The cell phone just got smarter as Japan service provider KDDI announced a partnership with both Hitachi and Oki Electronics to market a wireless phone system based on cell phone handsets.

What does this mean? The upshot is within the enterprise, calls to and from a cell phone on the KDDI network can be directed through an economical VoIP network that reaches the cell phone via 802.11 protocol rather than using the more costly cellular connection. This system works at the enterprise (business) level for now with the downstream promise of full functionality wherever there’s a wireless "hot-spot" -including your home.

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly &
Microdisplay Report

Oki and Hitachi have both standardized on the Sanyo E02SA phone that features wireless b/g and VoIP support. It has 40MB of internal memory and a USB 2.0 port with an optional high capacity battery.

Our take: This multi-mode phone idea that finds the lowest cost connection based on user proximity has been around for a long time. On the technology side, it has taken the advent of Wi-Fi networks with chips small enough to use in handsets as well as VoIP to make the dream a reality. Now with technology in hand and the KDDI partnership announcement, it looks like the will to do so is also here-at least in Japan.

Both Oki and Hitachi make enterprise phone systems and these could be extended to the home in fairly short order. Look for phone systems offering like support from other players including Toshiba, Sanyo and knock-offs from the Chinese possibly by the end of the year. The cost savings from this approach may be the "killer app" that drives future cell handset upgrades, perhaps even more than new mobile features like video that tend to add cost through increased service fees.

To enable this however, your next cell phone will have to support Wi-Fi connectivity and your service provider will need to support VoIP routing. Don’t look for wide adoption in the US until one of the cell service troika (Nextel, Sprint, or Cingular) decides to capitalize on the technology that more than likely will have a short-term negative impact on service fees.

Make no mistake, the service will come but only when it can be justified through demand and demonstrated effective with new subscribers. The question for the US market is who will bring it out first? –SS