USB VoIP phones

	The E-7180 from Hong Kong's Eastel 33 is a VoIP+PSTN desktop phone that features distinctive rings to identify VoIP from PSTN calls.

USB phone models strong; wireless, dual PSTN and VoIP modes, Web cameras and conferencing supported

Rising Skype adoption worldwide and the corresponding growth in the user base are fueling the Skype phone manufacturing industry across Greater China. The region's 300-strong supplier base offers a wide range of products, from entry-level USB models to wireless units with a host of value-added features. USB models, which make up the low end of the VoIP phone market, currently account for a huge portion of supply. Some makers project output of USB phones will start declining as the line reaches saturation and production of standalone phones rises, but their lower prices and the low technology threshold will sustain the USB phone segment for a few more years.

Buyers sourcing in Greater China will also find ample supply of VoIP phones embedding Skype software and units that support both PSTN and VoIP calls. To match growing interest in other peer-to-peer (P2P) programs, more phones now support other programs besides Skype, including NetMeeting, MediaRing, Net2Phone and GTalk.

More Skype phones are likewise supporting SIP, as well as MGCP and H.323. High-end models can support wireless capability in the form of Bluetooth, DECT or 2.4GHz. Many of these advanced models have a slew of value-added features and functions, including voice recording, Web cameras, triparty conferencing, color LCD screens and full-duplex communication.

Suppliers in Greater China are further enhancing their products' performance and functionality to keep pace with growing demand. Data from Taiwan's Market Intelligence Center (MIC) estimated Skype international calls made in 2007 at 8.1 percent of global international call value for the same year, up from 4.4 percent in 2006 and 2.8 percent in 2005. VoIP international calls were estimated at 22.6 percent of global international call value in 2007, up from 19.8 percent in 2006 and 16.6 percent in 2005. Meanwhile, traditional international phone calls accounted for 69.3 percent of global international call value last year, down from 75.8 percent in 2006 and 80.6 percent in 2005. Makers across Greater China see these trends as pointing to continued strong growth in the VoIP and Skype product lines in the years ahead.

Nonetheless, companies, particularly in mainland China, are gearing up for rising material and labor costs. Makers are anxious that the fluctuating yuan will exacerbate the pressure and affect finished product prices. Suppliers in Hong Kong and Taiwan noted steady price declines in the face of growing competition, but rising production costs could push up prices by up to 10 percent this year.

	Taiwan's Lobos offers the LB-SP710, which has a 300,000 pixel Web camera, USB 2.0 interface and echo cancellation.

At least 20 companies supply Skype phones in Hong Kong. All of these companies can make USB-based phones, and about half of them offer SIP phones. About five suppliers have released PSTN+VoIP models.

Production is largely done in mainland China, where many companies have set up their manufacturing facilities.

Mainland China's Megastek Technologies Ltd, which was established in 2000 to develop, manufacture and market add-on cards, consumer electronics and networking products, has a 2400sqm factory in Shenzhen, Guangdong. The company started producing USB Skype phones in 2005, and now has three models. It has a monthly capacity of 10,000 units, with actual monthly output at about 5,000 units.

Megastek's ISO 9002 factory has facilities to conduct almost all production processes, except for mold making and plastic injection molding. For its USB Skype phones, the company sources chipsets from Taiwan and other materials from mainland China. The components and materials account for about 70 percent of the total production cost.

Acetech Electronic Industrial (Xiamen) Co. Ltd has two factories in Xiamen, Fujian province. It supplies USB Skype phones and other Skype equipment, VoIP phones and related equipment, and GSM fixed phones. The company's 14,300sqm factory can handle industrial design (ID) development, structural design work, SMT, PCB assembly, final assembly, QC and packaging, with mold making and plastic injection subcontracted.

Acetech started producing USB Skype phones in 2005, and now offers three models. It can make 100,000 units monthly, but the actual monthly output is about 50,000 units. The company sources key components from Sonix of Taiwan and Tiger of the US. The components and materials combined account for about 70 percent of the total production cost.

Ningbo HCH Industrial Co. Ltd makes VoIP phones, casino accessories, games, promotional items and wine accessories. Its factory in Ningbo, Zhejiang province covers 3000sqm and can handle ID and structure design work, SMT, PCB assembly, final assembly, QC and packaging. The monthly capacity and monthly output volumes are 20,000 units and 4,000 units, respectively.

