Cisco, VoIP Star?

Today, there was another good omen that Voice over Internet Protocol (VoIP) is fast gaining traction among large companies. Bank of America (NYSE: BAC  ) said it will switch to Internet telephones, using Cisco's (Nasdaq: CSCO  ) equipment. Cisco's been the star of several such deals lately.

Through the deal, Cisco's Internet phones will appear on 180,000 corporate desks at 5,800 Bank of America locations throughout the U.S. The deployment will take place in phases over the next three years. EDS will assist in the design and deployment of the system, while Bank of America will tap several different phone companies for the service.

Last week, we learned that Fordwas installing VoIP, using SBC Communications (NYSE: SBC  ) as a provider. Cisco also provided Internet telephone equipment to Boeing recently. On the consumer side of things, Best Buyentered into a pact with AT&T (NYSE: T  ) to offer the CallVantage VoIP product to regular Joes.

Speaking of AT&T, last week Foolish contributor Tim Beyers commented on the giant's bid to pump up through VoIP, as big business and consumers are ready to embrace the technology (and its perceived cost-efficient side effects). Several market researchers expect about 40% of companies to switch to VoIP in the next two to four years. Of course, this means the telecom companies will be duking it out to provide the service, competing not only among themselves but also with cable giants.

Cisco may have been the winner of several big deals recently, but it by no means stands alone in the IP telephony equipment arena. It faces formidable rivals such as Avaya (NYSE: AV  ) and Nortel (NYSE: NT  ) . (Back in January, Nortel and Verizon (NYSE: VZ  ) teamed up on VoIP.)

Although the telecom companies may very well have the highest hopes to stage a reversal of fortunes through VoIP, companies such as Cisco also stand to gain from the inevitability of these deployments. While the area continues to contain risks, it's an interesting area to contemplate as businesses and consumers increasingly show signs they are accepting the technology.

SBC Communications is aMotley Fool Stock Advisorpick. See what other companies the Gardners expect will ring up profits by subscribing, risk free for six months. Or, to talk to other Fools about Cisco, click here.

Alyce Lomax does not own shares of any of the companies mentioned.


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