Tawkey "tri-mode": reinventing the cordless telephone

New consumer electronics devices leapfrog their predecessors by incorporating new types of functionality that re-define the "problem" their predecessors solved. Just think, for example, how TiVo has re-defined the VCR experience. Well, if the embrace and extend strategy can work for the innovator, then such a strategy can work for the predecessor. Along those lines, I have been ruminating on the question of what would the cordless telephone look like if it were to be re-invented?



A few worthwhile innovations stand out, none of which have been incorporated into any of the cordless phones that I have come across. First off, is a unified phone book within the handset itself. We take it for granted that within our cell phones are many tens, if not hundreds or thousands of phone numbers which are relatively easy to input into the phone, and can be called up in very few click strokes. Why then is the cordless phone still very much in the dark ages in this area? Seven times out of ten when I want to make a call at home I end up defaulting to using my cell phone as my home phone replacement since I have the number I want to call in my cell phone, don't use paper phone books and can't remember every phone number (e.g., a favorite restaurant to order to-go food). Needless to say, it is a major inconvenience to have to run and grab the yellow pages, and painful indignation to have pay $1.25 for directory assistance when the convenience could be right at my fingertips. The above scenario should scare the bejeezus out of the "Baby Bells" because it is but one example of how a former monopoly goes the way of the do-do bird. Similarly nice, but non-integral, would be if this function could wirelessly integrate with my Contacts in MS Outlook (or whatever favorite information management software you use).



Secondly, if my cordless phone could piggyback on top of my Wi-fi connection then I might be able to "connection-switch" between POTS (i.e., plain old telephone service) and VOIP (i.e., voice over IP). Why is this a good thing and why should the new cordless telephone have such capabilities baked in? Basically, it would enable me to turn my ordinary telephone into an Internet-powered walkie-talkie service (hence, "tawkey") so that minimally I could talk toll-free with friends and loved ones that have a tawkey-enabled phone (this scheme worked pretty well for Nextel in creating a self-reinforcing network effect), but optimally, I could leverage one of the emerging VOIP service providers without putting myself into the all-on-none quandary of choosing between VOIP (cheap to free, generally replaces POTS connection) and POTS (not so cheap, but very reliable, especially in case of power outages and emergencies). Different flavors of the phone might support more advanced communication features like instant messaging and email retrieval, co-opting some of the popularity of Blackberry types of devices.



To be clear, connection switching could actually provide two features in one. On one level, this functionality would enable switching between POTS, VOIP and ultimately, the third-mode in unified home telephony, cellular (I am dreaming, but we are clearly not far away, as a recent article on an href="http://my.netscape.com/corewidgets/news/story.psp?cat=50380&id=2004072607490002966682">HP/T-Mobile announcement addresses). Initially, this functionality would be manual in the sense that you would have to click a button to choose the preferred connection type before making the call. Ultimately, the technology would evolve to automatically switch to the cheapest, most reliable path (or default paths for specific types of calls -- think cheap when calling cousins in Peru). On another level, such a phone (or its base station) might deal more elegantly with spectrum contention when both the cordless phone is in use and Wi-fi traffic is taking place. This alone might be a reason for many to replace their old cordless phone.



So who is the customer for such a product, which I call Tawkey Tri-Mode (tri-mode = POTS/VOIP/PCS)? It's the home cordless phone replacement market, a fairly sleepy segment, which nonetheless moves over 30 million units, and generates $1.6B in revenues a year. Moreover, it's the 50 million or so people with Wi-fi connections who see home broadband as a logical convergence point for next generation telephony applications. And it's the 17 million people that have had an "aha" moment using Skype on their PC and who would like to extend that moment to their living room and kitchen. Ultimately, it's the 1 billion cellular users and purchasers of 500 million handsets annually who would like to marry the convenience and flexibility of cellular (and their cellular handset) to the reliability and (relative) cost-effectiveness of POTS when at home.



One key takeaway in all of this is that to deliver the goods, the offering needs to incorporate a new cordless phone and base station design, a network service to route and link up other Tawkey users, and potentially, a synch server that lives on your PC and periodically syncs Tawkey data with that on other devices, like your PC, PDA, cell phone or another family member's devices.



One comment about sync server types of functions. While one continuing trend in the industry is to collapse ever more features into a single device, my gut is that the device age will truly be upon us when I instead have one master data store, and multiple, simpler and/or more specialized devices sync'ing with it. For example, I should have only one master phone book, but I probably don't want all of my work numbers on my home cordless. Same deal with digital content. (But that's a blog for another time).



So who drives this innovation? Is it the cordless phone makers, like Uniden, V-Tech or Panasonic, who have no sacred cows to protect in terms of service provider relationships? Is it the Nokias and Motorolas of the world working in tandem with cellular service providers, who could aggressively target the home phone replacement market with a hybrid PCS/VOIP solution? Perhaps it's the baby bells needing "something" to reinvigorate themselves and gain better leverage to up-sell and lock-in their current customer base with a hybrid POTS/Internet/VOIP offering. For that matter, why not Sony, who truly gets digital convergence, or even Apple, who has proven time and again, their ability to re-invent markets?


There sure are plenty of different ways to make money on this. Sell handsets. Build intellectual property and license it for passive royalty income. Cut revenue sharing deals with DSL, VOIP or cellular access service providers. Or, pursue a premium revenue strategy by offering in-network or Tawkey-to-PC push to talk for free, and managed VOIP (similar to services like Vonage) for a monthly fee. Similarly, one could leverage this model to build an IP-based enhanced 411 directory service (think: gives option to automatically add number to phone book and coupon option on enhanced listings).



To be clear, there are some potential chicken and eggs. For one thing, hardware is expensive to fund and manufacture, and channels to distribute new products are notoriously difficult to secure. Plus, consumers are slow to embrace new ideas, as TiVo has discovered, taking almost seven years to secure 1.6M subscribers. And service providers are known laggards in terms of embracing new market opportunities. Further, there are issues of how reliable Wi-fi is for voice connectively in a typical home roaming environment where you are walking from room to room, and security is always a concern both from a secure tunnel and data accessibility perspective (e.g., I would not want there to be any meaningful risk of a "neighbor" with a Wi-fi scanner hacking their way into my cordless phone's phone book).



At the same time, the idea has some promising bells and whistles. One is that it sits at the convergence point for multiple large markets, and there are multiple players with a vested interest in not missing the boat on the opportunity -- think: baby bells, DSL, cellular providers and handset makers. Plus, walkie-talkie functionality has proven itself to be the first "killer app" of 3G, and the application by definition reconciles the battery life and bandwidth issues that stand in the way of broadband-optimized communication applications by piggy-backing on the price-performance wave of Wi-fi, DSL/Cable, and close proximity to its base station for easy battery re-charge.

Is Tawkey compelling? Would you use it? Any fatal gotchas?