With so many manufacturers making dual-mode cell phones, you would think this was a hot market. It is not. In fact, NO cellular carrier offers these handsets and probably will not, as they compete directly with their own businesses. Someone from Verizon at a basestation conference last month said they hated these phones and would never go for them. (Over 95% of all cell phones are made to carrier specs and sold through the carrier. You could buy a dual mode phone for yourself and get the carrier to enable it, but why? You also have to have a Wi-Fi VoIP supplier. And who would that be? I think NetGear and Belkin have deals with Skype, so that is an option. Otherwise I cannot name one other who does this. And will there really be a savings to the consumer? I am not sure too many have figured that out.)

To use such a phone in the enterprise, the company has to implement some major upgrades to its WLAN like adding a PBX-type device and expanding coverage. Most Wi-Fi still just covers conference rooms and a few selected areas, as most in-company PCs are still hooked up to the wired network. There is no data to show who has done this yet, but not many as far as I know.

Bottom line here is that essentially NO ONE is using these phones. They are a future potential contender for some cell phone business but there is no workable business model right now where someone can make some money. Technology-wise, there are still glitches in the system. For example, there is no seamless automatic handoff from cell to WLAN or vise versa. Also, security has not yet been implemented in such a way that enterprise users would accept.

I have seen several huge projections for these phones, but I suspect they will never live up to the expectations. At the recent basestation conference I ended up chairing one of the sessions. One of the speakers in my group was an engineering manager from Nokia in charge of their VoIP on cellular. He said they were working on VoIP on Wi-Fi too, but during the Q&A session when I asked him for penetration numbers he said there were none. He does see some VoIP over WiMAX, but not so much over Wi-Fi.

Anyway, another trend may not be so favorable to dual mode phones. That is the increasing use of picocells (or what they call femtocells) that are in essence small basestations installed in companies to increase or improve conventional cell coverage indoors. That will mitigate Wi-Fi phone coverage in my opinion.

I would not call dual mode phones dead on arrival, but if they amount to anything they will be a super tiny niche (if that) maybe in 2 or 3 years. The good news is that in a market that sells one billion handsets a year (965M this year projection, 1 billion + next year), a small niche is a big money maker for someone.