I can vividly recall the confusion in my mind when I was first introduced to VoIP through Free World Dialup and other early sites. In the following short article, I'll try to avoid explaining the underlying technology and simply answer the question in the title. If you have any questions, ask me on Twitter: @voipusers
A SIP phone is a device that acts exactly like a regular phone except it communicates over a network. The network can be local or over the Internet to a distant point. SIP phones cost between about $80 and several hundreds of dollars depending on the features:
Type of screen - one to three line LCD or much larger with graphic capability, color or even full blown browser.
Number of Lines - one, two or many more
Expansion Capacity - a "sidecar" for more quick dial buttons, software suites
Entry level phone quality varies, but today there is a
two-line Polycom model available for less than $140 which can do HD Voiceâ„¢.

What can you do with this device? The best way to explain is by example. We have a USA phone number my customers and friends can call to reach me in Europe (or indeed anywhere I happen to be). The number is charged at a normal rate to US callers and calls to it cost me nothing. Some services offer free dial in numbers, and other are very reasonable.
I see a hand up in the back of the room, "ooh ooh, what about Skype in?"
Skype in requires that you have a computer on to receive calls, so I think the
most compelling reason to have a SIP phone is to forget about leaving your computer on at all times.
How does this all work?
I have accounts at several services, some free, others paid. For example, we use
OnSIP.com to connect my associates and me so I can reach them by dialing an extension like 321. All of these calls are free and they happen in wideband, higher than Ma Bell telephone quality. If one of us needs to make a call within the USA, OnSIP will charge a per minute rate, but this is inexpensive compared to me calling from Europe and there is no monthly charge. Many months I don't need to make such calls.
What about mobility?
I have left a SIP phone at a place we rent each year for a month in the summer. When we get there, I plug the phone in to the router and it rings whenever anyone calls me, whether they are in France, New York or California, their cost is that of a regular phone call and my cost is... zero.
We are giving away a Polycom IP335 two-line phone every Friday in December on the VoIP USers Conference.
Another phone we use extensively in our home office is the
Siemens Gigaset s675ip, a cordless SIP phone that doubles as a regular phone and answering machine. We have two handsets and two simultaneous VoIP calls are possible, during which the regular phone line remains free. These phones have an excellent range, much better than the typical cheap cordless phones. Also, battery life is impressive, we have three handsets on our base and just purchased a second base for the other office.

Whether you win a phone or purchase one, there will always be someone on hand to help you set it up at the
VUC.
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