Zoom Into VoIP

Anticipating the gradual decline of its dial-up modem business, Zoom
Technologies is launching a Voice over Internet Protocol
initiative.

The firm’s first product is a ADSL modem that can be bundled
with the firm’s new VoIP phone service. The offering is designed for
out-of-the-box use and feature pay-as-you-go service as well as flat rate
plans.

Users can plug one or more phones into the box’s ports to make VoIP calls or
traditional calls, such as 911 dialing, local or toll-free dialing, or
calls when the power fails. For VoIP calls, users hit “#” before the number.

The device, which also ties in data features like a router, gateway,
firewall, switch and USB port, will sell for about $100 through retailers,
catalogs and online. It is compatible with Windows, Macintosh and Linux
systems.

“VoIP shouldn’t be viewed as an add-on, but a basic part of a broadband
connection,” Terry Manning, Zoom’s vice president of marketing, told
internetnews.com. “That’s why we chose to integrate it into an ADSL
box.”

Zoom expects to see quick uptake overseas where broadband lines are being
added at a strong clip. Yankee Group predicts broadband penetration
worldwide will grow from $100 million to $325 million by 2008. Among the
countries Zoom is targeting are the United Kingdom, Turkey, Vietnam and
Saudi Arabia.

The company’s new Global Village VoIP service includes a number of free
features including IP-to-IP calling, call logs, conferencing and voicemail.
The features are similar to offerings being rolled out by from Vonage and
AT&T .

A number of pricing options are available, including 2.9-cent-per-minute
plan for U.S. and Canadian calls, or a flat fee $27.95 per month plan. And
the gear does not lock users into receiving the service from Zoom.

To start, Zoom is targeting consumers and home office users with the product
and service. It may also offer the equipment/service through ISPs that want
to brand their own.

But it sees big potential in a business version of the product and plans to
boost its staff of 160 to prepare work on new products.

“We’re not going to compete against Cisco in the
enterprise market, but we absolutely see a place for this in the small
office,” Manning said.

Zoom has been around for almost 30 years. Dial-up and ADSL modems account
for 60 percent and 30 percent of its revenue, respectively. The remainder comes from equipment for Bluetooth and Wi-Fi technologies. Depending on the product
line, it competes with 3Com, U.S. Robotics and a number of Asian
companies.

The company expects the market for ADSL/VoIP gear to consolidate in much the
same way the modem market did. In the mid-1980s there were about 60
U.S.-based dial-up modem makers, Manning said. Now, there are only a
handful.

Zoom is publicly held and has about $10 million in the bank, so it has some
reserves if it needs to be an acquirer, Manning said.

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