Among Hong Kong-based makers, the production capacity is not a big issue, as orders for VoIP phones rarely exceed a few thousand units per month. In addition, most makers have much spare capacity to use should order volumes increase substantially. Vertical production is neither seen as critical to provide a significant advantage due to the current small volume production and order.

Established in 1993, Global Connect Electronics Ltd (GCE) operates a 5000sqm manufacturing facility in Shenzhen. The factory is equipped to carry out all key production processes in-house, including design, tooling, injection molding, coating and assembly. It can produce 300,000 phones a month. The company complies with ISO 9001 and ISO 14001.

Topcom Asia Ltd offers walkie-talkies, DECT phones, WLAN products, baby monitors and VoIP products. It can ship 60,000 VoIP phones monthly by working closely with five subcontractors in Shenzhen.

Eastel 33 Enterprises Ltd has been manufacturing VoIP phones since 2004. Aside from its ISO 9001:2000-registered factory in Shenzhen, where it can produce up to 250,000 units per month, Eastel 33 has a new manufacturing facility in Dongguan, also in Guangdong province.

Taiwan's Lobos Technology Inc. has a factory in Shenzhen, but also engages other subcontractors so it can focus on product development. It can supply 10,000 USB phones a month, and has no immediate plans to expand capacity, as it said it can easily outsource orders in excess of its current capacity.

Ipevo Inc. outsources its desktop Skype phones to USI, and USB Skype phones to Calcomp. All of its subcontractors' production procedures are certified by Skype. The company plans to add Taiwanese subcontractors to increase production capacity.

Taipei-based Qstarz International works with three subcontractors in northern Taiwan: two for GPS production and one for Bluetooth and VoIP production. The company can provide 3,000 to 5,000 Bluetooth and VoIP products each month. Qstarz will add production lines in its subcontractors to increase capacity in 2008. About 95 percent of its products' components are from Taiwan, and the rest are sourced from China.

In mainland China, mainstream Skype phones feature USB 2.0 or 1.1 and PC-to-PC or PC-to-phone operation. Many phones support H.323, MGCP and SIP. Entry-level USB phones from the mainland generally have no LCD screens. These are priced from $6 to $9 per unit.

High-end models support wireless technology, with most phones using DECT. These products also come with large LCD screens, Internet connection, USB 1.1 or 2.0, and dual operation modes supporting PSTN and VoIP. Some models support contact list, call history, caller ID and call waiting. In general, high-end Skype phones are priced starting at $30 per unit.

Similar to mainland-made entry-level USB Skype phones, models from Taiwan aimed at this category do not have screens. Midrange models come with LCD or LED screens. High-end units are equipped with built-in Web cameras with 300,000 pixel or 1.3MP resolution.

Most Skype phones from Taiwan support USB 2.0. These phones feature hot keys, voice recording, duplex communication, echo cancellation and noise reduction. They incorporate phone books and caller ID displays. Some of the value-added features integrated in advanced models include buzzer for incoming calls, missed and received call indication, and multiple ring tones.

Lobos offers the LB-SP150, which has built-in 128MB flash memory. It also has a 3.5mm audio jack for earphones and microphone. It supports password security.

Ipevo, which supplies Skype desktop phones, USB phones, speakers and conference phones, has developed the Solo, a Skype-embedded Internet phone that enables Internet calls without using a computer. It supports Skypeto-Skype, SkypeIn and SkypeOut. Its Skype interface is displayed on a 2.4in color TFT LCD. It has a USB 1.1 interface reserved for extension modules and two RJ-45 ports for Fast Ethernet switch. It supports static IP, DHCP, PPPoE, TCP/UDP/IPv4 and DNS. It features G.729AB voice codec and 8kHz voice sampling.

Many Hong Kong makers concentrate on USB VoIP phones due to their faster time-to-market advantage. These phones are targeted at the IT and promotions markets, while desktop PSTN+VoIP and cordless VoIP phones are aimed at the larger home and corporate markets. Almost all USB phones from Hong Kong makers are compatible or already embed Skype.

Entry-level models are typically compatible with any P2P VoIP network, but midrange and full-featured models highlight full Skype functionality.

