E-mail to land in cordless phones

April 12, 2002

Panasonic, Philips Electronics and Siemens will begin selling "landline" phones that have the ability to send and receive e-mails, according to announcements this week.

The initial wave of telephones will debut in Europe, where using a phone to send e-mails isn't such a foreign notion as it is to Americans. An estimated 30 billion e-mails are exchanged between cell phone users every month in Europe.

Representatives for Panasonic, Siemens and Philips Electronics all declined to comment on when the phones would be in the United States, if at all.

These cordless phones, also called landline phones, are in about 94 percent of all U.S. households. The billions of minutes spent talking on these phones is the main revenue source for most telephone companies. But in recent years, more people have been choosing to own just a cell phone. The numbers are small--currently between 3 percent and 6 percent in the United States, according to research firm The Yankee Group. But it could soon grow to about 10 percent in less than two years, other analysts believe.

The planned cordless phones look nearly identical to cell phones, complete with a screen for displaying e-mail. The phone's keys would be used to punch in text messages.

New services, like e-mailing that carriers would charge for, could help make up for the expected revenue dips for companies like SBC Communications, Verizon Communications and BellSouth, the top three landline telephone companies, analyst say.

"Many people in this industry are very, very worried," said Howard Gutowitz, founder of Eatoni Ergonomics, which makes software used to enter text into phones. Panasonic, Philips and Siemens are including Eatoni's software in their new phones.

"It might be small now, but I can easily see 10 percent of all Americans giving up their cordless phones in two to three years," said Robert Saunders, an analyst with consulting firm Eastern Management Group. "Carriers will see these customers just evaporate."

Some wireless carriers have picked up on the trend. In Minnesota, Qwest introduced "Q by Qwest", offering a cell phone plan with unlimited minutes for $39.99, a heavily discounted price designed to lure people away from their cordless phone.

Home phones use a network of copper wires and fiber-optic cables to deliver service. Cellular phones, which are in the hands of about 139 million Americans, transmit their calls through the air.

But the industry faces some design problems if it plans to pack more features into landline phones, which have about 128 kilobytes of memory available to power the entire phone. The least expensive cell phones typically have about 10 times more.

The limited amount of memory has already proven to be a roadblock. Eatoni Ergonomics has its software in dozens of cell phones, which helps predict the next letter in a word that's being entered. It usually can work with 24 different languages. But on cordless phones, there was only enough memory for six languages' worth of guessed words, Gutowitz said.

Still, software makers have been able to add numerous services. The latest cordless phones from Siemens comes with a 33 minute digital answering machine, a 200-name phone directory and can display information in English, French, Spanish or Portuguese.