Networking specialist Netgear will try its luck in the voice over wireless LAN (WLAN) market later this year by launching a Wi-Fi only mobile handset with an integrated Skype voice over IP (VoIP) client.

Previewed at this week's Consumer Electronics Show (CES) in the US, the device will allow users to make low-cost IP-based calls over the internet by connecting them to broadband links via WLANs in the home or the office, and later via public access Wi-Fi 'hotspots'.

But the Netgear phone will not make calls over mobile GSM networks, meaning customers may end up carrying a cellular phone around with them as well. Nor will it connect to BT's public switched telephone network (PSTN), an option which is offered by the BT Fusion residential voice over Wi-Fi service.

"It seems like a very niche market opportunity; if you are not in an area where there is Wi-Fi coverage it is not really interesting, and you will have to have a mobile phone just in case," said Julien Grivolas, telecoms analyst with research company Ovum who added that residential users are likely to want a fixed line telephone as well.

A number of manufacturers, including Nokia and Motorola, are perfecting dual mode wireless handsets that route calls over both mobile cellular and Wi-Fi networks and switch between the two according to which is in range. These will also allow business users to connect into office IP public branch exchanges (PBXs) to deliver business class VoIP features, although issues with billing models and WLAN access point handover are still to be resolved before commercial deployments to enterprise customers can begin.

The Skype software client on the Netgear phone lets users call other Skype users via the internet for free, with video calling capabilities due to be added later this year. Users pay a small charge to call standard landline or mobile numbers, however, whilst audio quality can vary a great deal according to the speed of the wireless connection or broadband link.

A Skype software client is already available for smartphones and handheld PCs running Microsoft's Pocket PC operating system, whilst Wi-Fi only handsets are offered by a number of companies, including Cisco and SpectraLink.

Online auction specialist eBay acquired Skype in October last year.