USB phones account for almost 50 percent of Topcom's shipments. The company's Webt@lker 100 is especially designed for Skype. It has built-in hot keys, echo cancellation, and buzzer function for incoming call alerts. It is bus-powered and contains 3.5mm jacks for earphones and a microphone. The device comes in a compact, mobile phone design and is suitable for frequent travelers.

Eastel 33 has a growing range of USB phones, SIP phones and VoIP+PSTN phones. Its USB VoIP phones are fully compatible with Skype and lead overall output.

	The GCE5929 Video VoIP phone from GCE of Hong Kong has a built-in CMOS camera and 3.5in TFT-LCD screen.

Some companies in Hong Kong released SIP phones in late 2006 and early 2007. Most VoIP phones from Hong Kong's GCE, for instance, support SIP 2.0 protocol. The final specifications of the company's products depend on clients' requirements.

GCE has recently focused its new product development on VoIP products, including SIP phones, Skype phones and analog telephone adapters (ATA). The company has an R&D team of more than 40 engineers and designers, some of whom came from prestigious universities in mainland China such as Tsinghua University and Nanjing University, and had previous work experience with Huawei Technologies Co. Ltd, ZTE Corp. and Cisco. The company uses VoIP solutions from Infineon.

In addition to supporting different protocols, more new releases from Greater China boast value added through video capability, recording, multiparty conferencing, image capture and other feature enhancements.

The GCE5929 Video VoIP Phone from GCE comes with a CMOS camera and 3.5in TFT-LCD screen. It features two-way recording, three-way conference, incoming caller number display, call transfer, call forwarding, call timer and configurable ring tones. It can be administered through a Web browser and upgraded automatically via HTTP/FTP through the integrated Web server. Voice activity detection (VAD), comfort noise generator (CNG), acoustic echo cancellation (AEC), QoS and jitter buffer are built in.

The GCE5929 provides codec support for MPEG-4, G.711A, G.711µ, G.729AB, GSM6.10, and optional H.263 and H.264. It is compatible with various networking protocols such as DHCP, PPPoE, NAT, TCP/IP, SIP, RTP, RTCP, DNS, FTP, HTTP, DTMF and SNMP. AES/DES encryption, password protection and MD5 authentication are enabled for security.

GCE's GCE5088 VoIP phone is non-video-enabled, but features a 3.5in color graphic TFT display, built-in 8x Java hardware accelerator for Web-driven Java applications and Java Script. It features VAD, CNG, AEC, QoS, jitter buffer, auto upgrade via FTP, and Web browser administration through a built-in Web server. DHCP, PPPoE, bridge (switch mode), TCP/IP, SIP, RTP, DNS, FTP, HTTP, DTMF, SNP and optional PSTN and VLAN protocols are supported. Add-on functions include status indication, call timer, redial, incoming call number display, call transfer, call forwarding, message waiting indicator, full-duplex speakerphone, three-way conference and music on hold. AES/DES encryption, password protection and MD5 authentication are also included.

Eastel 33 offers the E-210-V, which features call waiting, three-way conference, call transfer, call on hold andcaller ID. It is compatible with SIP 1.0/2.0, IP/TCP/ UDP/RTP/RTCP, IP/ICMP/ARP/RARP/SNTP, TFTP client/DHCP client/PPPoE client, Telnet/HTTP server and DNS client protocols. Its 2-line, dot-matrix LCD enables incoming and outgoing calls to be reviewed. Switching between PSTN and IP calls is optional.

	The Butler 4812 cordless USB VoIP phone from Topcom of Hong Kong is compatible with Skype, MSN Messenger, Net2Phone, SJPhone and VoIPBuster.

wireless models are also emerging, and these support DECT, 2.4GHz or Bluetooth. Some models can switch between DECT and PSTN.

Hong Kong's GCE offers cordless Skype and SIP phones. The company's GCE6002 is a multiline SIP 2.0 phone that features 2.4GHz FHSS technology. It comes with auto answer and digital TAD, and supports VAD, CNG, AEC, G.723.1, G.729 and G.711. It has 60 incoming and 60 outgoing number memory, 500-entry phone book with two numbers per contact, five kinds of ring tones, and data/voice/ protocol encryption. It likewise features dynamic codec selection, three-way conference and local voice message.

GCE's GCE6003 is a 2.4GHz digital cordless Skype phone. It features Skype contact display on the handset, handset menu operation and 30-entry phone book. It has call timer, LCD contrast control, date and time display, alarm, low-battery indication and ring volume control.

