Trump Frequency In Cordless Marketing At CES

New York— Cordless manufacturers will roll out a host of new technologies at International CES to keep home telephony viable in the cellular and VoIP age and beat back the relentless price erosion that has become the category's hallmark.

CES attendees will find:

• More Bluetooth devices to link cordless phones to cellular phones without a physical dock;
• Larger multihandset bundles, with clubs getting four handsets in one box and CE dealers getting three-handset bundles;
• More partnerships between cordless manufacturers and VoIP service providers and an expansion of product lines under existing partnerships;
• The first Digital Enhanced Cordless Telecommunications (DECT)-based cordless phones in the U.S. market;
• USB handsets and cordless phones for PC-based VoIP and instant-messaging services such as Skype and NetZero;
• Multi-purpose expandable systems with interchangeable components for audio and video monitoring, cellular conversion, VoIP telephony and a choice of conventional handsets.

The broadening array of new technologies signals a shift in how cordless telephony will be marketed in 2006, said Tom Bratton, worldwide marketing GM for Thomson Communications. “We're changing the game. It's no longer about numbers — it's about selling features.”

Vendors described the process as putting the cordless handset into a more central role in the “digital home,” keeping the product relevant by pushing such functionality as VoIP, cellular conversion and video monitoring.

The change is being driven by the “bloodbath” that has occurred in the market, said Matt Ramage, VTech's marketing VP. The NPD Group, for example, found that 2.4GHz analog/digital and 5.8GHz analog/digital dropped a combined $100 million in retail-level sales for the first 10 months of 2005, compared to the year-ago period. Products in the 5.8GHz analog/digital spectrum were the only ones to report dollar gains over the surveyed time period.

Digital spread spectrum pricing has fallen off precipitously for both 2.4GHz and 5.8GHz, suppliers added.

With no higher frequency on the horizon to boost higher selling pricings, vendors will build out the current 2.4GHz and 5.8GHz models with more functionality.

The feature-oriented pitch will be complemented by the increasing availability of more standard telephony features, such as caller ID/call waiting, integrated answering machines, varied ringtones and color LCD screens, as price pressure forces vendors to offer more features at lower price points.

Manufacturers will also place more emphasis on bundled systems than on expandable multihandset systems in 2006. While aftermarket handset attach rates haven't budged much since the expandable system's inception, adoption of multihandset bundles has soared, Ramage said. As such, several vendors will increase the number of handsets offered in a bundle, up to four for some mass merchant dealers.

“We're finding that consumers are very happy with the bundle. It's one product that meets their entire home's telephony needs,” said Wayne Borg, Panasonic's national marketing manager.

The prominence of bundles will not mean that the expandable segment will be abandoned. Instead, vendors say that the expandable concept is changing — expanding if you will — beyond a multiplicity of traditional handsets to incorporate varied functionality into a single system.

Several vendors will be rolling out expandable systems with interchangeable parts that include not just cordless handsets but cellular docks, audio/video monitors, and VoIP adapters — all capable of communicating with a single base station.

If the cordless phone is to remain relevant, it needs to do more than just place calls; it must communicate with a host of other digital devices in the home, manufacturers argue.

Manufacturers are also sinking their teeth into Bluetooth, embracing the wireless frequency to serve as a “wireless dock” for cellular conversion. Using Bluetooth sidesteps the problems of multiple mobile phone hardware platforms, Ramage said.

Although 5.8GHz will likely represent the upper threshold for home telephony's operating frequency, vendors will in fact introduce a quasi-new frequency this year: 1.8MHz/1.9MHz, or DECT (Digital Enhanced Cordless Telephony). In April, the FCC approved the use of these frequencies solely for voice communication, and phones in the band based on Europe's DECT standard will debut at CES from Philips and others.

DECT is widely used in Europe and other markets and will be positioned by manufacturers as a means of making cordless phones “Wi-Fi friendly” and free of 2.4GHz microwave-oven interference.

Cordless phones featuring built-in terminal adapters and VoIP connectivity will also be on hand. Several vendors will offer their first such devices in concert with VoIP service providers, while Uniden and VTech will introduce second-generation models for use with their partners.

Cordless vendors will also court the roughly 5 million U.S. Skype users with USB base stations and handsets capable of displaying Skype buddy lists and placing calls without being tethered to a PC.