Charles Giancarlo is chief technology officer and senior vice president at Cisco, and president in charge of its Linksys division.

In the first of a two-part interview with vnunet.com, Giancarlo discusses the future of voice over IP for the consumer.

In a bid to boost its position in the consumer VoIP market, Cisco's Linksys division acquired a start-up company in April called Sipura for $59m. The transaction marked the first takeover by Linksys since the company was itself bought by Cisco in June 2003.

Sipura develops VoIP adapters for consumers which transfer digital internet signals to analog telephone signals, allowing consumers and businesses to use existing telephones on a VoIP service.

How mature is the VoIP market?

Linksys started selling VoIP phone adapters in October. Six months later we had shipped one million ports. That's pretty fast. It's faster actually than the iPod in its first six months. The signs are there that it's growing rapidly.

Where do you see Cisco fitting into the VoIP market?

It's only a matter of time before we are the number one telephony player in the enterprise. We are already the number one in IP telephony, but we are in the top three of total telephony in the enterprise.

In the consumer space we are off to a very good start. Cisco has tremendous technology in VoIP. We are going to be able to translate that into some significant success in both the consumer and enterprise spaces. A technology that we started investing in about six years ago is now turning out to be something that we are going to be a leader in.

Tremendous technology? The Linksys phone adapter that sits under my desk providing my VoIP service today is a pretty dumb device if you look at the functionalities that I get out of it.

The phone adaptor is just at the beginning and I believe it's just a transitional device. What we are going to see soon are hard IP phones as well as Wi-Fi phones. The majority of phones that are bought in the home are cordless. With a WiFi VoIP phone you get that cordless functionality but, because its IP right to the handset, you have the opportunity for so much more.

You'd have an unlimited number of lines, you could link into your buddy list and dial right off your buddy list. You could have instant messaging. You can have push-to-talk [walkie-talkie functionality]. A whole variety of new functionalities opens up as soon as IP goes all the way to the handset. We definitely see that occurring.

We'll launch the first Wi-Fi phones this year. The consumer hard phones [that you plug directly into an Ethernet cable] will start this year. Probably first in the small business context, where the additional functionality of extra buttons and more lines is worthwhile. But we are also going into the home within 12 months.

The current offering is for voice line replacement. Do end users understand that it's VoIP? Do you even need to say that it's VoIP?

No, you are absolutely correct. It needs to be just a better cordless phone. I think we need to make it transparent to users.

There is this notion that something needs to be 10 times better to successfully replace a current offering.

The iPod was better than the Walkman because it stored more songs. I don't know that you'll get 10 times better in terms of IP phones, but I do think that consumers are very willing to trade to a new device. People trade on cellphones all the time to get a camera on it. They are used to trading these things.

In the case of VoIP you bought a $60-$70 box to get a $25 a month service. It's the same kind of thing. You don't have the disadvantage of having to plug in your analog phone and be able to use it only in one room. If you have a box and a Wi-Fi environment, you can take it anywhere in the home and not worry about where the box is. That's certainly more convenient and I think people will subscribe to that.

You have previously predicted that by 2010 half of all phones will be VoIP. What will be the killer application?

All the new voice services that are deployed by carriers are going to be VoIP. They are not deploying a new service on the analog system again. That's gone.

Reason number two is that the pricing is right. VoIP is fundamentally less expensive, and as a result will be fundamentally less expensive to consumers.

Thirdly, we learnt in the enterprise space that there is no one killer app. Each consumer responds to a different environment. For some consumers it might be push-to-talk. For others it might be that a camera also has a high-speed uplink. For some consumers it may be dual-mode phones where their cellphone also operates as their home phone when they are in the home environment.

For others it may be the fact that a specific phone has a touch screen which allows them to use the same buddy list that they have on AOL. For others it may be a videophone. There are enterprise videophones that are coming out that make use of the broadband environment as well. It's hard to say.