Topcom offers cordless USB+PSTN phones. Its Butler 4012 DECT phone displays the Skype buddy list on the LCD. It has polyphonic ring tones, 50-entry phone book, handsfree operation on the handset, and distinctive ringing between PSTN and VoIP calls. The receiver can support up to five handsets.

The Webt@lker 6000 from Topcom can be used as a regular DECT phone over PSTN. It embeds Skype and can be plugged onto a broadband router. The Skype menu is displayed on a color LCD screen. Users can create a new Skype account, and sign automatically or manually.

Topcom's Webt@lker 5000 and 6000 are both Skypecertified and support auto Skype version update. These two models currently account for 15 to 20 percent of the company's monthly VoIP phone shipments. Topcom can also customize its VoIP phones to support other VoIP client software depending on customer requests.

Under development from Topcom are a desktop Skype phone with a Web camera for videoconferencing, a Wi-Fi kit for its corded VoIP phones, and a low-cost, dot-matrix version of the Webt@lker 5000. The company aims to explore more the enterprise market.

In Taiwan, wireless VoIP phones that support Wi-Fi, RF or Bluetooth are marketed as high-ends models and are expected to dominate the market in the next few years. Bluetooth models have the advantage of stable signal reception and audio quality, but the high costs involved could hinder market penetration. Models based on 2.4GHz RF are more cost-efficient to produce, but makers have yet to resolve interference problems.

Most suppliers of VoIP phones in Taiwan offer both wired USB and wireless models. Wired models are mainstream for enterprise use, because these are more stable. However, makers expect wireless models to start gaining momentum.

Qstarz is currently working on new models supporting embedded Skype and wireless capability. Qstarz has the capability to develop software for its Bluetooth, GPS and VoIP products in-house.

	Taiwan's Ipevo has developed the FREE.2, a USB 2.0 Skype phone with a white-backlit LCD panel and echo cancellation.

Many of the new product rollouts emphasize compact and portable designs. With many makers targeting their USB Skype phones at enterprise users, many new releases are designed to fit the office environment. Although many suppliers are expanding the functionality of their USB Skype phones by integrating other products or features from other products, companies are able to surmount the challenge of fitting a myriad of functions and features into slimmer housings.

Mainland China's Megastek has just released a USB Pen Drive with VoIP and Bluetooth capability. The slim, plug-and-play product has up to 2GB capacity when used as a USB drive and has pre-installed Skype and Nero SIPPS connect software to be used as a Skype phone. It also serves as a Bluetooth dongle and can support Internet conferencing with up to three participants.

Lobos of Taiwan offers streamlined units shaped like remote controllers, such as the LB-SP140 and LB-141, which feature echo elimination to deliver better sound quality. According to Lobos, its Skype phones without displays are the company's best sellers.

Many Taiwan makers use mono displays for their phones, although some companies continue to offer Skype phones without displays. Qstarz, for instance, supplies USB Skype phones without LCD panels, but supporting PC-to-PC, PC-to-phone dial, MSN Messenger, Yahoo! Messenger, USB audio device 1.0 and USB 2.0.

Ipevo offers bar-type Skype USB phones with or without LCDs. The company's R&D team is looking to develop wireless and video functions, as well as IP camera support for its new Skype phones. The company cooperates with Skype Technologies S.A. for Skype hardware development.

Some suppliers design their phones like USB mice or mobile phones. Eastel 33 of Hong Kong has developed its E-310-U7 USB VoIP phone, which looks like a Sony Ericsson mobile phone. It features a blue-backlit LCD screen that displays incoming calls, talk time, contact list, call list, missed call list and user information. It comes with 16 ring tones, echo cancellation, noise reduction and volume adjustment.

Irrespective of the switch to slim housing designs, some companies continue to offer desktop units. Topcom's Webt@lker 5000 desktop phone has a 2.4in color display for showing the Skype menu. It supports handsfree operation, multiple languages and Skype menu navigation through arrow keys. Echo cancellation and ring tone choices are incorporated.

