When cell phones are too small

Long-distance calls. Remember those? They still exist, of course, but the associated costs aren't a given, anymore. You can, in fact, call China for the same price that you'd pay to call your neighbor. The difference is in how you make that call.

Voice over Internet Protocol (Voice over IP or VoIP) allows calls, faxes and SMS messages to be routed via the Internet rather than public switched telephone networks (PSTN), the system that has traditionally routed our calls and becomes more expensive the farther the call must travel. VoIP, however, has none of those geographical limitations. The new system has caught on with individuals and is taking hold with the business environment as an attractive alternative that can save money. The most popular platform, Skype, began as a service for individuals but has begun marketing itself to businesses. With Skype, phone calls can be made for free between two IP addresses, or for a small fee from an IP to a land line or mobile.

Gigaset is a home communications firm that specializes in corded, cordless and VoIP phones. The company was established in late 2008 when private equity firm Arques Industries acquired an 80.2 percent stake in Siemens Home and Office Communication Devices from Siemens AG. CEO Hans-Burghardt Ziermann was in Prague for a Gigaset meeting and spoke with The Prague Post about the Czech market and its strategy for the future.

The Prague Post: What is the market like for fixed lines?

Hans-Burghardt Ziermann: Well, the fixed-line market is changing. Obviously, if you take the classical PSTN fixed-line market in the world, it's decreasing in numbers with the substitution by mobiles. Classic, fixed-line phones are passing away in many areas of the world. What we have now are the IP pipes coming into homes, and that is growing in huge numbers. Telephony is now a big part of the service packages offered through IP pipes. That's developing differently in different parts of the world; some countries offer flat rates on top of the IP pipes for calls, but some are also charging differently.

TPP: How do you sell your products to clients?

HZ: I would say there are basically two ways we do that. One way - the majority of how we sell phones and the way we prefer - is through retail. In retail, you can position your product, you can promote the brand, you can show the features, and you can upsell and generally generate higher prices. The other way is through a dedicated operator or with certain dedicated chains of IP providers. We're selling via the retail method more in more-developed markets. The United States is a good example of this; it's a highly developed market with very advanced retail chains like Best Buy. If you go to a significantly less-developed country, you basically have a business that is dominated by the operator that supplies the hardware, like the old days with AT&T in the United States.

TPP: What kind of features do fixed-line phones have now compared with previous years?

HZ: You have the classic features like holding, SMS, transferring. The biggest feature is the comfort aspect. I don't think someone wants to make hourlong calls on a little device like this [holds up a mobile phone]. It's probably not comfortable. But with a bigger phone, you have more of a comfort level, and the voice quality, which is very significant, is of a much higher level. There's also the issue of power consumption and radiation levels; Gigaset excels at providing low power consumption and radiation levels.

TPP: How do you work with services like Skype?

HZ: Well, if you take Skype, you basically have a methodology tied to a PC call from one IP address to another IP address. You usually can use a headset with this, although I don't think that's very comfortable. What we're looking at is a different way of using it. By attaching it to a cordless IP phone, you can hook that up to a laptop, iPad or whatever technology you're using.

TPP: What about corporate versus individual clients? Are those separate strategies for you?

HZ: If you take the normal cordless phone sold through retail, it's for consumers. But we're starting our own business approach called Gigaset Pro. We're going to address small- to midsize enterprises: small offices or home offices. It's interesting because, of course, there are large suppliers like Cisco that provide all the solutions you could imagine, but these solutions are not really fitting to smaller environments where you have 10-15 extensions. We have a software solution with that that is auto-configuring; anything that needs to be done can be done remotely, and it will have completely different price points than larger companies. We've introduced that in March in some focus markets, and we'll roll it out on the European market after that. It's a nice opportunity for us.

Claire Compton can be reached at
ccompton@praguepost.com