Eastel 33 offers several VoIP+PSTN desktop phones. The E-7180 supports various protocols, including SIP 1.0 (RFC 2543)/2.0, IP/TCP/UDP/RTP/RTCP, IP/ICMP/ARP/ RARP/SNTP, TFTP client/DHCP client/PPPoE client, Telnet/HTTP Server, and DNS client. It features a 2-line digital display, call waiting, call forwarding, call on hold, caller ID, three modes of call transfer, redial and threeway conference. Both speaker and handset volumes can be adjusted. Distinctive rings identify VoIP from PSTN calls.

Many companies are projecting an increase in their production and export volumes this year. Topcom of Taiwan, for instance, projects its total shipments of VoIP phones will reach 110,000 units in 2008 for a 10 percent growth over 2007. The company's customers include major electronic chain stores, telecom and computer shops, and hypermarts. Products under its Topcom brand account for 70 percent of its overseas shipments. OEM projects take up 30 percent.

Aside from Western Europe, where 50 percent of total shipments are distributed, Topcom also distributes its products in Eastern Europe, Southeast Asia, Africa and the Middle East. The company has also begun promoting its VoIP phones in Central and South America. Its web site offers distributors, resellers and other clients useful information for spreading consumer awareness about Internet telephony.

GCE sees at least 50 percent annual shipment growth in step with rising demand for VoIP phones. It expects its wide client base for caller ID phones and one-piece phones to eventually shift to VoIP phones and ATAs. Among GCE's biggest clients are Telefonica of Spain, BellSouth of the US, Reliance Telecom of India, and Samsung of South Korea.

Besides VoIP phones, GCE also supplies caller ID phones, SMS phones, feature phones, cordless phones, basic one-piece phones and TADs. It has been working with major telecom operators and service providers in more than 40 countries in Europe, North America, South America, Southeast Asia, East Asia and the Middle East.

Eastel 33 looks forward to a 50 percent shipment growth in 2008. The company exports 100 percent of its output, mainly to Western Europe. Its total shipments in 2007 comprised about 10,000 USB VoIP phones and 5,000 VoIP+PSTN phones.

Although suppliers in Taiwan can provide OEM and ODM services, most companies generally pursue own-brand manufacturing (OBM).

All of Ipevo's Skype phones carry the company's own label. About 40 percent of the company's Skype phones are exported, with main markets being Europe, North America and Japan. The supplier plans to extend its overseas market to Brazil, mainland China and emerging regions in 2008. It has a branch office in the US for sales and technical support, and plans are afoot to set up another office in mainland China this year. Ipevo's distributors include Gravis in Germany, Chainwise in Singapore, V2 in Hong Kong and Seglobal in Brazil.

Lobos, which started producing USB VoIP phones in 2005, is OBM-oriented. It ships about 80 percent of its products under its own label, although it also undertakes OEM and ODM projects. It exports 70 percent of its output. The company's products are distributed to Europe and North America, with 60 percent and 30 percent shares, respectively.

Qstarz is positioning itself in the midrange and highend markets for VoIP phones. Sales of its own brand made up 70 percent of its total sales in 2007, and the share will likely stay the same in 2008. The rest of its sales in 2007 came from OEM projects, and this will continue in 2008.

Qstarz exports 95 percent of its products. Its main markets are Europe (more than 50 percent share) the US and Asia. In 2008, the company will also explore emerging markets.

	The VVB300 from mainland China's Acetech supports not only Skype, but also X-Lite and X-Pro.

With USB Skype phones increasingly regarded as a sunset industry due to the onslaught of standalone VoIP phones, more mainland China companies expect a dip in their production and export volumes this year.

Acetech produced 600,000 USB Skype phone in 2007, all of which shipped overseas. The company expects a 20 percent drop in its output and export volumes this year to 500,000 units. Its main export markets are the US and Europe, each accounting for 20 percent and 80 percent of overseas sales. Seventy percent of the company's overseas business is from OEM, and the rest is from OBM.

HCH projects a 25 percent decline in its output and export volumes in 2008—40,000 units from 50,000 USB Skype phones made and exported in 2007. The company's overseas business caters to OEM and ODM clients. Its major customers are based in the US, Europe, South Asia and South Korea.

Megastek expects its 2008 production and exports of Skype phones to stay at 2007 levels: 60,000 units of USB Skype phones made and 48,000 units exported. Eighty percent of the company's exports ship to OEM clients, and the rest carry the Megastek brand. The main export markets are the US, Europe, Brazil and South Korea.